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☕ If you are worried about Tesla, read this

Jan 12, 2024

Good morning! 👋

I hate to say that I “told you so” because that’s not my style.

In this case, I did.

I wrote to you Monday about today’s inflation data saying that, "If the data suggests inflation continues to weaken, [traders] will see that as reason for the Fed to justify cutting rates or at least holding ‘em steady for longer. And buy.’”

Guess what?

Wholesale prices fell 0.1% unexpectedly and futures that had been firmly in the red this morning immediately turned higher. All three indices remain green as I type. (Read)

I have no idea whether that’ll continue for the balance of the day; I could just as easily have been wrong. That’s how the ol’ ball bounces.

The key point and the one I want to drive home is this.

Our job as investors is to focus on being profitable.

Being right is gravy.

Here’s my playbook.

1 – Wells Fargo bucks the banks??!!!

I couldn’t believe my eyes when I read the headlines.

Wells Fargo, which has been the poster child in recent years for poor behavior ranging from opening ghost accounts, to hiring practices, to cash sweep options and more, posted higher Q4 profits helped by rates and cost cutting. BoA, Citi, and JPM all fell.

I’ll still take JPM any day of the week, though.

The earnings hit is because of a $2.9B fee related to government seizures of failed regional banks last year. CNBC reports that JPM’s revenue climbed 12% for the quarter to $39.94B. (Read) What’s more, full year results hit a record. (Read)

Time to do a little shopping, me thinks.

2 - If you’re worried about Tesla read this

Reuters is reporting that Tesla is the first company to say that Red Sea attacks are impacting output. Unka Elon is apparently going to stop the company’s Berlin production line for 2 weeks. (Read)

Scores of investors are flipping out.

My advice?

First, don’t kid yourself, you are not an investor if this bothers you. You are a speculator or you have too much money on the table and have taken on too much risk either because you own too many shares, or you are simply over your skis.
And second, remember your history. Amazon lost 90% of its value when the Internet bubble blew up. Things were so bad that Bezos himself had to reassure investors that the numbers would work. Apple, Microsoft, and other household names today have all experienced massive selloffs too at other points in history.

As nasty as the situation is, the attacks are nothing more than a short-term speed bump.

If you’re a trader, knock yourself out. This kind of volatility should be what you live for.

If you’re an investor, chill.

Tesla has returned 84.40% over the past 12 months, 881.48% over the past 5 years, 2,238.94% over the past decade according to Koyfin.

–8.56% YTD just isn’t a big deal in the scheme of things.

3 - Hertz: To heck with EVs

Hertz says that it’ll be selling 20,000 EV’s from its fleet to reinvest in gas-powered vehicles. (Read)

Not surprising.

How many times have we talked about this… the technology is not ready for prime time despite what scores of government apparatchiks think.

Hertz’s customers prefer piston-clankers over the EV option.

If you are part of the OBA family, you already know my thinking and my recommendations when it comes to Texas Tea. And if you’re not but would like to be, I’d be honoured. Upgrade to Paid.

4 – US and UK carry out strikes against Iran-backed Houthis in Yemen

War is unfortunately a growth industry.

I wish it weren’t, but it is.

The Middle East is a powder keg both literally and figuratively. (Read)

Defense stocks are a no brainer, especially if they’ve got dividends, a big backlog, and make mission critical components for the US and its allies.

Normally, I prefer a laser-like focus on specific companies, but this is one of few times when a defense-oriented ETF like Global X Defense Tech ETF (SHLD) could make sense.

5 – AI: Our fingerprints are NOT unique

A decade ago, there were perhaps 2-3 “use cases” for AI.

Now, there are dozens.

Including this one that caught my attention.

Our fingerprints are not as unique as once thought, a new discovery that could help solve thousands of cold cases and boost law enforcement efforts worldwide. (Read)

What catches my attention is not the fingerprint thing – although that’s fascinating – but rather that a researcher with no prior forensic experience has used AI to make a breakthrough discovery using data that in this case has eluded human experts for years.

Legions of PhDs who have built their reputations on “knowing better” had best get ready because AI will increasingly make it clear many of ‘em don’t.