1/ I almost don't know what to say about what follows:
I had a conversation today with a guy I respect a great deal. A truly impressive intellect and experienced in our industry. Was the Chief Strategist for a $5bn RIA that sold to someone else, so a track record of success.
I had a conversation today with a guy I respect a great deal. A truly impressive intellect and experienced in our industry. Was the Chief Strategist for a $5bn RIA that sold to someone else, so a track record of success.
2/ We were discussing our new joint business venture, the details of which I will spare you. Just that a cornerstone of it is incorporating "shorting frauds" into portfolios we are crafting for this new business. We are leading with our ability to identify garbage.
3/ He noted that he thought I was completely out in left field on Tesla. That it is Ford that is at risk, not Tesla. In fact, according to him (who has lived in and maintains a base in LA), Tesla is the likely survivor here, with everyone else playing catch up.
4/ His view is that earnings for Tesla will never matter ("They're winning, who cares about earnings.") To be fair, he was also discussing earnings in the context of COVID for the mkt and how the mkt will give EVERYONE a pass this qtr (I don't necessarily disagree w that).
5/ He dismissed my fraud claims and said I should take off my tinfoil hat. His claim is everyone wants a Tesla and they are selling every car they make (I didn't have the heart to bring up the Netherlands. . .)
6/ My point here is this: This is a reasonable guy who understands our business. And yet, this is his view. Admittedly, he has been disconnected from the day to day strategist job for a while, but if he feels this way, it perhaps explains the tenacity of other retail buyers.
7/ He knows nothing of the details of the Tesla story I would guess but does see the CNBC stories and crazy headlines, which is why Musk is so focused on PR. Musk knows how important people like my friend are to his mythology. And,
8/ when one is likely about to ask the gov't for a bailout, mythology is helpful. My friend didn't care about the SEC charges. In fact, he implied because Musk was so dismissive of the SEC is proof the charges were triviata.
9/ So this is the Other Other side of the trade. Not the idiot Value Analyst/Alter Viggo side, but the casual observer that knows markets. Frankly, it emboldened me, because this is the kind of uniformed viewpoint one finds right before The Big Headline.
10/ Musk may or may not have the Chinese gov't in his pocket (I go back and forth on who has leverage over whom). But, he ain't manufacturing any more sales in the Netherlands and he's losing Norway in spades (no pun intended @fly4dat . . .)
11/ My friend says "everyone" in CA is driving one. Yes, and therein lies Musk's other problem. That market is played out. I didn't have the heart to point out to him that S and X sales are down 50% from their peak and these are mostly US cars.
12/ My buddy didn't care about all the one-time items that have lead to Elon's headline earnings beats. Could care less. His response was "Elon has figured out the game." I was shocked by my buddy's complacency but these are markets today.
13/ With 50% of assets today in passive strategies, what does an ETF or Target Date Fund care if Musk makes 50% of his FCF in a quarter from one-time environmental credit sales? They don't care until they are forced to care.
14/ . . . but I sometimes wonder if it is a spectacular blowup (like Tesla) that will end the passive wave. I doubt it. Passive strategies were barely 20% of the market when WCOM blew up. And Tesla will probably be treated like a speed bump.
15/ Our job as analysts has probably changed now from picking winners to avoiding disasters. And the payout on the disaster strategy takes YEARS. $LK is the anomaly here, not Tesla.
@AlderLaneeggs has said it. This is one tough Jaguar. It appears now the country is buying Musk's line. But I like that dynamic. The complacency exhibited by my friend didn't exist in 2019. Less than a year ago, people were actually speaking of Tesla as a company in trouble.
