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Tesla Investor's General Macroeconomic / Market Discussion
- Thread starter FluxCap
- Start date
So, for me I am now 55% cash. One reason is I have been holding on to more cash lately in case Tesla continues its range-bound trading. So I bought a lot at $180 and now I am down to my normal Tesla position again. Second, the Shiller PE ratio is 28.2. I want dry powder for the overall stock market as well. Also, Donald Trump looks to be keeping his campaign promises for the most part and that will lead to considerable uncertainty. When the election looked to be going his way at first the futures were down 700 points or so to what I believe is Dow 17,000. I don't see any reason we might not find ourselves back in that range fairly quickly here as hope turns to uncertainty. Of course the short term is more unpredictable than anything so who knows but I feel that there is very little to keep a bull market afloat at this time.
Perhaps strangely, I consider Tesla to currently be a countercyclical stock which will trade better than the market in case of general economic problems, so I've been selling other stuff and buying even more TSLA. ....
I could be totally wrong.
I could be totally wrong.
palmer_md
Member
When I read this comment in November, I just thought it was you blowing off some steam, but it seems you've held true to your statements. I hope all is well with you and I wish you the best in whatever you're pursuing at this point. I just wanted to say that I miss reading your insights and world view on economics in general. Best Wishes, Michael
Very kind thoughts, thank you! I honestly have had a bunch of other work and personal life events dominate my time for the last few months, but am hopefully, finally coming up for air. In retrospect, that post was definitely the political FluxCap blowing off steam in frustration. However, the investment management FluxCap has enjoyed a nice TSLA gain since the 180's along with many of the rest of you. I'll try not to be too much of a stranger, as long as there isn't an Executive Order banning FluxCap anytime soon. ;-)
Oh boy. I've actually been debating this a lot. There are so many different risks in readiness. I couldn't tell you, honestly. Some possibilities:
-- interest rate raises catch overextended speculators, like 1987
-- fraud level is too high, major fraud discovered and money rushes to safety
-- P/E ratios are consistently unsupported by earnings growth, usually causes long-run bear market rather than crash
-- shutdown of international transfer payments, capital controls, tarriffs, protectionism catch companies unawares, pre-WWI crash scenario: likely to cause trading halts and stock market closures
-- debt deflation crash, such as 2008 or 1929
-- Oil collapse driven crash (this is the only one where I have a good sense of the timeline)
-- domestic political instability crash, last seen in the US during the post-Civil-War period: likely to cause trading halts and stock market closures
Which one happens first? Who knows. I think all of them are likely to be years from now, but they could happen sooner than I think. We're kind of set up for *all* of these right now.
We're in more trouble if they happen *simultaneously*. If the shoes drop independently and separately you get a lot of little corrections and investors have time to rearrange their portfolios. If they drop simultaneously, people's hedges fail to hedge and things cascade quite spectacularly. Perhaps the biggest overhang is the debt deflation problem because those tend to smash everyone's hedges.
Tesla is remarkably insulated against most of these risks, though not all of them (severe shutdowns in international trade would hurt a lot though they are more insulated than most companies; debt deflation would create a financing problem but again they have better collateral than most companies, and once they have internally generated profits on a consistent basis they'll be much more safe against that; nobody can fully protect against domestic political instability but Tesla is in a better position than most).
MitchJi
Trying to learn kindness, patience & forgiveness
We've been discussing this over in the "Shorting Oil, Hedging Tesla" thread. 2023. Plus or minus 5 years, but honestly I think it'll be pretty close to 2023.
That's for the permanent collapse of oil prices, with the waves of bankruptcies to follow later over the course of a decade, so the general stock market response could be delayed.We've been discussing this over in the "Shorting Oil, Hedging Tesla" thread. 2023. Plus or minus 5 years, but honestly I think it'll be pretty close to 2023.
Wonder if this is one of the reasons why Buffet is suddenly long airlines (aside from the oligopolies that has developed).
A number of us on TCM have invested over many decades and based on that experience conclude (and have recommended from time to time)
-the best approach is passive long term stock picking and low cost Index Funds (ETFs).
Looks like we are in good company
Interesting weekend read (part of recent Oracle reveal)
I love the bet he made (and won)- Enjoy
Buffett slams Wall Street 'monkeys', says hedge funds and advisors have cost clients $100 billion
-the best approach is passive long term stock picking and low cost Index Funds (ETFs).
Looks like we are in good company
Interesting weekend read (part of recent Oracle reveal)
I love the bet he made (and won)- Enjoy
Buffett slams Wall Street 'monkeys', says hedge funds and advisors have cost clients $100 billion
No cuts to U.S. entitlement programs in Trump budget: Mnuchin
So now we know: Trump's budget plan is pure borrow-and-spend -- blow a giant hole in the budget by cutting taxes and increasing spending. Doesn't surprise me at all because it's what Reagan did.
So now we know: Trump's budget plan is pure borrow-and-spend -- blow a giant hole in the budget by cutting taxes and increasing spending. Doesn't surprise me at all because it's what Reagan did.
I do love this myself.
Notice that Buffett made his bet in a very careful way. He picked "funds of funds" and specifically ones which invested in hedge funds. Hedge funds have a ludicrously high fee structure to start with, and "funds of funds" add another layer of fees.
Buffett wasn't about to make a bet that there wasn't someone who could beat the market. He was betting that the fees would exceed any possible degree by which they
would beat the market, and he picked a category with exceptionally high fees.
He's repeating my First Law of Investment Advice: if an investment manager can beat the market, their fees will exceed the degree by which they can beat the market.
(For reference, my Second Law of Investment Advice: if you are capable of identifying a competent investment manager, you are also capable of just doing the investments yourself.
Put these two together and you get some interesting conclusions about the very narrow circumstances under which it makes sense to hire an investment manager of any sort: you must be capable of doing the investments yourself, but want to spend your time doing something else, and you must be willing to pay a premium to have that time available. Few people are even capable of beating the market on their own; how many of those people *also* are so competent at something else that it's a better use of their time and money?)
MitchJi
Trying to learn kindness, patience & forgiveness
Exactly - text book definition of Reaganomics:
In a comment suggesting that Trump's budget and tax plans may use aggressive revenue assumptions, Mnuchin said the administration "fundamentally believes in dynamic scoring," a budget calculation method that assumes that a lower tax burden boosts revenues by encouraging economic activity.
A little off topic (kinda?):
Interview with Jim Chanos, Dec 2016:
Chanos: Is a big change underway in global capitalism?
Interview with Jim Chanos, Dec 2016:
Chanos: Is a big change underway in global capitalism?
Indeed. Markets have been FULLY expecting a borrow-and-spend fiscal stimulus package from Trump that pads corporate bottom lines. If it looks like that may not happen or will be significantly delayed, I think we can expect a sharp market-wide correction downwards.
Aside: Goldman TSLA downgrade this morning is honestly laughable - a $5 price target reduction based on conjecture that has little merit. Still, I'm cautious about adding shares now as I think Tesla has returned to a bit of its "momo" stock status and just as buying begets buying, selling can beget more selling. Hunting for an entry point for some trading shares, myself.
Brutal
Cox: Snap IPO marks moment investors donned sweats
"
As for the price they paid, Seattle venture capitalist Erik Benson estimates Snap went for a near-50 percent premium to Facebook, which at the time was making $1 billion a year – compared to Snap's $515 million net loss in 2016. "If SNAP does have a successful IPO, I’m moving all of my investments to cash as it will be the leading indicator of market peak,” said the Voyager Capital partner. Benson's broker will be a busy man today. Snap surged by more than a third to $24 when trading opened.
If numbers are confusing, there are other reasons for investors to truly dislike Snap. The most important is the precedent it sets by offering stock that confers zero voting power. That is why calling them "shares" is an insult to, well, sharing. For now, they really should be considered rights to participate in Snap's losses. The total control this IPO structure has conferred to Spiegel and his co-founder Bobby Murphy is totally without precedent on Wall Street.
"
Wish he wouldn't sugar-coat it like that
[Makes me glad to be in TSLA at its current valuation frankly]
Cox: Snap IPO marks moment investors donned sweats
"
As for the price they paid, Seattle venture capitalist Erik Benson estimates Snap went for a near-50 percent premium to Facebook, which at the time was making $1 billion a year – compared to Snap's $515 million net loss in 2016. "If SNAP does have a successful IPO, I’m moving all of my investments to cash as it will be the leading indicator of market peak,” said the Voyager Capital partner. Benson's broker will be a busy man today. Snap surged by more than a third to $24 when trading opened.
If numbers are confusing, there are other reasons for investors to truly dislike Snap. The most important is the precedent it sets by offering stock that confers zero voting power. That is why calling them "shares" is an insult to, well, sharing. For now, they really should be considered rights to participate in Snap's losses. The total control this IPO structure has conferred to Spiegel and his co-founder Bobby Murphy is totally without precedent on Wall Street.
"
Wish he wouldn't sugar-coat it like that
[Makes me glad to be in TSLA at its current valuation frankly]
The state of the markets and the macroeconomy in general is one reason I've ended up highly concentrated in a very small number of stocks. There's so many things which could trash the broader markets that I want to make sure I've invested in something with real, tangible (i.e. factories, not virtual) value, whose business won't collapse due to a tariff war (short supply chain!) or policy change (waitlists for purchase!), which is on the right side of the global energy transition, and which has decently high barriers to new competitors (i.e. capital intensive).
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