Tesla Defies Both Logic and Gravity

 | Feb 10, 2014 | 1:08 PM EST
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I never, ever slam Tesla Motors (TSLA). In fact, I totally get the thesis of why you should buy it. The stock is simply one of the best cult stocks ever, backed up by the political power of pretty much every government in the world and shot at by pretty much every hedge fund that likes to get against stocks.

In short, Tesla is too easy. It makes me jealous. You can do all of the homework in the world on an Eaton (ETN) or an American Airlines (AAL) or a Noble Energy (NBL), and if it stumbles, you are the doghouse. If cheap stocks like General Motors (GM) and Apple (AAPL) get a whisper of negativity, it's game over, or at least it feels like it.

And then there's Tesla. This morning we heard that China is going to extend subsidies for electronic vehicles. Even though Tesla is in no position to mass-produce Chinese cars, it just doesn't matter. The thesis is simply too positive not to buy Tesla. Next thing you know, the stock takes out its high, and you have a technical reason to own Tesla. I am sure that right now, Elon Musk has a half-dozen reasons to propel Tesla further into the stratosphere. There is no negative story now that the fire issue has been cleared up. There's only valuation.

And that, of course, is what makes things so hard. At my hedge fund I had iron-clad rules, and one of them was not to waste time thinking about valuation for a small part of my portfolio. There was always room for a Tesla. Now, running a public portfolio, Stephanie Link and I at least like to have some valuation underpinning, any at all, because it is charitable trust money.

But we can't design one. Yes, we bought Facebook (FB), because we thought it was about to have an earnings breakout. Which it did. We own Google (GOOG), but that's because Google is actually ridiculously cheap on 2015 earnings.

But Tesla? It makes no sense on earnings whatsoever.

Which, alas, makes it even easier to own. Want to get even less particular? To test-drive a Tesla is to own one. If you like to own the stocks of companies that make products you love, then Tesla is golden. It may be the coolest product I have ever brushed up against.

Again, I know, that's a foolish reason to own a stock. Just because you love it, that doesn't mean it's flawless.

But in this case, the driver experience is a huge positive.

So here's the bottom line: I hate you Tesla, you make the whole process seem so easy it is almost farcical, which is why the stock remains a cult buy.

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