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> For example, someone who works in the electric vehicle space could reduce their risk by making personal investments in ICE companies, just in case EV adoption
by UncleMeat 2y ago
> For example, someone who works in the electric vehicle space could reduce their risk by making personal investments in ICE companies, just in case EV adoption is slower than expected.
This works well if the EV industry slows and ICEs are poised to dominate the future. This works very very badly if the vehicle industry as a whole slows and the entire sector tanks.
- mattmaroon 2y agoIt may work in the actual case: EVs are the future, but the longer term future, and the market irrationally decides a company that makes 1% of the cars is worth 50% of the industry because they greatly overestimate how fast the transition will occur and the legacy auto makers (whose stocks have underperformed due to the same bad prediction) have plenty of time to use their substantial advantages to compete.
- spacebanana7 2y agoYeah it only works well for narrowly defined microeconomic risks. However, in sectors like vehicles there's a relatively low risk people will stop car purchases altogether but a very very high risk they'll buy from another manufacturer instead of yours.