An interesting article on the Financial Post here in Canada about business that thrives on…

The tone of the article is much more hostile than I think is warranted. Governments subsidize things they want to promote. If an industry develops to fill that niche, that's not "fake" but capitalism. The nuclear energy example is a very weak one. Nuclear energy is one of the most heavily regulated industries on the planet; if it is not competitive with cheap fossil fuels, that is largely the consequence of government action. On the other hand, as regulated utilities, power producers are not exactly the free market. By the author's reasoning, the biggest "fake" industry is aerospace, which exists solely to take money from the government.

That doesn't mean that a company like Tesla that relies heavily on government investment for its survival (including rebates to customers to lower the purchase price of the product) aren't on shaky ground. The one thing I found telling was the market cap per car sold. Tesla is way overvalued, but that is not the fault of government subsidy. It is the doing of illogical, emotional investors (see what I did there, Sean?).

Yep, FusionDude, I would tend to agree with that. Governments subsidize to encourage activity in a certain area of the economy that they feel needs a start or a boost, etc. And yes, Tesla is grossly overvalued. It's got negative trailing and forward P/E's. I wrote an article about Tesla the last time it has a parabolic move and talked about a crash in the stock. It ended up cutting in half. Now we're into the next parabolic move for Tesla and the sell-off from it could be even worse.

KHYee, thanks for sharing the article. Was good conversation about it.

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