Monday, August 24, 2020

Tesla Bubble Update

Now we are at ~15 times revenue for a car company that has never made a profit.


Wide Moat said...

Last time I brought this up was July 1, when I snarkily asked how much longer and you returned in kind--"more than one day."

In that jest, we elided an extremely important point for novices, or even those market participants with only a few decades worth of experience. You can see an anomaly, but the real value, if you can find it, will come from the structure and timing of the trade. If we can only say long or short, then we have exposed our mental pre-commitments as that Procrustean bed destined to bring only torment and pain. I short July 1 and now I have to get a 50% drop in some reasonably short interval to break even. That's assuming I haven't covered a chunk at a loss already.

I suppose one could have taken a 1% short position on July 1, rode the position to $2000 and now scale up, since the "top is now in," and do fine. That sounds a bit more like the business of heroes, not fit for mere mortals.

Anonymous said...

There's no way you can "time" any of this. You can't predict the future.

Nobody knew that there was going to be a WuFlu pandemic, and nobody knew that the pandemic would make the market rocket higher (for now).

whydibuy said...

Never short stocks. That philosophy saved me from insolvency during the internet bubble. If I acted on that bubble I would have been right but the early timing would have bankrupted me.

This market has its share of bubble stocks too. Its just even more concentrated in a smaller group of stocks. I am not long this market simply because to go long means having huge exposure to the bubble names. Not what I want to do.
As well, the market seems to dismiss the societal changes of the disease as evidenced by empty city streets and buildings. Something never witnessed before but the market poo poos it as a non event. Maybe yes, maybe no. Systemic and chronic unemployment may be with us for years but its nothing to the market. I guess. I don't play in a game I have no understanding of.