Christopher DeVocht, a carpenter from Vancouver Island, Canada, turned a modest investment into a staggering $306 million by betting on Elon Musk’s Tesla Inc. stock. His C$88,000 (approximately $65,000) investment with RBC grew to a fortune of C$415 million (about $306 million) by November 2021, fueled by the pandemic-induced stock surge. However, DeVocht and his advisors chose to hold onto the stocks, leading to significant losses during the 2022 bear market.
DeVocht is now suing RBC and Grant Thornton, alleging they provided inadequate and negligent financial advice, ultimately contributing to the demise of his fortune. He claims the advice he received from RBC and Grant Thornton was flawed, leading to the erosion of his wealth.
One piece of advice that proved detrimental was the suggestion to incorporate a company and roll his securities into it to reduce his tax liabilities. DeVocht was also advised to make charitable donations to lower his tax liability, further diminishing his wealth. RBC also set up margin loan accounts for DeVocht to borrow against his concentrated Tesla stock position for spending purposes, which further amplified his losses when the stock plummeted.
DeVocht’s lawsuit is an initial notice of claim and does not include evidence like brokerage account statements to prove his gains or losses. However, the case highlights the risks associated with concentrating investments in a single stock, especially during volatile market conditions.
It’s important to note that Tesla’s stock has been subject to significant market activity in recent times, making it a risky investment. While the company’s third-quarter deliveries exceeded consensus and grew year-over-year, the stock experienced a plunge in October.
Despite the recent volatility, analysts remain optimistic about Tesla’s future, with the highly anticipated Robotaxi Day potentially being a significant catalyst for the stock. The event could drive the stock further with the unveiling of unannounced items related to Tesla’s autonomous vehicle technology.
DeVocht’s story serves as a cautionary tale for investors, emphasizing the importance of seeking professional advice and diversifying investments to mitigate risks. It also highlights the crucial role of responsible financial guidance in managing wealth and making informed investment decisions.
