The economy is either headed for a recession or it isn't. This is a pretty binary event. If it is not, then buying TSLA here and averaging down is the right thing to do. But if it is, then buying here is a risky proposition, moreso than people think. Buying based on TSLA's fundamentals in the face of macro markets going the other way is a particularly dangerous proposition. Because even as TSLA's fundamentals continue to improve, the equity markets can price assets completely differently in a bull market environment compared to a bear market.
From 2007 to 2008 AAPL's revenues increased by 50%, while its stock price declined by 60%.
From 1999 to 2001 AMZN's revenues increased by almost double, while its stock price declined by 95%.
Now, that was in the midst of an internet bubble and a financial crisis, neither of which I believe to be the case today. So do not take this as alarmist, because I DO NOT think TSLA will be hit that hard. However, the point is, improving fundamentals is no guarantee of an appreciating stock price when there are macro headwinds. Even if we only get a run of the mill recession here, which to me is the most likely bear scenario(not 2000 or 2008), TSLA can still be impacted quite a bit. Again, in a bull scenario where we avoid a recession, now(200) is the time to buy.
Now does that change the long term story in the event of a recession? No. Indeed, AMZN and AAPL are both up tremendously even from their 1999/2007 highs. But, the point is this, had you started buying too early, you would have run out of powder when the real buying opportunity came. Or worse, lost everything before the eventual rise.
With that in mind, where are we now? At the end of a bull market correction? Then buy. Or at the beginning or a bear market(even if it is a mild one)? Then sit tight, or even hedge.
I cannot answer that question for you guys. But just know that it IS a question. Not a certainty. Something I do not see enough people asking themselves.
