“The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” ― F. Scott Fitzgerald
I don’t know if it’s me getting older or the world getting more complex—maybe both—but being a nuanced thinker feels more important than ever. Nuanced thinking is the ability to hold subtle, often contradictory ideas about a situation, a person, or an event, and still make sense of it.
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I don’t think nuanced thinking is our default programming. One of the first books my father read to me was Vladimir Mayakovsky’s bluntly titled book of poetry What Is Good and What Is Bad. To be clear, there’s nothing wrong in starting with absolutes—this is how we instill values in our kids. But life is messier than childhood morality tales, because people are complex. The same person can perform both good and bad actions, and even good intentions can lead to terrible outcomes.
We also have to think across timeframes. A decision might be good in the short term but terrible in the long term. Investing thrives on such nuances. The same CEO may be the perfect leader during a company’s growth phase but detrimental in maturity (Uber comes to mind).
Henry Ford revolutionized the automotive industry and was also a vile antisemite. Hitler admired Ford and even mentioned him in Mein Kampf. Should Jews drive Ford cars? That’s not for me to say, but IMA does take a nuanced approach in our investment philosophy: one of our investments, Rheinmetall, is a German defense contractor that made tanks for the Nazis. I personally embrace nuance as well. Richard Wagner, a known antisemite, died six years before Hitler was born, yet many Jews refuse to listen to his music. I respect that, but I personally love Wagner's music. The world is complex.
This brings me to Tesla and Elon Musk.
Last week, I received a lot of responses to my article about Tesla. They ranged from “Stop spewing your anti-right propaganda and stick to data” to “You don’t like Tesla stock. Are you saying your next car won’t be a Tesla?”
Tesla and Musk are full of contradictions. I’ve literally written a (small) book about them – you can read it here.
You can admire what Musk has built with Tesla yet question his ethics in promoting the stock (he made a lot of promises that have not come through, and a lot that have). You can both agree and disagree with his political choices and still think Tesla has achieved something extraordinary in building over two million cars in less than two decades. And at the same time, you can come to a reasonable conclusion that the stock isn’t a good investment—at the present time.
I love my Tesla. But my personal experience and analysis lead me to the conclusion that its Full Self-Driving (FSD) mode is dangerous. I think Musk is wrong to avoid lidar and radar. I’ve learned a lot from Musk. He’s both my hero and anti-hero—a person to learn from both for what to do and what not to do. Life is complex.
The ability to hold conflicting ideas without breaking—this is the superpower of our age.
Vitaliy Katsenelson is the CEO at IMA, a value investing firm in Denver. He has written two books on investing, which were published by John Wiley & Sons and have been translated into eight languages. Soul in the Game: The Art of a Meaningful Life (Harriman House, 2022) is his first non-investing book. You can get unpublished bonus chapters by forwarding your purchase receipt to [email protected].
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