Sell Tesla?

RandallFlagg

US markets set to open shortly after the Labor Day holiday. Tesla pre-market suggests a drop of another 15%. That drop may be more option trade timing as it shows a sudden drop which suggest a single trade. 

Plus, here is some speculation on the Battery Day announcements on 22nd September, mentioning the Osborne Effect that may impact the stock price, something I have posted about previously in P&E in relation to the car industry as it transitions from ICE powered cars to EVs.

https://www.ccn.com/tesla-battery-day-bad-news-tsla-stock/

 

RandallFlagg

another feature that suggests Tesla has an advantage over other vehicle manufacturers as the depreciation is a lot lower over time and the cars are improved via software & hardware updates after sale, this is beyond the minimal safety recalls that other manufacturers facilitate

https://cleantechnica.com/2020/08/29/tesla-introduced-a-business-model-the-world-has-not-seen-before/

RandallFlagg

Meanwhile in the Wild West, as Tesla opens 16% down, Nikola stock opens 30% up after GM amount taking an 11% stake in order to produce their proposed Badger EV/hydrogen truck.

Tesla stock price may be madness but surely that makes Nikola's stock price insanity as they have not yet produced a single vehicle and have nothing but some words and a pile of investors cash?

https://www.cnbc.com/2020/09/08/general-motors-takes-11percent-stake-and-2-billion-in-equity-in-electric-truck-maker-nikola-.html

RandallFlagg

Potential major step forward in innovation to be announced on Tesla Battery Day 22nd Sept. I would expect the stock to jump up significantly if this is correct, causing even more pain for short sellers:

https://www.teslarati.com/tesla-roadrunner-battery-day-leak-analysis-video/

RandallFlagg

So, do we still reckon Tesla is a sell?

https://www.ft.com/content/bba4ffb5-69f2-4282-89a3-3de1827d8d4d

"Tesla’s planned shift to in-house production of electric vehicle batteries has caused investors to question the carmaker’s partnership with longtime supplier Panasonic. The Japanese group’s stock sank 4 per cent in Tokyo on the news. Dashed expectations of growth for the business with Tesla propelled the fallout. Tesla revealed on September 22 that it intended to produce 100 gigawatt-hours’ worth of battery cells by 2022, enough for 1.4m vehicles. The volume is roughly three times that which Tesla purchases from Panasonic today. “Supplies to Tesla’s new vehicles [from Panasonic] could potentially decline,” said Tang Jin, senior research officer at Mizuho Bank. The development comes as Panasonic’s business of producing batteries for Tesla makes its way towards profitability after years of red ink."

Snap

read and heard quite a lot of opinion that Tesla is still undervalued. 

monquixote

I think some really significant shifts are going to happen in the car market.

If you look at the components of a fully electric car then the main high value and differentiating bits are going to be:

Batteries - Which are going to be bought through an OEM.

Electric Motors - Which are going to be bought through an OEM for many manufacturers

Software - Which may end up being done through partnerships with big tech firms like Google, Apple who will do it better.

That really doesn't leave much for a traditional manufacturer to do other than make some nice looking bodywork.

The cars aren't going to be serviced like conventional cars any more. It will be probably a: change a battery, b: replace a whole sealed motor unit, d: reinstall the firmware.

That's going to potentially gut the number of people someone like a Mercedes needs to employ at the manufacturer and dealer level. I can imagine them being mired in labour disputes like the UK was in the 70's if they aren't careful.

That could play into the hands of newer players like Tesla especially if they are vertically integrated on the things that count like battery and software while others are buying in.

crunchman

monquixote said:

I think some really significant shifts are going to happen in the car market.

If you look at the components of a fully electric car then the main high value and differentiating bits are going to be:

Batteries - Which are going to be bought through an OEM.

Electric Motors - Which are going to be bought through an OEM for many manufacturers

Software - Which may end up being done through partnerships with big tech firms like Google, Apple who will do it better.

That really doesn't leave much for a traditional manufacturer to do other than make some nice looking bodywork.

The cars aren't going to be serviced like conventional cars any more. It will be probably a: change a battery, b: replace a whole sealed motor unit, d: reinstall the firmware.

That's going to potentially gut the number of people someone like a Mercedes needs to employ at the manufacturer and dealer level. I can imagine them being mired in labour disputes like the UK was in the 70's if they aren't careful.

That could play into the hands of newer players like Tesla especially if they are vertically integrated on the things that count like battery and software while others are buying in.

True to some extent but the whole car market is going to change for other reasons as well.

There will be more working from home, so that will reduce the mileage done.  People who own their own cars will probably keep them longer.  Some 2 car families will drop down to 1 car.

The government is also going to make a concerted effort to get people out of cars because of air pollution.  Around two thirds of journeys are 5 miles or less.  A lot of those could be cycled.  That will be carrot and stick.  Around here, they are building new cycle lanes, but they have also closed off several roads to cars.  It's upsetting a lot of people, but there is reason behind it.  The biggest source of particulate pollution is brake and tyre dust.  While electric cars will clean up exhasut emissions, the only way to get particulate emissions to a low level is to get people out of cars completely.

Ownership of cars will also change when driverless cars arrive on the scene.  WIth a lot of people making less car journeys, and the price of a cab coming down massively as there is no driver to pay, a lot of people won't bother to own their own car.  I see young people around here in London who already do that.  They don't bother with a car, and get an Uber 2 or 3 times a week when they want them.

All of these things need to factored in.  The odds are that the market for new cars will be much smaller.  That won't just be because of less miles, but also the driverless cars owned by the Uber's of the world will do far more miles than current cars do.  Let's say 20 people currently own their own car, and each drive it for 5 hours per week.  That's 100 hundred hours per week.  One driverless Uber could do that on it's own with reasonably fast charging.  That kind of utilisation makes the capital cost of buying it much less of an issue for the likes of Uber as well, and reduces costs still further.  There will be less cars on the road, and less market for new ones.

Rich210

For what it's worth, my mate sold his Tesla after a few years, and the depreciation started to be a factor. I think he got £50K for it last year. With the more affordable models set to be released they dont hold their value like before. I'd say sell. 

monquixote

crunchman said:

monquixote said:

I think some really significant shifts are going to happen in the car market.

If you look at the components of a fully electric car then the main high value and differentiating bits are going to be:

Batteries - Which are going to be bought through an OEM.

Electric Motors - Which are going to be bought through an OEM for many manufacturers

Software - Which may end up being done through partnerships with big tech firms like Google, Apple who will do it better.

That really doesn't leave much for a traditional manufacturer to do other than make some nice looking bodywork.

The cars aren't going to be serviced like conventional cars any more. It will be probably a: change a battery, b: replace a whole sealed motor unit, d: reinstall the firmware.

That's going to potentially gut the number of people someone like a Mercedes needs to employ at the manufacturer and dealer level. I can imagine them being mired in labour disputes like the UK was in the 70's if they aren't careful.

That could play into the hands of newer players like Tesla especially if they are vertically integrated on the things that count like battery and software while others are buying in.

True to some extent but the whole car market is going to change for other reasons as well.

There will be more working from home, so that will reduce the mileage done.  People who own their own cars will probably keep them longer.  Some 2 car families will drop down to 1 car.

The government is also going to make a concerted effort to get people out of cars because of air pollution.  Around two thirds of journeys are 5 miles or less.  A lot of those could be cycled.  That will be carrot and stick.  Around here, they are building new cycle lanes, but they have also closed off several roads to cars.  It's upsetting a lot of people, but there is reason behind it.  The biggest source of particulate pollution is brake and tyre dust.  While electric cars will clean up exhasut emissions, the only way to get particulate emissions to a low level is to get people out of cars completely.

Ownership of cars will also change when driverless cars arrive on the scene.  WIth a lot of people making less car journeys, and the price of a cab coming down massively as there is no driver to pay, a lot of people won't bother to own their own car.  I see young people around here in London who already do that.  They don't bother with a car, and get an Uber 2 or 3 times a week when they want them.

All of these things need to factored in.  The odds are that the market for new cars will be much smaller.  That won't just be because of less miles, but also the driverless cars owned by the Uber's of the world will do far more miles than current cars do.  Let's say 20 people currently own their own car, and each drive it for 5 hours per week.  That's 100 hundred hours per week.  One driverless Uber could do that on it's own with reasonably fast charging.  That kind of utilisation makes the capital cost of buying it much less of an issue for the likes of Uber as well, and reduces costs still further.  There will be less cars on the road, and less market for new ones.

Yes, I agree.

You can already see with PCP being the thing that car companies push for they like the recurring revenue model and you already see battery leasing being a thing with electric cars.

I can imagine it fairly quickly moving to a model where you don't generally own a car, you just pay a subscription to have one allocated to you. If you replace the batteries every few years there should be a lot less need to keep replacing an electric car every few years like people do with petrol.

That will change to have a subscription to have one show up on your doorstep with autonomous driving, but I think that's a lot further off that people like Tesla will have you believe. Trucks on motorways going on well understood routes will be a lot quicker.

RandallFlagg

Tesla stock price is set to jump 13% when the US market opens this afternoon after it was announced that Tesla will join the S&P500 index in December.

The pain of the enormous losses isn't getting any less for the February short sellers, it still doesn't look like Tesla is a sell. I expect the share price to continue a steady rise over the next few years with some volatility along the way as traders lock in profits periodically but my view remains that it's a buy and hold stock for the foreseeable until the competition catch up with Tesla's battery and software technology, and when they do Tesla will still be years ahead of them as they will have perfected cheap mass production of that technology.

What's your “top-rated analyst of 18 years in a row” Toni Sacconaghi got to say for himself now @ToneControl ?

$27BN losses with 58% less shares shorted as the short sellers cave in and buy themselves out of a hole.

https://thenextweb.com/hardfork/2020/10/30/tesla-stock-short-sellers-interest-intel-alibaba-apple-squeeze/

https://www.ft.com/content/5642b34b-ae8d-466d-a906-9acb473b601d

ToneControl

https://www.cnbc.com/2020/11/12/jeremy-grantham-reiterates-bubble-call-calls-covid-rally-truly-crazy.html

Investor Jeremy Grantham doubled down on his belief that the U.S. stock market is in a bubble, telling CNBC that many aspects of its recovery from pandemic lows have been “truly crazy.”

“The more spectacular the rise and the longer it goes, the more certainty one can have that you’re in the ‘Real McCoy’ bubble,” Grantham said in an interview that aired Thursday on “Closing Bell.”

“You want to see lots of crazy behavior, which we really have seen a lot of” since June 17, Grantham added, which was when he first told CNBC that he was witnessing the fourth major bubble of his career. “And you want to see not just the market rise, but if anything, an acceleration. And the rate of market rise, since the turn in March/April, has been nothing sort of sensational.”

ToneControl

https://markets.businessinsider.com/news/stocks/stock-market-outlook-investing-legend-jeremy-grantham-bubble-crazy-rally-2020-11-1029801632

"The market can go up on bad news and go up on good news," Grantham said. "It can interpret a Trump victory as bullish and then seamlessly interpret a Biden victory as bullish. There are all the characteristics of a bubble. There's nothing much you can throw at when it gets going."

He added that an effective coronavirus vaccine or more fiscal stimulus in the US wouldn't change the fact that the stock market is in a bubble.

Grantham has successfully called three market bubbles: Japan's asset-price bubble in 1989, the dot-com bubble in 2000, and the housing crisis in 2008.

On Thursday, he said one year would be a "stretch" for the bubble to continue inflating while two more years of rising prices would be "extremely unlikely."

RandallFlagg

ToneControl said:

https://markets.businessinsider.com/news/stocks/stock-market-outlook-investing-legend-jeremy-grantham-bubble-crazy-rally-2020-11-1029801632

"The market can go up on bad news and go up on good news," Grantham said. "It can interpret a Trump victory as bullish and then seamlessly interpret a Biden victory as bullish. There are all the characteristics of a bubble. There's nothing much you can throw at when it gets going."

He added that an effective coronavirus vaccine or more fiscal stimulus in the US wouldn't change the fact that the stock market is in a bubble.

Grantham has successfully called three market bubbles: Japan's asset-price bubble in 1989, the dot-com bubble in 2000, and the housing crisis in 2008.

On Thursday, he said one year would be a "stretch" for the bubble to continue inflating while two more years of rising prices would be "extremely unlikely."

It's glib to say "the market is in a bubble". Is every stock in the US is inflated in a bubble? Not a chance. Many of the S&P500 companies are down way below their highs, a few companies pull up the index, same with the Russell.

What do you do? sit out for 1 year? 2 years? 3 years? that's not going to help with building a retirement fund. How many years do you let go by waiting for that "I told you so" moment?

Jeremy Grantham has been forecasting doom and gloom since before 2017, he says returns have been inflated for the last 100 years. He'll get it right one of these years. he was probably skipping round his living room in March, albeit briefly.

Will the US stocks market crash 50% from current values again? yes, without a doubt, but should you sit on the sidelines letting years go by in fear of it? no.

ToneControl

RandallFlagg said:

ToneControl said:

https://markets.businessinsider.com/news/stocks/stock-market-outlook-investing-legend-jeremy-grantham-bubble-crazy-rally-2020-11-1029801632

"The market can go up on bad news and go up on good news," Grantham said. "It can interpret a Trump victory as bullish and then seamlessly interpret a Biden victory as bullish. There are all the characteristics of a bubble. There's nothing much you can throw at when it gets going."

He added that an effective coronavirus vaccine or more fiscal stimulus in the US wouldn't change the fact that the stock market is in a bubble.

Grantham has successfully called three market bubbles: Japan's asset-price bubble in 1989, the dot-com bubble in 2000, and the housing crisis in 2008.

On Thursday, he said one year would be a "stretch" for the bubble to continue inflating while two more years of rising prices would be "extremely unlikely."

It's glib to say "the market is in a bubble". Is every stock in the US is inflated in a bubble? Not a chance. Many of the S&P500 companies are down way below their highs, a few companies pull up the index, same with the Russell.

What do you do? sit out for 1 year? 2 years? 3 years? that's not going to help with building a retirement fund. How many years do you let go by waiting for that "I told you so" moment?

Jeremy Grantham has been forecasting doom and gloom since before 2017, he says returns have been inflated for the last 100 years. He'll get it right one of these years. he was probably skipping round his living room in March, albeit briefly.

Will the US stocks market crash 50% from current values again? yes, without a doubt, but should you sit on the sidelines letting years go by in fear of it? no.

hmm, I think you have to factor it in if you plan to retire within the next 5 years, you can't just ignore it

RandallFlagg

ToneControl said:

RandallFlagg said:

ToneControl said:

https://markets.businessinsider.com/news/stocks/stock-market-outlook-investing-legend-jeremy-grantham-bubble-crazy-rally-2020-11-1029801632

"The market can go up on bad news and go up on good news," Grantham said. "It can interpret a Trump victory as bullish and then seamlessly interpret a Biden victory as bullish. There are all the characteristics of a bubble. There's nothing much you can throw at when it gets going."

He added that an effective coronavirus vaccine or more fiscal stimulus in the US wouldn't change the fact that the stock market is in a bubble.

Grantham has successfully called three market bubbles: Japan's asset-price bubble in 1989, the dot-com bubble in 2000, and the housing crisis in 2008.

On Thursday, he said one year would be a "stretch" for the bubble to continue inflating while two more years of rising prices would be "extremely unlikely."

It's glib to say "the market is in a bubble". Is every stock in the US is inflated in a bubble? Not a chance. Many of the S&P500 companies are down way below their highs, a few companies pull up the index, same with the Russell.

What do you do? sit out for 1 year? 2 years? 3 years? that's not going to help with building a retirement fund. How many years do you let go by waiting for that "I told you so" moment?

Jeremy Grantham has been forecasting doom and gloom since before 2017, he says returns have been inflated for the last 100 years. He'll get it right one of these years. he was probably skipping round his living room in March, albeit briefly.

Will the US stocks market crash 50% from current values again? yes, without a doubt, but should you sit on the sidelines letting years go by in fear of it? no.

hmm, I think you have to factor it in if you plan to retire within the next 5 years, you can't just ignore it

What has a fixed point in time got to do with anything? Unless you plan to buy an annuity, convert all your pension fund to cash and see it dwindle away with inflation and drawdown?

If you want your retirement pot to continue to grow or at least keep up or almost keep up with drawdown past retirement date it needs to be invested, retirement date is only the point you stop paying earnings into it (save for any capital gains through inheritance), not the point it stops being invested.  

ToneControl

but your philosophy is to invest in managed funds, and never move into cash

most investors don't make money that way consistently, you are just following the indices more or less

I can't believe you just dismiss Grantham as if he knows nothing
https://en.wikipedia.org/wiki/Jeremy_Grantham

He is a self-made  billionaire, and manages over £100b of investments

RandallFlagg

ToneControl said:

but your philosophy is to invest in managed funds, and never move into cash

most investors don't make money that way consistently, you are just following the indices more or less

I can't believe you just dismiss Grantham as if he knows nothing
https://en.wikipedia.org/wiki/Jeremy_Grantham

He is a self-made  billionaire, and manages over £100b of investments

Do you have empirical evidence of that? Index investing is statistically proven for as long back as records exist.

As for Grantham, I'm not dismissing him as such just not fearing his predictions, note that he says expected long term returns from US stocks may be lower due to high valuations now, he is not saying there will be no returns. It will all average out and revert to the mean over time and that mean will be steady growth over the long run. To reduce sector and location bubble risk but remain invested for long term growth then investing in the global index would be the best course. 

Here's your favourite canadian on market timing, quoting data on market timing:

ToneControl

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

ToneControl

looking at this chart

For the S+P
if you invested in 1929, your pension fund would go down 85%, and not recover until 1955, 26 years later
if you invested in 1937, your pension fund would go down 50%, and not recover until 1946, fair enough there was a war
if you invested in 2001, your pension fund would go down 45%, and not recover until 2007

it's not happened much recently, you need to research why that is in the USA
compare the FTSE and S+P charts

The US has pumped lots of cash into the markets effectively. This cannot carry on indefinitely
https://www.investopedia.com/ask/answers/021015/how-does-quantitative-easing-us-affect-stock-market.asp

https://www.investopedia.com/articles/investing/082515/how-do-asset-bubbles-cause-recessions.asp

Asset price bubbles shoulder blame for some of the most devastating recessions, including those faced by the United States in its history. The stock market bubble of the 1920s, the dot-com bubble of the 1990s, and the real estate bubble of the 2000s were asset bubbles followed by sharp economic downturns. Asset bubbles are especially devastating for individuals and businesses who invest too late, meaning shortly before the bubble bursts. In this regard, asset price bubbles bear a similarity to Ponzi or pyramid scams. The inevitable collapse of asset bubbles wipes out net worth of investors and causes exposed businesses to fail, potentially touching off a cascade of debt deflation and financial panic that can spread to other parts of the economy resulting in a period of higher unemployment and lower production that characterizes a recession. 

read all that and tell me that you believe everyone should simply invest permanently, and passively