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☕ Why the go-fast crowd is likely to regret selling Tesla

Jan 17, 2024

Good morning! 👋

Futures are down as traders ponder whether rate cut expectations might not match up.

Ya think??!!

Yields continue to climb.

And that, in turn, means highly leveraged-up-to-their-eyeballs traders will sell to avoid their version of a king-sized margin call.

The good news is that this has nothing whatsoever to do with the business case for owning world class companies making “must-have” products and services. In fact, that’s getting stronger by the minute.

Here’s my playbook.

1 – Fed destroys yet another perfectly good rally

I’ve been all but a lone voice in the wilderness for the past several months, noting repeatedly on television, at presentations, in research, and right here in the 5 with Fitz that traders were getting ahead of themselves with regard to the Fed and rates. To be fair, I thought JPow would hike in December, too but he didn't get the memo. (Watch)

While that stinks, it’s not a bad thing either.

The markets are like the plumbing in your house… every once in a while, they need a good cleaning.

I told the One Bar Ahead® Family yesterday that it’s time to begin boosting hedges and now I’m telling you. It’s not hard but you do need to think about YOUR expectations. Upgrade to Paid

The question you want to ask yourself today if you’re an investor is do you… a) want to stick your head in the sand with a sign on your rear end that says, “kick me when it’s over” or b) figure out how to play offense (which history shows, btw, is always the stronger choice over time)?

If you’re a trader, knock yourself out – that’s different.

MyPOV: Investing is a series of choices that favour the bold, the determined and the disciplined. I learned a long time ago from my mentors that the headlines really don’t mean squat if you own great companies. I realize that it’s hard to internalize if you’re not used to thinking like this, but TRY! And if that doesn’t work, look around. Do you see Warren Buffett running away? No. Ray Dalio… no. Ron Baron… no. In fact, I bet you dimes to dollars all are on the hunt for their next great buys and that we’ll read about ‘em shortly.

2 – Iran v dang near everybody else – here’s why

If there’s going to be a s__-hits-the-fan moment, odds are good it’ll start with Iran.

Maybe it already has.

Reports are hitting the wire this morning that it’s struck targets in Syra, Iraq and Pakistan over the past 24 hours. (Read)

What makes this different from past military actions is that Tehran has hit targets that are ostensibly located in allied nations.

People are focused on Israel and Gaza but the bigger game afoot is regional normalization because any new détente potentially creates a Palestinian State, a de-escalation of tension, a resumption of trade… and Iran won’t have a say in any of it.

So, they’re lashing out.

Investing Tip: Despite the fact that this is unpredictable as heck, there is a predictable element to what’s happening. It’s the difference between probabilities and possibilities which is why, as an investor, you want to make clinical decisions about what’s likely to happen rather than what could happen. Oil comes to my mind, for example, so do many defense stocks and even some retailers – all of which have high dividends and low betas. Translation = smoother ride.

3 – Three simple ways to play Tesla

Tesla has reduced prices on cars selling into Germany, France, Norway and the Netherlands shortly after making similar cuts for model 3 and model Y cars in China. (Read)

The go-fast crowd is all over it.

My guess is they’ll live to regret their haste.

They’re missing something much bigger than next quarter’s results.

Building cars is a long-cycle game requiring plenty of advanced thinking, not just quarter to quarter earnings for the sake of appeasing analysts, most of whom have never sat in the C-Suite.

Unka Elon knows the Chinese are coming and that companies like Nio and Xpeng have chosen Europe as their launch point. He also knows, like we do, that they’re the real competition which is why he wants to build market share now while they’re still a few years away from meaningful quality and scale.

I have no idea how low Tesla’s stock price could go but I’m perfectly happy to play offense under the circumstances. Tesla has returned 18,857.76 % since inception versus 468.08% from the SPY over the same time period according to Finmasters.

This isn’t our first rodeo any more than it is Musk’s.

AI, robotics, energy trading, big data… the company is a dozen startups in one.

DCA/VCA into more shares is simple, effective and consistent without being emotional
Selling Cash Secured Puts allows any investor doing so to get paid for shopping at lower prices
LowBall Orders allow you to define what you’re willing to pay in advance, to the penny.

$300 a share.

Meanwhile, the big money is going to shake out the last of the weak hands first.

4 – A personal exoskeleton for the paralyzed

Years ago, I visited Ekso Bionics and was so impressed with what I saw that I labelled it one of the most inspirational companies I’d visited in years. That’s still the case but you’d never know it from the company’s stock price which is just $2 and change.

Now there’s a report that French exoskeleton maker Wandercraft has launched a self-stabilizing version in the US. (Watch)

This is the future and, as AI develops, a logical step forward – pun absolutely intended.

The challenge is going to be paying for this stuff.

Ekso worked with medical facilities early on but had a hard time gaining the momentum it needed because insurance companies constantly fought back against the treatment regime by limiting access, jacking prices and more unpleasantness. One of my friends, in fact, had his promising recovery from a surfing accident cut short because of it, but that’s another story for another time.

I imagine Wandercraft will face similar challenges but, again, that doesn’t diminish the potential here.

Exoskeletons are great medical devices, but they are also on the cusp of amazing human-powered engineering which is the bigger picture and the one I’m thinking about as investor.

Imagine assembly line workers who can singlehandedly lift an entire engine or carrier armament specialists who can load missiles by themselves. Both are already reality.

Other possible choices also include ReWalk and Hyundai Motor Company which owns Boston Dynamics.

MyPOV: Sometimes it’s worth buying a few shares and letting ‘em sit on a shelf somewhere because, well, there may come a day in the distant future when they’re worth something. As always, though, use speculative capital you can afford to lose entirely because breakthrough companies often turn out to be zeroes despite the fact we’d like ‘em to be heroes.