Each of us lives somewhere. Maybe a big town or a small one, the countryside or the mountains, by the water or in the desert. And we often feel a heavy weight on our shoulders, for reasons big and small.
Let me try to put our issues in perspective, starting with my own.
1/N
My kids grew up in Chelsea. They were born in Chelsea Westminster hospital and are big fans of the Chelsea Football Club, which is just a 1/2 mile down the Fulham Road. That red circle below is St. Luke’s on Sydney Street, where they played football (soccer) day in and day out.
Chelsea is in southwest Central London. Greater London is a big place. The red polygon shows Chelsea in perspective.
London is a city in England. When you combine England with Scotland and Wales, you have Great Britain. When you add Northern Ireland to Great Britain, you have the United Kingdom.
In comparison, I have outlined London in red.
England, along with all those other countries, are part of Europe (ha, well kinda).
This is a map of Europe, and I have circled the UK and the Republic of Ireland in red.
Europe is one of the seven continents on the planet. The other continents are Asia, Africa, Australia, Antarctica, South America and North America.
These continents and the oceans are all part of huge sphere called planet Earth. I have outlined Europe below.
On this side of our sphere, we only see 2 ½ continents. On the other side we have North America, South America, Australia, and Antarctica.
The Earth spins around on itself once per day (every 24 hours). The Earth is also circling around our Sun.
It takes one year for the Earth to circle (or orbit) all the way around our sun.
Earth is one of nine planets in our solar system (Pluto has recently been reclassified as a planet, so didn't make the cut below).
Each of these planets has an orbit around our sun.
Of the nine planets in our solar system, the earth is larger than four of them; Venus, Mars, Mercury, and Pluto. Compared to them, the Earth is massive.
But when you throw in the other planets, the Earth starts to look pretty small.
Then getting back to our sun, it heats up all the planets, and has the gravitational pull to keep all the planets in orbit around it.
Even though Jupiter is massive when compared to the Earth, it is very small when compared to our sun.
As a quick sidebar, we should get a sense of the speed of light.
If you could travel at the speed of light, it would take you eight minutes and 20 seconds to reach the sun.
More practically, it takes eight minutes and 20 seconds for the light from the sun to reach us on earth.
Our solar system, which includes our sun, the Earth, and all the other planets orbiting around the sun, is part of a bigger system called a galaxy.
Our galaxy is called the Milky Way.
There are many, many, many other suns in the Milky Way. The nearest of these other suns is called Alpha Centauri.
Alpha Centauri is over 25 trillion miles away from our sun (and remember, that is the closest sun to our own).
It takes four years and five months for light to travel from Alpha Centauri to the Earth. In other words, when we see Alpha Centauri in the night sky, we are seeing it over four years ago.
The arrow below points to it in the night sky.
While Alpha Centauri is the closest star to us in the Milky Way, the *largest* star in the Milky Way is VY Canis Majoris.
Despite its largeness, it is so far away that we can’t see it without a telescope.
VT Canis Majoris is over a *billion* times larger than our sun, and - traveling at the speed of light - it would take nearly 5,000 years to get there.
And even though we can’t see VY Canis Majoris in the night sky, we can still get a clear view of the Milky Way (from some places, like mountaintops) without a telescope.
It is vast and beautiful.
However, the portion of our galaxy visible to our naked eyes here on Earth is only a fraction of the entire Milky Way.
And believe it or not, in our universe there are thousands upon thousands upon thousands of galaxies.
Scientists estimate that there are over 100 billion galaxies in the universe. Here are just a few to scale, including our own.
But some other galaxies are bigger. Much bigger.
The largest known galaxy in the universe is called “IC1101”. It has over one hundred trillion stars. IC 1101 is over a billion light years away.
In other words, when we look at it through a telescope, we are seeing it a billion years ago.
And IC1101 makes the Milky Way look like a grain of sand.
So, when we feel like we have big problems (and yes I know, they ARE big problems), it might help to remember that – ultimately - when compared to this vast universe, the weight on our shoulders is very, very, very, very, very small.
/END
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After estimating 2024 earnings of $7.25 per share 18 months ago, The Street now thinks Tesla will do just $2.56 of EPS in 2024. I am closer to $1.85.
Despite the emergence of competitive EV models from other manufacturers, particularly from BYD and the Chinese; and Tesla’s delays in launches, lack of product refreshes, increase in inventories, cash burn, and negative earnings growth...
....if Mr. Market still ends up paying 20x for the automotive business that Musk is feverishly trying to distance himself from, that means that Tesla’s core business is worth 20x $2.56, or just over $50 per share.
Precisely five years ago, Tesla traded for $19.61 per share. At the time, the consensus 2023 EPS expectation for $TSLA was $2.81. Today, it is $3.16, or 12% higher.
The stock, however, is up nearly 1000% to $212.
A thread...
Part of this move was very-much justified as five-year forward earnings expectations increased by 336% (from $2.81 to $12.24) from 2018 to 2023.
If the stock had merely increased by the improvement in those forward fundamentals, it would be at $85.
Instead it is at $212.
This suggests that only about 30% of the stock move was driven by improved fundamentals, and 70% of it was driven by (possibly) meme-stock frenzied multiple expansion.
Now $TSLA, before hanging up the phone, please read on. I am truly trying to help.
A thread on why retail investors get hurt more often than they need to:
So, $TSLA has gained over $50 billion in market cap today because sell-side analyst Adam Jonas at Morgan Stanley has again purposefully let his thesis drift.
Adam now claims that the “supercomputer” Tesla has developed to “train” its FSD system alongside a Tesla- developed “custom AI/ASIC chip” that is more efficient than those at Nvidia, and produced at a fraction of the cost; thus opening Tesla up to a new TAM of $10 trillion.
For a quick review of Adam’s tech prognostication capabilities and skill, Adam originally downgraded $TSLA to a hold in June of 2016 at $13 per share which he reiterated in April of 2019 at $16 per share.
If you are interested in $TSLA, or Mercedes, or Ford, or any automaker, or just the industry in general, you need to get to know BYD. Time for a quick thread.
In terms of BYD and how their battery technology and EV offerings are competing on the world stage against traditional US manufacturers, industry guru Mike Dunne claims “we’re getting spanked.”
And I think he is right.
Turns out BYD is even spanking $TSLA. It looks like Tesla may produce and sell 1.7-1.9 million units globally this year. BYD is going to produce and sell almost twice as many.
I’ve had a great debate over the past 2 years with Tesla fans, or I should say $TSLA fans. As some of you might now, I am not a $TSLA fan (although I am a Tesla fan). I simply believe that the stock price has built in grandiose, unrealistic expectations for their auto business.
I also believe that many have baked in an impractical valuation outlook for the non-auto “Musk Option”, whether it be related to the energy business, to leadership in Level 5 automation with FSD, to AI-fuelled Teslabots, or to the next thing that @elonmusk will come up with.
And it is the debate with intelligent bulls (yes, they do exist, $TSLAQ) where the learning happens. Sure, I hope I’ve done some teaching, but there is no doubt I’ve done some learning too.
I thought I'd trot out my comparative analysis of the performance of Berkshire Hathaway shares vs. the S&P 500. In short, what had looked like underperformance over the past 20 years basically unwound itself in a single year. 1/6
And as Buffett, Munger and Berkshire showed in their recent 2022 letter, this means that the cumulative outperformance of Berkshire over the SPX has been nothing short of phenomenal.
However, at the risk of upsetting my good friend @ChrisBloomstran and other Buffett acolytes, I should point out that this cumulative number is more a construct of compounding on the outperformance in the early years.