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☕ Tesla could triple, call me crazy

Apr 01, 2024

Good morning! 👋

And we’re off into Q2.

Market conditions are mixed as I type after some early strength in the tech-laden Nasdaq and the broader S&P 500. The Dow, which is a far narrower index, has been negative from the bell.

Makes sense.

The S&P 500 just had the strongest Q1 since 2019, jumping 10.2% versus the DJIA which tacked on 5.6% and the Nasdaq which added to 9.1% to the tally.

What catches my attention is that the markets just wrapped up their 5th consecutive up month.

Being in to win has never been more important.

Just ask those who are playing not to lose and, in many cases still on the sidelines earning 4-5% while the S&P 500 has tacked on 32.09% over the past 12 months and companies like NVDA have ripped 228.54% higher even after recent selling over the same time frame.

At the risk of sounding like a broken record, buy the best, ignore the rest.

Here’s my playbook.

1 – Tesla could triple, call me crazy

As I noted to the venerable Stuart Varney this morning, I like underdogs. (Watch)

The situation reminds me of Apple early on when Jobs returned, and it teetered on the edge of failure.
The herd – meaning most retail investors – buy when they should be selling and sell when they should be buying so the fact that Tesla is impossibly and almost universally hated is a golden opportunity to my way of thinking.
The company hasn’t been about cars for a long time. The charging network could be worth billions as it becomes the de facto global standard, AI is going to permeate the company as robotics and DoJo come online. And Unka Elon wants to redefine the assembly line in a move that could boost production margins by 50%.

MyPOV: The late Sir John Templeton who, btw was one of the most successful investors ever to play the game, used to say that you want to buy at what he called points of “maximum pessimism. What’s happening to Tesla certainly qualifies.

I think Tesla could well triple in the next 3-5 years.

OBAers, please keep an eye out for this week’s update later today and TSLA commentary. And, while we’re at it, the April issue comes out this Friday along with a new recommendation you may find valuable. I’m actually quite excited based on my research. 😊

2 – This could be the quarter Walmart catches up

Costco, an OBA fave, has returned nearly 50% over the past 12 months while Walmart has tacked on roughly 27%.

I’m thinking this could be the quarter when Walmart finally begins to put up some decent earnings (and catch up).

Hmmm.

MyPOV: As tempting as it is to switch horses mid-race, that’s not something I’m a huge fan of doing. History shows very clearly that investing in optimism remains a far better path to profits than cowering in pessimism even in situations like this one that seem straightforward but almost always aren’t.

Btw, if you’d like some help in this department, I’m here.

3 – A picture is worth 1,000 words when it comes to volatility

I was king of the nerd herd growing up and card-carrying member of the propeller-head beanie club.

Still am.

Numbers tell a story.

In this case, it’s volatility compression.

There are all sorts of reasons why – computerization, 0DTE options, liquidity, and passive investing just to name a few – but the kind of compression I’ve highlighted in yellow suggests the market is storing up a gob-smacking amount of energy for its next big move.

Many people will read that and immediately think “oh, ____” but that’s overrated. Volatility cuts both ways – up and down – so it’s important for investors to play to that.

Risk appetite remains good, growth is still stronger than expected and big tech – as hard as it is to wrap your mind around – is just getting started with AI.

4 – Gold just hit another high

I believe that every investor needs to own at least some gold.

People think it’s an inflation hedge but that’s not quite true the way scores of late-night TV commercials seem to make you think.

The relationship with interest rates is very real, however.

That's because gold prices tend to move opposite interest rates which means that gold prices are more appealing as rates fall. (Read)

At the same time, foreign investors in places like China, India and much of Africa tend to latch on as a function of perceived weakness in the global economy and the USD.

If you’re interested in buying or selling gold or other precious metals, I suggest you give the folks at ASI a call and tell ‘em I sent you.

**Full disclosure - I do not accept compensation in any form from ASI. I’ve known the company’s principals Michael and Rich Checkan for years and trust ‘em. Simple as that.