> Why bother investing in GM through a broad index fund if I know for sure Tesla will eat their lunch? Because even bad stocks are an essential component of a

> Why bother investing in GM through a broad index fund if I know for sure Tesla will eat their lunch? Because even bad stocks are an essential component of a balanced portfolio if they reduce overall portfolio beta (volatility). The name of the game isn't pure gains, because the gains are not guaranteed. You want to make gains and hold onto them. And no, you don't know for sure that Tesla will eat their lunch. You have a very high level of confidence that they will. So does the rest of the market, that's why Tesla is trading at a huge premium relative to its financial fundamentals. But this wasn't always the case, and there were more than a few times when Elon Musk brought Tesla to the brink of bankruptcy. If you were confident that Tesla was going to pull through, even back then, you either a) knew something the market didn't, b) were mistaken/wrong (but luck pulled through for you in the end), or c) you were reckless / irrational.