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

[MikeAtkinson]

The pound is headed to parity.

Honestly, the whole of Europe is in a huge negative paradigm shift, similar to what occurred in the US in the 1970s. Just like the US in the 1970s, Europe’s global economic standing is going to drop considerably in the next few years.

In the early 1970s the US had to start importing lots of energy after local oil production peaked, competing with Europe and Japan for the same energy resources. The loss of cheaper local energy caused an economic paradigm shift that echoed throughout the industrial economy severely hurting several industries. This was made worse by much of the top engineering talent being siphoned off by the weapons industry.

The same thing, but a little different is happening to Europe right now. Europe has been falling steadily behind the US and Asia in technology. Now because of the mistake of relying on Russia for their energy, they have the highest energy prices in the world, and they will for the foreseeable future. They also have the highest taxes and regulatory cost in the world, and on top of this, their workers work less hours than any workers in the world. They *might* be able to swing this if they were leaders in technology, but as I’ve said above they’ve fallen deeply behind. For instance, California spends more on R&D now than Germany, France and Britain …combined!

Now europe is getting an adjustment just like the US did in the 1970s.

Although the EU and UK share some problems, there are major differences. Both have short term domestic energy production shortfalls and an aging workforce due to demographic changes.

The UK suffers from chronically bad investment, inward investment, workforce training and incredibly bad government. Brexit has destroyed the trading relationship with the EU and there is no sign of replacement any time soon. The London centric nature of much of the economy, investment and policy is a real weakness.

Much of the UK economy is based around very high housing costs, both to buy and rent. This means that ordinary people have most of their wealth in an illiquid asset, or can't build up assets at all if they are renting. This is different from most of EU where housing costs are much less and in some cases super cheap.

The UK planning process is almost as slow and cumbersome as Germany's. It is really difficult to get transport, industrial or energy infrastructure built.

For these and other reasons I think that the EU is likely to suffer a short sharp recession and then grow moderate ly fast, the UK a much longer recession and then struggle to grow.

 

[bkp_duke]

Nice. Good to know we'll definitely be at $400 before the market opens.

Nice to see the accuracy of your predictions has not changed.

 

[M|S|M MYP]

Sorry kids....it's Cup O Noodles for all meals for the rest of the month!

 

[AndrewZ]

The slap down at close was a sign I guess. 10,800 has to hold for the nasdaq or we will re-test lows. Who knows what ends up happening there… If we get a rejection and recovery, would be a large double bottom. But new lows are certainly possible right now.

We have never seen a market bottom while the Fed is in the process of raising rates, I think we'll see the bottom next year when they pause to assess the damage

 

[Nocturnal]

Oh come on.

 

[Zythryn]

Please do excuse my ignorance of how US politics works, and this isn't meant to be a political post at all, but in the event of republican wins in the house, senate, and presidency, wouldn't all of this (the IRA) get cancelled in short order?, or is it a case of once started, it can't be turned back, sort of thing?

No, this was passed by congress into law. Congress can replace/rescind it. However, this is not as easy to do as one might think.

If a President signs an executive order, that can be undone by the next President with a simple signature. This is why executive orders are pretty worthless in terms of long-term issues.

 

[traxila]

Please do excuse my ignorance of how US politics works, and this isn't meant to be a political post at all, but in the event of republican wins in the house, senate, and presidency, wouldn't all of this (the IRA) get cancelled in short order?, or is it a case of once started, it can't be turned back, sort of thing?

Possible, but not likely.

First off, that is at least 2.5 years away.

Second, the way this works in DC, is by the time that rolled around, there will be many entities sucking at the teat of the IRA, entities that would be lobbying hard for the IRA to stay. Since money is money, many of these entities will very probably be ‘conservative’ in political nature.

Third, If the Republicans retake it all, they will probably be focused on different topics and campaign ‘promises’. The IRA probably wouldn’t be worth expending political capital on.

‘Obamacare’ was promised to be repealed, but never was (they did nibble at it), despite Republicans controlling entire government in 2016. Granted, the repeal of the IRA would be much simpler in comparison and more likely successfully repealed if they did target it.

 

[Right_Said_Fred]

We have never seen a market bottom while the Fed is in the process of raising rates, I think we'll see the bottom next year when they pause to assess the damage

This is not correct. According to this article on Marketwatch during the last six rate hike cycles the market bottomed 16, 176, 55, 81, 16 and 0 days before the end of the cycle.

Another positive note: according to this article on Institutional Investor the average return during a rate hike cycle (since 1989) was 55% for the DJIA, 62.9% for the S&P 500 and 102.7% for the Nasdaq.

 

[Unpilot]

Rate hike's...double bottoms....IRA repeals....phhtt.....I'm rage buying.

 

[Artful Dodger]

The "vig"??

vig - Urban Dictionary​

www.urbandictionary.com › define › term=vig
The interest to a loan on the street or through a bookie. It is common to not pay back the principle but have to pay the "vig" or interest weekly to keep your ...

 

[TheTalkingMule]

Nice to see the accuracy of your predictions has not changed.

I'm sorry......did the markets close for the week already???

 

[bkp_duke]

Rate hike's...double bottoms....IRA repeals....phhtt.....I'm rage buying.

Bought some Jan `25 350 strike leaps this AM. Missed the bottom, but am very happy with the purchase.

 

[AndrewZ]

This is not correct. According to this article on Marketwatch during the last six rate hike cycles the market bottomed 16, 176, 55, 81, 16 and 0 days before the end of the cycle.

And according to this article on Institutional Investor the average return during a rate hike cycle (since 1989) was 55% for the DJIA, 62.9% for the S&P 500 and 102.7% for the Nasdaq.

I don't know where the author is getting their numbers from, but they don't align with the charts I'm looking at

Federal Funds Effective Rate

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

Overlay this with the S&P 500

A market bottom while rates are increasing doesn't even make sense conceptually with the way impacts in the real economy lag interest rate changes, despite the market being a forward-looking mechanism. When the Fed finally stops raising, we'll still have months of worsening data to contend with

 

[Unpilot]

Bought some Jan `25 350 strike leaps this AM. Missed the bottom, but am very happy with the purchase.

I looked at the Jan 25 leaps...still too pricey for me.

 

[jkirkwood001]

I very rarely adjust the £/$ rate on my investment spreadsheets, but when I did do it recently - wow what a positive impact on my bottom line

If you use Google Sheets, you can maintain the currency exchange dynamically:

=GOOGLEFINANCE("USDGBP")

0.907805

You can even do historical:

	1-Jan-2022
=index(GOOGLEFINANCE("USDGBP", "close", date(2022,1,1),1), 2,2)	0.7390164

* You could use a cell reference and replace "date(2022,1,1) with a pointer to the date in the upper cell
** The index function is required because a historical googlefinance returns in a matrix, with headings for date and SP

I use this in my spreadsheets for USD-CAD exchange of my TSLA and other US stocks. My personal finance sheet has evolved over the last decade and tracks my net worth to the penny in real time (with parameters for estimated growth of real estate and other fixed assets).

DM me if you need more info.

 

[bkp_duke]

I looked at the Jan 25 leaps...still too pricey for me.

Lots of Theta on them, for sure. But not that much more expensive than the Jun `24 LEAPS.

 

[ZachF]

The London centric nature of much of the economy, investment and policy is a real weakness.

This is probably the UK’s largest weakness, TBH.

In resource economies there is a thing called “Dutch disease” where the presence of large amounts of oil or gas, much much more than you can use, causes your currencies or relative international incomes to rise much higher than would normally be, which then causes the tradable goods sector to be hollowed out. It’s called Dutch disease because this happened to the Netherlands when they found large gas deposits in the 60s/70s.

I think the UK has a version of this (“London disease”?) where the financial services industry in London achieves basically the same effect. If you look at the British economy outside of London, it’s pretty bad… The GDP per capita of cities like Manchester, Birmingham, Leeds, etc are some of the lowest in Western Europe. Manufacturing is only ~8% of GDP now, and R&D spending only 1.7%.

Housing is also a problem, but that is shared in much of the west from years of low interest rates and NIMBYist policies.

 

[ZachF]

WTI has dropped below $80 and crude futures traders are officially considering going back to prostitution as their primary profession.

Powell was right to force the entire globe to deal with this right now. I admit I didn't want him to be so heavy handed, but he did the right thing. Breaking the majority of this inflation now lets us hike at much safer .25 chunks or even pause heading into Nov/Dec/Jan.

It’s demand destruction in China and Europe more so than Powell that’s really causing pain in the oil markets.

 

[Singuy]

I don't know where the author is getting their numbers from, but they don't align with the charts I'm looking at

Federal Funds Effective Rate

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

Overlay this with the S&P 500

A market bottom while rates are increasing doesn't even make sense conceptually with the way impacts in the real economy lag interest rate changes, despite the market being a forward-looking mechanism. When the Fed finally stops raising, we'll still have months of worsening data to contend with

Seems like the market correct or crash according to future predictive of a recession vs the fed rates. I see many instances where the S&P rise with the fed funds rate and crash along with the fed funds rate.

This is the overlay

US - Federal Funds Rate vs. S&P 500 | US Market | Collection | MacroMicro

The chart shows that when the Fed enters a rate-rising cycle, the economy grows faster and the stock market can yield higher returns than the bond market.

en.macromicro.me

 

[Unpilot]

Lots of Theta on them, for sure. But not that much more expensive than the Jun `24 LEAPS.

The problem for me is I am too rational. Every time I look at the Data I think "this is a can't lose buy!" then the market slaps me in the face with a cold dead fish.

For TSLA to be at these prices TODAY is absurd. We all know the positive catalyst's that are underway.

The negative news IMHO really has a small bearing on Tesla's ability to outperform every other Car/Energy/Software company out there.....wait there are no other Car/Energy/Software companies now are there?

Still the price hair cutting continues