Elon Musk, Jeff Bezos, and Warren Buffett: Stocks, NOT Bitcoin, Made Them Rich

A recent rally in Bitcoin prices has made the cryptocurrency market hot again. While it might look like a good option to quickly get rich, it could be the worst investment decision of your life. Here’s why.

| More on:
analyze data

Image source: Getty Images

Tesla CEO Elon Musk became the world’s richest person earlier this month — surpassing Amazon founder and CEO Jeff Bezos’s wealth. While Musk is known for his positive outlook on cryptocurrencies, it’s not Bitcoin or any other cryptocurrency that made him the richest person on the planet. Let’s take a closer look.

Tesla stock made Musk the world’s richest person

Tesla’s shares rose sharply by 743% in 2020 after witnessing years-long roller-coaster ride. The stock has seen a 17% rise in January so far. These gains helped Musk to claim the world’s richest person’s title.

About a couple of years ago, Musk said cryptocurrency “is a far better way to transfer value than pieces of paper” and called the blockchain technology “quite brilliant.” Nonetheless, he has never publicly revealed that he owns any cryptocurrency. And even if he secretly does own any little amount of cryptocurrency, the largest portion of its wealth still undoubtedly came from a sharp rise in his electric car company’s share prices.

Most businesses — including auto companies — faced big challenges last year due to the global pandemic. But surprisingly, the demand for electric cars continued to soar last year. The surging demand for EVs — along with Tesla’s improving fundamentals — triggered a buying spree in its stock.

Stocks are better than Bitcoin

Despite a phenomenal surge in Bitcoin prices last year, the uncertainties about its future remain intact. The world’s most renowned investors — including Warren Buffett — don’t consider Bitcoin or any other cryptocurrency worth investing in. That’s one lesson many new investors and traders learn only after losing a big portion of their hard-earned money, unfortunately. Bitcoin’s 2018 crash was a great example of how small investors can lose billions of dollars in no time.

In contrast, investing in stocks is more sensible when estimating the potential return on investment and assessing risks to your portfolio. Overall, it’s all about investing in the stocks and businesses that have made Musk, Bezos, and Buffett, some of the world’s richest persons.

A great Canadian EV stock to buy now

If you’re thinking of buying Tesla stock, you might have already missed the train as it’s already overvalued. However, Canadian investors still have an opportunity to get Tesla-like returns by investing in some good cheap companies that are betting big on the ongoing EV revolution.

For example, Magna International (TSX:MG)(NYSE:MGA) could be a great investment option right now. The shares of this Aurora-based mobility technology company jumped up by 48% in the fourth quarter. If you invested $2,000 in its stock at the end of Q3 2020, it would have turned into more than $3,000 by now.

Magna International last month partnered with LG Electronics — the South Korean tech giant — to make e-motors, inverters, onboard chargers, and e-drive systems. This partnership is likely to expand Magna’s presence in the fast-growing electric car segment. That’s why I find the company to be well positioned to take advantage of rising EV demand under the leadership of its recently appointed well-experienced CEO, Swamy Kotagiri.

Bottom line

The recent surge in Bitcoin prices might attract you, but it’s extremely risky, and this mistake could cost you dearly. That’s why investing in well-established businesses as well as in good growth companies’ stocks for the long term is a far better and safer way to get rich — just like many of the richest people in the world.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon and Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns shares of and recommends Amazon and Tesla. The Motley Fool recommends Magna Int’l and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Personal Finance

Female hand holding piggy bank. Save money and financial investment
Personal Finance

Here’s Why a Big Emergency Fund Is a Terrible, Terrible Idea

Here's why saving more than six months' worth of expenses can be disadvantageous to your household.

Read more »

cup of cappuccino with a sad face
Personal Finance

5 Super-Simple Ways to Completely Ruin Your Credit Score

Building your credit score takes time, dedication, and smart decisions. Tearing your credit score apart — well, you could do…

Read more »

Young woman sat at laptop by a window
Personal Finance

5 High-Paying Side Hustles That Could Help You Save for Retirement in 2022

If you're struggling to save for retirement, here are five side gigs that could give your retirement fund a boost.

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Personal Finance

The Tax Deadline Is Almost Here! Here Are 5 Things You Need to Know if You Haven’t Filed Yet

The deadline to file your taxes is May 2. If you haven't started yet, here's what you should know.

Read more »

consider the options
Personal Finance

New to Investing? Be Sure You Avoid These 5 Newbie Mistakes

If you're new to investing, here are five big mistakes you should watch out for.

Read more »

Couple relaxing on a beach in front of a sunset
Personal Finance

Lazy Canadians: Here’s How You Can Make $200 Per Week in Passive Income

To earn $200 a week, invest money in high-quality stocks or ETFs.

Read more »

gas station, convenience store, gas pumps
Personal Finance

Costco vs. Canadian Tire: Which Rewards Card Will Save You More on Gas in 2022?

The CIBC Costco Mastercard earns 3% back at Costco Gas, and the Canadian Tire Mastercard earns 10 cents per litre.…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Personal Finance

Finally! Apply for a CIBC Costco Mastercard Now to Get a Welcome Bonus!

From now until December 31, 2022, CIBC will give you a welcome bonus on the new CIBC Costco Mastercard.

Read more »