There Was a Time When Investors Bought Companies. Increasingly, They Buy Futures.
By Joe Cozart
I was amused by a recent description of investors developing “fresh doubts” about Elon Musk’s ambitions. Fresh is a lovely word in this context. One wonders where the old doubts had gone. Presumably they had been placed in storage while the market attended to the more agreeable business of calculating the value of enterprises that have not yet been built.
There is nothing especially new about speculation, of course. Wall Street was selling tomorrow long before Silicon Valley discovered that tomorrow photographs better with a rocket in the background. Every investor buys some version of the future. The peculiar feature of the present moment is how much of that future can now be included in the price before it has acquired the inconvenience of actually existing.
Musk presents an especially entertaining case because he has made skepticism unusually hazardous. Ordinarily, the sensible man enjoys a considerable advantage over the visionary. He points to the arithmetic, explains why the thing cannot be done, and waits for reality to vindicate his sobriety. Musk has complicated this pleasant arrangement by occasionally doing the thing.
Reusable rockets were once discussed with the solemn patience generally reserved for perpetual-motion machines and relatives with business ideas. Then rockets began landing vertically on platforms at sea. Electric cars were supposed to remain expensive curiosities for wealthy environmentalists. Then they became an industry. The skeptic therefore approaches each new Musk proposition carrying the uncomfortable memory that the last impossible thing may now be sitting in somebody’s driveway.
This has created a marvelous problem for investors.
What exactly are they buying?
A conventional answer would involve automobiles, factories, batteries, revenue, margins and cash flow. These are respectable things. Accountants know where to put them. Analysts can build spreadsheets around them and emerge several hours later with decimal points that lend the proceedings an air of scientific authority.
But that plainly does not describe the entire proposition anymore.
The investor is also being asked to contemplate autonomous transportation, artificial intelligence, humanoid robots, energy storage and whatever additional industry may wander into the conversation before the next earnings call. Some of these ventures may become enormous. Some may become useful but ordinary. Some may remain perpetually five years away, which is one of technology’s more durable units of measurement.
The fascinating part is that the market must put a price on all of them now.
We have consequently arrived at an unusual form of capitalism in which imagination itself has become something resembling an asset class.
This is not quite as foolish as it sounds.
If a man has repeatedly demonstrated an ability to attract extraordinary engineers, raise extraordinary amounts of capital, survive extraordinary industrial difficulties and occasionally turn propositions regarded as absurd into functioning businesses, his next absurd proposition cannot rationally be valued at zero. Past improbabilities alter the probability assigned to future ones.
But neither can they rationally be valued as though they have already happened.
Somewhere between zero and inevitability sits an enormous number, and Wall Street has been trying to discover it.
That may explain more about certain modern valuations than another examination of quarterly earnings ever could. Investors are not simply valuing businesses. They are valuing optionality attached to personalities, technologies and organizations whose future boundaries cannot easily be determined.
The founder himself becomes part of the intangible assets.
Accounting has no particularly satisfying line for this. There is goodwill, certainly, although calling the phenomenon goodwill seems rather like describing Versailles as adequate housing. What is being valued is closer to demonstrated improbability: the possibility that the person proposing the next unlikely enterprise possesses an unusual ability to make unlikely enterprises less unlikely.
This is where things become dangerous, because demonstrated improbability can quietly become presumed inevitability.
The first is evidence.
The second is faith wearing a necktie.
Markets have always been vulnerable to the transformation. A successful prediction encourages another prediction; a successful enterprise encourages another enterprise; eventually the extraordinary becomes expected. The visionary is no longer rewarded for accomplishing the improbable. The improbable has been incorporated into the share price and is now part of the quarterly obligation.
That is an awkward promotion.
Once tomorrow has been purchased today, tomorrow eventually has to report for work.
Robots must become more than impressive demonstrations. Autonomous vehicles must become more than an approaching revolution. Artificial intelligence must eventually produce something beyond increasingly expensive reasons to purchase additional computing power. The future may arrive, but capital has the disagreeable habit of wanting to know when.
This is why I find the current reconsideration of extravagant technological ambition much more interesting than the usual argument between believers and skeptics.
Both sides have an embarrassingly incomplete case.
The believer can point to achievements that were once dismissed and reasonably ask why the next one should be dismissed.
The skeptic can point to the price and reasonably ask how many miracles have already been included.
Neither question can be answered by enthusiasm.
And perhaps that is the strange condition of modern investing. We have become remarkably good at imagining technologies before we have become equally good at valuing the uncertainty surrounding them. A company can simultaneously possess a real business, several plausible future businesses and a collection of magnificent possibilities that exist chiefly in presentations, prototypes and the collective imagination.
All of them somehow arrive at the stock exchange under the same ticker symbol.
The old investor bought a company and hoped for growth.
The modern investor can find himself buying the company, the growth, the industries it may someday enter, the products it may someday invent and the founder’s continuing ability to surprise everyone who has confidently explained why he cannot.
There is undoubtedly value in that.
The difficulty is deciding how much.
And so the doubts have become fresh again.
Perhaps they were never gone.
Perhaps they were simply priced in.
——— GMJoe™ ———
Clarity. Strategy. Sovereignty.
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Joe Cozart is a writer and consultant based in North Dakota. His work explores the intersection of political performance, cultural clarity, and the architecture of power. He is the creator of the GMJoe™ consulting voice and author of several longform essay series exploring sovereignty, institutional systems, industrial civilization, and the recursive tensions shaping the modern age.