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What to make of Tesla

Mar 02, 2023

Good morning! 👋

SOSDD… rates up, stocks down.

Like many, I’d rather see some green, but there are two ways to make money in any market.

Up AND down!

Here’s my playbook.

People are missing the point on Tesla (again)

Tesla CEO Elon Musk is in the hot seat this morning because the media is portraying his investor day as long on vision but short on specifics. (Read)

I don’t think they were watching the same presentation. Or if they were, that they’ve got a lick of business sense. Probably both, now that I think about it.

The man changes every industry he touches. He leads from the front—cars, batteries, solar power, electric trading, energy, etc. Of course, he’s gonna be long on vision because that’s what he does!

Betting against Musk today is like betting against Steve Jobs back in the day.

Tesla’s 1-year total price return is -30.9%, which sounds terrible.

Put that in perspective.

5-year annual rate of return is 55.41%, for a total increase of 807.60% over that time frame. That’s enough to turn every $1,000 invested on March 2, 2018 into $8,076.02 today.

The 10-year annual rate of return is 56.38%, which translates to a total increase of 8,677.92%—enough to turn every $1,000 invested on March 2, 2013 into $86,779.22 today.

Could Tesla’s stock fall?

Sure… every stock could go to zero, including Tesla.

But what’s the likelihood of that happening?

That's the question you want to be asking yourself if you’re nervous.

REMEMBER: Always do what Wall Street does, not what it says.

Not for nothing, but just who do you think is buying all those Tesla shares that are being unloaded right now?

I’ll bet you dimes to dollars it’s the smart money.

Buy low, sell high.

*Data: Alpha Vantage, Bloomberg, Yahoo! Finance

Deadbeat drivers beware

Patent filings can be one of the biggest sources of information for savvy investors.

This one caught my eye.

Ford has filed a patent for a self-driving car that will—get this—repossess itself. 🤦‍♂️

That’s right.

Miss a payment and the car will drive itself back to the dealer or to the scrapyard if the delinquent owners don’t play ball. (Read)

Two things come to mind: 1) This will impact insurance premiums; over time insurance companies will probably use this as an excuse to raise prices. And 2), what happens if the car drives off and gets into an accident? “The car did it” probably won’t sway a jury.

Tesla’s a better ride… for my money, anyway… but admittedly, I’m still jonesing for a 700hp Ford Raptor! ⛽

How to play the “big move”

Florida’s Chief Financial Officer Jimmy Patronis says that 900 people a day are moving to Florida, migrating from what he calls an entirely predictable list of states including New York, New Jersey, and Ilinois. (Read)

Money is like water; it will ALWAYS flow to where it’s treated best.

Election results like those in Chicago completely reinforce the notion that people have had it with feckless government leaders implementing one bad policy after another.

Like, for example, Lori Lightfoot, who was a one-woman wrecking ball in Chicago, according to voters who have now sent her packing. (Read)

I don’t see the trend stopping anytime soon.

An idea… Long moving box stocks and short real estate in specific areas.

Macy’s jumps, should you?

Shares of Macy’s (M) are up 6%+ in the premarket as I type, as holiday profits top expectations.

Should you chase the stock?

Obviously, that’s up to you, but I wouldn’t.

Wall Street loves quick moves because the FOMO that drives individual investors to a stock like Macy’s is a lot like moths being drawn to a light for the kill on a hot summer night in Georgia.

I’ll bet they fade it quickly, perhaps even by the time you read this.

Putskies or some sort of put-oriented spread may be the better bet here.

Either way, remember something we talk about frequently…

Buy the best, not the rest.

Macy’s is “the rest” as long as rates are rising and consumers are hamstrung.

Nothing “best” about Best Buy

Like many retailers, Best Buy updated their fiscal-year 2024 EPS forecast. This time to $5.70–$6.50, which is below analysts’ estimates of $6.71. Using the midpoint of the forecasted range, that’s missing the mark by about 9%. (Read)

You can read the data 2 ways… either Best Buy is wrong, or the analysts don’t get it.

In this case… both.

Best Buy is a retailer selling “nice to have” products and services at a time when consumers are stretched beyond their means. I am hard pressed to see a way out at any price.

I’d rather keep my money in companies making “must have” products and services and would encourage any rational investor interested in building wealth to think about taking a page out of the same playbook.