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Why I’m paying very close attention to Tesla

Oct 16, 2023

Good morning! 👋

The markets are UP in early going, which is absolutely astounding under the circumstances.

As usual, the media will focus on the Dow, but the indices you want to watch for “staying power” are the much broader S&P 500 and the tech-laden Nasdaq.

Here’s my playbook.

Why the markets are up even though all heck is breaking loose in Israel

The fabulous Stuart Varney jumped right into it this morning, asking me why the markets are green when all heck is breaking loose and the war in Israel looks to widen. (Watch)

Two reasons:

There were rumours overnight of a pause or a ceasefire to allow humanitarian supplies into Gaza and non-combatants out. That’s since been denied, according to news reports.
Conflict tends to bring the Fed running, and traders simply cannot afford to be caught flat footed if Team Powell pauses or cuts. So they’re buying.

Most individual investors will view what’s happening very skeptically, as well they should.

You’re not alone if you’re one of ‘em.

Just remember something else we talk about frequently… always do what Wall Street does, not what it says.

Keith’s Investing Insight: Chances are that the world’s best companies will put up far stronger numbers than many think yet again this earnings season. Once again, investors who stay in the game and on the hunt are likely to be rewarded.

Why I’m paying very close attention to Tesla

Tesla reports this week, and I’ll be watching very closely. I think we’ll see mixed results, including Q3 earnings down about 25% YoY but revenues higher by about 8–12%. (Read)

Most folks are going to focus on deliveries, as usual, but that’s a mistake.

The most important number is going to be input costs, meaning what it takes to make every vehicle. That’s because every dollar reduction in input costs boosts profit margins.

At the same time, I think we may also get some insight into distributed power production, AI, and more including insurance, power trading, and even finance… all of which are worth billions down the line.

Rite Aid = Bed Bath & Beyond 2.0

I can’t say I am particularly surprised. Management completely missed the switch to online sales and lower-priced essentials while competitors like Walgreens and CVS have both pivoted to healthcare. Every location I’ve seen for the past several years looks like a ghost town. (Read)

If you’re going to invest in healthcare—and I suggest you do—there are four “classes” of stocks worth your time: drugs, medical services, medical devices, and, of course, health insurance.

We’ve got 2 of the 4 covered in my paid research journal, One Bar Ahead®, and I’m pleased with all of ‘em, particularly with regard to income. Upgrade to Paid

Smith & Wesson votes with its feet

For 170 years, iconic gunmaker Smith & Wesson has been headquartered in Springfield, MA.

No more.

Ditching its home state, which these days has some of the strictest gun laws in the US, the company recently packed up and moved to Maryville, TN. (Read)

It’s one of the most fundamental rules of all.

Money, like water, will flow to where it’s treated best.

State and federal governments would do well to remember this.
Many municipal bond holders would, too.

Don’t get scammed: donating to Israel and Gaza humanitarian charities

I received no less than 4 scam calls this weekend asking me to donate to humanitarian causes in Israel/Gaza. There are also loads of sketchy websites popping up, and the email engines seem to be in high gear, too.

Do NOT donate to any inbound solicitation unless you verify the legitimacy of the charity doing the asking first.

I suggest you visit CharityWatch, one of the most highly acclaimed independent watchdog groups for charitable giving that currently rates over 600 charities with over $1 million in funding. Charity Navigator also does a great job. It’s rated nearly 200,000 charities since 2001 and, like the organizations it rates, is a 501(c)(3) nonprofit as well.

And, when you do:

Ask questions. Legitimate charities do not demand that you donate on the spot.
Get their information including the exact name and address, website, and tax information. Then verify it. Most legitimate charities will have .org as well as https: and a lock icon when you visit their website.
What is the organization’s history, goals, and record of success?
Do NOT give out personal bank account or financial information under any circumstances.
Get a receipt because you’re going to need that information for taxes and, unfortunately, in case you’re contacted by an organization that claims you didn’t honour a pledge (yep, it happens).

And if you do get scammed, make a beeline for ReportFraud.ftc.gov