Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[larmor]

Considering the Chinese government turned off power plants during the Beijing Olympics just to have clear blue skies for the world to see, shutting down a city is like meh in the scale of importance and you are reading way too much into this. The government trying to contain a potential serious illness but you are here spreading fear like this is the movie "outbreak". Calm yourself. So far the mortality rate is 4% from a country that doesn't even have ample supply of anti virals AND the Chinese people see a doctor when they are potentially dying because that's our culture. So consider these biases before making your assessments.



Disclaimer: I am Chinese and a health care professional.

Adding to this tangentially, i had chance to visit one of the largest hospitals in Shanghai (3500 beds) earlier in the year, and it was a well oiled machine. The radiology department had state of the art PET/CT, PET/MR as well as the latest CT and MRI 3T(esla) scanners, operating smoothly and extremely efficiently.

 

[FreqFlyer]

View attachment 504686

I bet you 99% of the public who saw Trading Places have no idea or concept how those two got rich and bankrupted the brothers was by shorting the Orange Juice futures.

What Actually Happens At The End Of 'Trading Places'?

 

[MC3OZ]

Five years ago I would have predicted Tesla's non-Chinese competitors would be shipping around 500K quality EVs per year at good prices by 2020.

I didn't buy the "Tesla Killer" or "Competition" narrative as there were plenty of ordinary ICE cars that can be displaced in the market... IMO we will get serious competition when EVs are shipping in higher volumes and are at least 80% of the new car market.
So what is true, and IMO is slightly surprising is, that the transition to EVs is proving much more painful and difficult for car makers than we expected, so far dealers are largely immune, but but that can't last...

So I have a hunch around two years ago Tesla may have sensed that the competition was slower to arrive than previously expected, so they scaled up their plans. They were right to do so, if anything the opportunity for Tesla is getting bigger all the time.,.. for the time being, and like all opportunities, they need to take it while it is there....

So I don't think Tesla needs to slow down to make life easier for the completion or try to help them out.... if the competition are not already highly motivated, they soon will be...

In terms of the mission, the more Tesla does and the sooner they do it, there is less for others to do, and almost certainly much more motivation for others to more and do it faster....

And I also think the competition are learning their lessons and are not far off improving, ... maybe...or perhaps maybe not... time will tell.

 

[StealthP3D]

There's no doubt in my mind that they gonna prevent people from going into Beijing and Shanghai for weeks or longer. Consider GF3 production impact a given fact. And there are maybe other negative effects. Sure all manufacturer activity and the entire economy would be impacted.

I'm not yet convinced that the city or region around Shanghai will be completely "locked down" for weeks or longer. It's more likely a way to strongly discourage optional travel and make people take it seriously while demonstrating the government is being pro-active. Even if the worse case comes to pass, it will only delay the blossoming of Giga-Shanghai, not cripple it forever. These things always pass.

As to Fremont and Nevada Giga's, very minimal impact as there is not a huge amount of China content and Tesla dual-sources components much like Apple.

Am I saying this will not impact Tesla's valuation? Of course not - it almost certainly will have at least some impact and it might even seem to be a sharp reaction, at least briefly. But these things always sound worse when we don't know what's coming, how bad it will be and how long it will last. In the bigger picture, events like this are rarely more than a small bump in the road. In light of this, the bigger picture, I'm surprised at the short-sightedness and nervousness displayed here. It makes me think there are a lot of people participating in the markets that don't have a constitution that lends itself to being a successful investor.

And this is coming from someone that has significant call options expiring this Feb. 7th and 21st (and a sugar-load of shares). To tell you the truth, I'm hoping it will drop sharply tomorrow so I can pick up some more at more reasonable prices. But if it's just a little drop of 10% or less I'll probably just stay put. Remember the words of the most successful investor in the history of mankind, "Be fearful when others are greedy and greedy when others are fearful." This has worked wonders for me more times than I can count, most recently when I doubled my TSLA position at $184 and bought a bunch of cheap, out-of-the-money calls afterward. This was when popular news stories and interviews with "experts" were predicting Tesla was going to zero.

 

[Buckminster]

It may just be me but I feel like there has been an increasing hostility between people over the last few weeks, which seems odd given everyone should be pretty happy given what the stock did. I recall seeing some very well known and active members who contribute excellent info on a regular basis appear to be at each others throats due to differing opinions how much more the stock would go up, which unto itself seems like a ridiculous think for a bunch of bulls to be arguing about. I realize investing is serious business, but there seems to be a level of politeness missing that was the norm before. Sorry if its just me who feels that way.

I noticed it after the spike to 500+ SP. People have made good money - testosterone and ego are high - collisions of newly anointed alpha males from 100 troops all in 1 place.

Just wait till rutting season...

 

[Green Pete]

I'm not yet convinced that the city or region around Shanghai will be completely "locked down" for weeks or longer. It's more likely a way to strongly discourage optional travel and make people take it seriously while demonstrating the government is being pro-active. Even if the worse case comes to pass, it will only delay the blossoming of Giga-Shanghai, not cripple it forever. These things always pass.

As to Fremont and Nevada Giga's, very minimal impact as there is not a huge amount of China content and Tesla dual-sources components much like Apple.

Am I saying this will not impact Tesla's valuation? Of course not - it almost certainly will have at least some impact and it might even seem to be a sharp reaction, at least briefly. But these things always sound worse when we don't know what's coming, how bad it will be and how long it will last. In the bigger picture, events like this are rarely more than a small bump in the road. In light of this, the bigger picture, I'm surprised at the short-sightedness and nervousness displayed here. It makes me think there are a lot of people participating in the markets that don't have a constitution that lends itself to being a successful investor.

And this is coming from someone that has significant call options expiring this Feb. 7th and 21st (and a sugar-load of shares). To tell you the truth, I'm hoping it will drop sharply tomorrow so I can pick up some more at more reasonable prices. But if it's just a little drop of 10% or less I'll probably just stay put. Remember the words of the most successful investor in the history of mankind, "Be fearful when others are greedy and greedy when others are fearful." This has worked wonders for me more times than I can count, most recently when I doubled my TSLA position at $184 and bought a bunch of cheap, out-of-the-money calls afterward. This was when popular news stories and interviews with "experts" were predicting Tesla was going to zero.

You could call it weak constitution or hedging. I have a calls expiring in a year that I haven't touched since I got. Others I picked up last Monday for Feb March and April expiry. I let go of them Friday afternoon having had a pretty good 5x return and being concerned about the short term ramifications over the weekend. I'll likely pick up short term options again before earnings and let them go depending on how china looks.

I don't think playing safe on the weekends with a major country cutting off entire cities is weak constitution. But that's just me. I mean you sold those jan 2021 a few weeks ago. I could call that a constitution thing or you could call it hedging too.

 

[hobbes]

Here's a (very) fresh summary of all scientific Wuhan coronavirus R0 estimates:

View attachment 504645​

The freshest estimate is the highest, by Chinese authors - presumably based on very fresh data.

Here's a specific infection case study from The Lancet:

View attachment 504647​

The important takeaway is that infection in most cases seems flu-alike, and that Patient 6, a young child of the family, remained uninfected due to the use of facemasks.

Wikipedia article already has R0 of 3-5 listed (Corona virus is called 2019-nCoV here) which matches your sources. Similar to SARS.
Basic reproduction number - Wikipedia

 

[Singer3000]

You are quoting facts without context. Pro-active decisions should be seen in a much different light than reactive decisions. My take is that the Chinese are being very pro-active. If you are capable you can muse about the effect of these decisions on Tesla production while they are in effect but you should not infer anything about the severity of outbreak based on the steps taken.

To those with an interest in the wider macro effect I can only pass on what is happening in Singapore. In the last hour or two the government has announced a compulsory 14-day leave of absence for all kindergarten children, school and university students and all employees of said educational establishments who have recently visited mainland China.

Following this, I would not be in the least surprised if a large chunk of the island's private companies enact work from home provisions for their employees, whether those employees have visited China or otherwise.

This may seem an excessive step to those of you sitting in Chicago or California or Alaska but to put this into context: Singapore's director at the National Centre for Infectious Diseases yesterday estimated that 20% of those infected will become "very ill".

And hence quite unsurprisingly the Minister for Trade has today warned that the outbreak will "impact Singapore's economy, business and consumer confidence" without specifying the severity.

To those investors on here saying "who care's about this virus, X thousand die from flu every year". You should consider that the reaction of governments in Asia is quite unlike anything we have seen. You are free to muse why this might be. From a human perspective, hopefully this is a case of excessive caution while the facts are still forming. But even if this is the case and all we are looking at is another swine flu, from an economic perspective, there is going to be a considerable knock anyway. Any global economist is no doubt already looking at their 2020 forecasts and tweaking their spreadsheets.

From an investor perspective, none of this matters much if you are a DaveT style buy long and hold strong. But things might get choppier for those trying to time the market, with or without leverage. Anyhoo, this is the last I'll say on the matter in this forum as I consider my duty to share my caution to have now been discharged.

 

[2Pearls]

To those with an interest in the wider macro effect I can only pass on what is happening in Singapore. In the last hour or two the government has announced a compulsory 14-day leave of absence for all kindergarten children, school and university students and all employees of said educational establishments who have recently visited mainland China.

Following this, I would not be in the least surprised if a large chunk of the island's private companies enact work from home provisions for their employees, whether those employees have visited China or otherwise.

This may seem an excessive step to those of you sitting in Chicago or California or Alaska but to put this into context: Singapore's director at the National Centre for Infectious Diseases yesterday estimated that 20% of those infected will become "very ill".

And hence quite unsurprisingly the Minister for Trade has today warned that the outbreak will "impact Singapore's economy, business and consumer confidence" without specifying the severity.

To those investors on here saying "who care's about this virus, X thousand die from flu every year". You should consider that the reaction of governments in Asia is quite unlike anything we have seen. You are free to muse why this might be. From a human perspective, hopefully this is a case of excessive caution while the facts are still forming. But even if this is the case and all we are looking at is another swine flu, from an economic perspective, there is going to be a considerable knock anyway. Any global economist is no doubt already looking at their 2020 forecasts and tweaking their spreadsheets.

From an investor perspective, none of this matters much if you are a DaveT style buy long and hold strong. But things might get choppier for those trying to time the market, with or without leverage. Anyhoo, this is the last I'll say on the matter in this forum as I consider my duty to share my caution to have now been discharged.

Thank You

 

[Fact Checking]

I'm not yet convinced that the city or region around Shanghai will be completely "locked down" for weeks or longer. It's more likely a way to strongly discourage optional travel and make people take it seriously while demonstrating the government is being pro-active. Even if the worse case comes to pass, it will only delay the blossoming of Giga-Shanghai, not cripple it forever. These things always pass.

Agreed, and I've also seen two (anecdotal) reports that many GF3 employees didn't travel back home for the lunar new year, as a precaution, and that Tesla GF3 has introduced new, stricter health measures at the factory.

If the quarantine of Wuhan works we should see a peak in new cases and a drop-off in about 1-3 weeks. Even if Shanghai introduces new containment measures, the road traffic of supplies would be among the last impacted, because that's how food is transported too. To not throttle economic activity while maximizing containment must be a top priority of Chinese officials.

If things get worse there will be early warning signs, such as more major cities quarantined.

 

[Ameliorate]

Not getting many updates on the frankfurt market but seems pretty Okay so far

 

[Mike Smith]

I'm not trying to glorify Elon with this, it's for people here who didn't know much about Kobe to see what kind of guy he was in an understandable context.

 

[Artful Dodger]

Not getting many updates on the frankfurt market but seems pretty Okay so far

NASDAQ-100 Futures down 1.5% as of 02:51 EST

Frankfurt regular trading hrs started at 09 hrs CET, or 03:00 in New York: (chart via Google)

497.10 EUR = 548.48 USD Jan. 27, 9:01 a.m. GMT+1 (dn 1.70x vs macros; dn 2.89% vs Friday)

Due to Friday's Closing, 508.33 intraday would invoke the "uptick rule" restricting short selling.

The Mid-BB at Friday's Close was 489.94

 

[Fact Checking]

501.20 EUR = 553.15 USD Jan. 27, 8:26 a.m. GMT+1

However, Frankfurt doesn't start regular trading hrs for about 30 minutes.

The drop so far is roughly in line with the macro index drop.

Frankfurt trading opens at 8am, I.e. has been open for ~30 minutes already.

 

[MC3OZ]

Agreed, and I've also seen two (anecdotal) reports that many GF3 employees didn't travel back home for the lunar new year, as a precaution, and that Tesla GF3 has introduced new, stricter health measures at the factory.

If the quarantine of Wuhan works we should see a peak in new cases and a drop-off in about 1-3 weeks. Even if Shanghai introduces new containment measures, the road traffic of supplies would be among the last impacted, because that's how food is transported too. To not throttle economic activity while maximizing containment must be a top priority of Chinese officials.

If things get worse there will be early warning signs, such as more major cities quarantined.

Surely Tesla can also implement reasonable safety precautions...

e.g.
1. Have all employees fill in an online survey before returning to work...or ASAP after starting work... travel details, social contacts, health status..
2. Employees who have travelled to at risk areas, or been in contact with people who have been to at risk areas, stood down for a few weeks with full pay .. or until they can be totally cleared by a screening test.
3. Work Roster favour employees who did not travel, or did not travel far... (hiring new staff earlier if this helps, and is needed)
4. Precautions at work, face masks, hand washing ... briefings... etc

So there is a cost in risk minimisation, but surely a lot risk minimisation can do and worth doing in this case...

 

[Fact Checking]

Agreed, and I've also seen two (anecdotal) reports that many GF3 employees didn't travel back home for the lunar new year, as a precaution, and that Tesla GF3 has introduced new, stricter health measures at the factory.

If the quarantine of Wuhan works we should see a peak in new cases and a drop-off in about 1-3 weeks. Even if Shanghai introduces new containment measures, the road traffic of supplies would be among the last impacted, because that's how food is transported too. To not throttle economic activity while maximizing containment must be a top priority of Chinese officials.

If things get worse there will be early warning signs, such as more major cities quarantined.

Update, this just got announced by the Shanghai government:

Global Times on Twitter

"Enterprises in Shanghai should not resume work before 12 pm on February 9 and all kind of schools including universities, high schools, primary schools, vocational schools, kindergartens and nursery schools should not start the new semester until February 17: Shanghai Government"​

I suspect "enterprises" includes GF3 too.

The Lunar New Year ends on February 2, so this is an at least one week extension for businesses, and an at least two weeks of shutdown of schools, kindergartens and universities.

Next steps would be restrictions of road traffic (long distance bus traffic got stopped yesterday already: this is the cheapest and most common form of transportation used by migrant workers), and the banning of inter-provincial travellers from entering Shanghai.

Again, like in Beijing, these are well choreographed, aggressively proactive containment measures - very different from the SARS reaction which was slow and reactive.

China's primary strategy appears to be to ride it out in Wuhan via a full quarantine, and to slow the spread elsewhere via clever use of the Lunar New Year, where people are at home among family and friends in relative safety. By prolonging the "vacation" they take the edge off the disruption and also make sure people relying on wages to sustain themselves aren't trapped in big cities without sources of income.

Previously I didn't understand why China waited for people to travel for the new year festivities (because this was a transmission risk) - now I'm reasonably certain it was intentional to depopulate big cities voluntarily while infection levels are low, and move workers back home to relative stability, and that most of this was part of a systematic, proactive response.

But I could be wrong, and it would take time for the markets to realize this and stop panicking, so this is not advice.

 

[UnknownSoldier]

Good thing these calls don't expire until March and April. I can ride this s**t out for awhile at least. If I had known about this outbreak earlier, they would have been even further out. Let's see what happens when earnings start coming out though. 135 companies are reporting earnings this week. If earnings are good, there will be a general pushback against macro.

 

[lklundin]

Is this true even for relatively large blocks like the multi-hundred hectare Tesla site, or is that policy only for relatively small urban locations? As an example, why then would the survey teams thereupon stop at the plot's boundary, as opposed to including at least _X_ meters further out along the peripheral boundaries?

Good question. I don't know how the boundaries of the area to survey are determined.

Demolitions are usually prepared such that all charges and their detonators are placed - and then everything is detonated simultaneously (either with detonation cord for small distances or else electrically). Otherwise one detonation could disturb the other charges and their detonators.

Yesterday we heard four, separate detonations. They appeared so close in time that all the demolitions clearly were prepared before the first detonation. So apparently each detonation (incl. whatever effect the aerial bomb could have) was deemed unable to disturb the setup of the subsequent demolitions.

The reason I argue that the whole site would have been surveyed and all ordnance prepared for demolition before the first detonation, is that the old aerial bomb fuzes are extremely unstable so the subterranean chock wave can bring one closer to detonation. So when the first detonation goes off, you don't want to have to touch or otherwise work with any other bombs in the area, since a detonation could have brought them to the point were the smallest disturbance could trigger them.

If a bomb lies buried undetected outside the area to be cleared, then it is not going to be touched or otherwise worked with so the concern must be less regarding how it may be impacted by the chock waves of the detonations.

 

[Fact Checking]

The reason I argue that the whole site would have been surveyed and all ordnance prepared for demolition before the first detonation, is that the old aerial bomb fuzes are extremely unstable so the subterranean chock wave can bring one closer to detonation.

Btw., I think after 75 years lying in forest ground (sand mostly), being soaked in water for every bigger rain, I'm pretty sure there's little left of the bomb casing and the detonators.

Such old bombs are still dangerous and still kill even today, but mostly in urban environments where random chance would protect them from moisture and preserve them - or planned but forgotten about ammunition storage that could have protected them from moisture.

The bomb clearing team here likely didn't take any chances and followed standard operating procedures that are designed for the worst-case - but in reality these bombs were likely inert for a long time.

 

[JBRR]

As predicted by many, the real numbers are a magnitude higher than the observed numbers.

Xinqi Su 蘇昕琪 on Twitter
Key takeaway so far
1, Wuhan is estimated to have over 25,000 confirmed cases and over 43,000 infections
2, Wuhan lockdown doesn’t really help to stop spreading in other major cities in China
3, Chongqing can be the most affected,followed by Beijing Shanghai Guangzhou Shenzhen"

This is the correct way to model:
Nassim Nicholas Taleb on Twitter

Nassim Nicholas Taleb on Twitter