Power and Influence

Elon Musk’s Dignitas

I usually make it a habit to avoid taking surveys. I recently made an exception, however, for a survey from Investing.com when I saw it was on the subject of Elon Musk. Elon Musk, the famous entrepreneur, investor, and personality, has recently come under fire for his mixed signals on the value of cryptocurrency.

The main question of the survey was “Does Elon Musk have too much power?”

Naturally, I scoffed and shouted “no” as I aggressively clicked down on the no button. The entire subject of Elon Musk having “power” was and is quite bizarre. There are very few people as well as institutions that actually have power over markets. True power that is. Elon Musk has something different, which will be the subject of my blog post.

To begin with, let’s start in ancient Rome…

Well, not really, but the Romans had an interesting way of making a distinction between “auctoritas” and “dignitas.” Auctoritas is actual constitutional power as in the power that can be wielded i.e. through legal institutions or military and police power, whereas dignitas is the type of power that comes from personal prestige or influence.  

Another way of looking at this is that Elon Musk cannot force a price on a stock to go up from a legal perspective, but he can give his opinion and because of the fact that he is a famous personality and lots of people think he is a visionary, they invest in stocks and currencies he highlights.

While this is a type of power, the very hair-splitting difference between auctoritas and dignitas or Authority and Personal Prestige as we’ll call them from here on out, is actually essential.

The key is that neither you nor your neighbor is forced to buy a stock or currency simply because Elon Musk highlights it. That would be like saying that Instagram Influencers have power because they can make people go to a restaurant. It’s not power so much as influence, hence the name.

All the investors institutional or otherwise who invested in bitcoin or dogecoin and got burned on the trade because Elon Musk was tweeting for his own amusement and not because he truly believed they were valid investments didn’t ask the key question of investing:

Does this stock have value?

Is the company making money, have the potential to be a game changer in economics or any other sector, or is it a solid company with years of revenue that pays a good dividend, are questions investors need to ask.

Elon Musk’s influential “power” and only comes from him saying things and having money but that does not mean a stock is intrinsically valuable. He can still be wrong. As can anyone else. At the end of the day, you have to put your convictions to the test.

If your investment is something you believe in, you can always be sure that you won’t regret it. But there can be a lot of regret and lost opportunity that comes from investing because a billionaire with nothing to lose wrote a tweet.

I’m Nickolas Urpí

From Emergent Financial Services

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