There have been and are many companies with insane valuations that have been the drivers of the market for the past decade or so. Tesla’s valuations have pretty much always been insane. Investors can rationally decide that such doesn’t matter given that stock price changes over a moderate term can be unmoored from those analyses.
Which returns us to earlier in the thread: independent of Trump the S&P500 overall is at insane valuations. Has been for a while. Does that mean that staying in it was definitionally irrational?
You find a friend that owns that stock. You agree on some price you pay him to loan that stock for a while.
You sell the stock you loaned.
When the agreed upon term has passed you buy the stock and give it back to your friend.
Yes, it is a weird way of doing business. In reality it is even weirder because the “you” in my story is often a hedgefund that is a subsidary of the “friend” that lets the stock.
When retail investors “short” a stock, the broker will act as the buyer, the seller, the lender and charge you for each step.
I just had inspiration for a bit of gallows humor for this thread. Somebody somewhere may already have done this but if so I haven’t seen / heard of it. Anyhow …
Start with this: Poster art - The Bonfire of the Vanities (1990)*, change the three people to be trump, elmo, and I’m not-sure-who sneering evilly, and change the movie’s title to be “Bonfire of the Equities”.
Sure to be a big hit meme all over the internet.
*Sorry you’ll have to click through. I’m on a low-bandwidth connection and couldn’t readily find a hotlinkable example of the same pic.
I think my interest in paying close attention to investing is done. Tesla is up like 4% today even though they just got found for 1.6 billing in missing assets, the side panels keep falling off the swastikar so they fucking recalled all of them, and all of the other stuff. If such an obviously awful stock can be in the top 10 of all market caps in the world the whole thing is just a mass delusion and a scam. I’m still holding my short sell and my long term puts but there’s no sense in any of this and if the rules aren’t real, the people in control are manipulating the players, and everything is made up it’s no fun to play the game.
I mean I’m not going to stop investing, I’ll still adjust things every once in a while, but I think I’m just going to go back to plugging in some safe bets and forgetting it.
I shorted Tesla at $270 and I think $230 so I’m still up on that a little bit. I have various puts across time and prices – $245 today, 210 on April 4, 190 on May 2, 170 on May 16, even all the way out to 150 in December. It’s hard to imagine, even as cynical as I am now, that Tesla can come out with their earnings report in late April that says their sales are down massively across the world and not finally crash.
It seems likely those will still probably hit and propping up Tesla currently is about “exit liquidity” for the big players (con a bunch of suckers to buy their stocks as they slow exit out of their position) and it’s still going to crash in some future date. So I’m probably fine, and there’s a decent chance I still make a ton of money off of this.
So it’s not personal annoyance at losing money so much as realizing the whole thing is kind of a joke. Charitably it’s a mass delusion, but it’s probably a scam of the big players against the smaller players too. If it can’t act rationally even in the most obvious situation ever that it should, it’s hard to remain enthusiastic about the idea that somehow you can rationally master it.
Tesla is a huge, obvious, unmistakable emporer’s new clothes sort of situation. It’s hard to take any of it seriously when this can go on.
I remember taking Introductory Economics freshman year in college. “Assume rational actors …” Well there’s the problem right there. Economics made huge progress with behavioral economics and game theory which applies rational analysis to behaviors that at first level analysis seem very irrational. Harder in the ever changing market, where again increasingly powerful AI systems are fueling to stay ahead of each other in recognizing emerging patterns.
I think longer term rational analysis will win out, we who are buy and hold may be okay … but personally short to even moderate term movements are not something I am equipped to make any confident guesses about. Recognizing that some still do just fine trading and speculating. Not for me.
The fact the CEO is openly BFFs with the President is going to cause wild unpredictable short-term swings. Just one fact of countless I’d imagine affecting short-term volatility that has nothing to do with your intelligent analysis of this stock being overvalued. Yea, not for me either.
Sometimes I feel like I’m just summarizing Electrek articles on this board, but this one from this morning is so on point, that I have to mention it.
Over the last three months Tesla board members and executives have sold millions worth of TSLA. None are buying the dip. And this is the money quote from the article:
Not a single Tesla insider who requires SEC reporting to buy or sell Tesla stocks has purchased it in the last few years.
None.
Of course none of that in anyway means that shorting TSLA is a good bet, because the stock price depends on so many things other than future profit expectations.
Tesla is up almost 10% today. Somebody is manipulating the market big time, I wonder how they do it and how they are getting away with it. And, of course, for how long. Incredible.
Of course, markets are up across the board thus far today, anywhere from 1 to 2 percent. Obviously that’s not close to 10%, but it is a significant increase.
Nah, I don’t think so. I think people figure a 50% drop is unreasonable and so are buying the dip.
I certainly don’t think it’s unreasonable, since I think Tesla’s sales are permanently damaged. The left hates Elon and the right isn’t nearly as likely to embrace EVs.
However, you do often hear it claimed that Tesla is really a tech company and not a car company, so if that really turns out to be the case, then maybe.
Manipulation is a strong word. It’s just people buying up Tesla for reasons. Probably unknowingly or not caring about buying Tesla.
Or said another way, I’m about to “buy” Tesla. I’m going to buy an S&P 500 ETF because I think we’re at a floor of sorts (or it’s at least a bit cheaper than it was a few months ago). So I buy the ETF, and it has Tesla stock, so the price goes up.
There are thousands of ways to buy Tesla that’s not directly buying it that could cause the price of Tesla to go up. It would need to be in Tech/Tesla weighted type ETF’s to account for the 10% (assuming this would be the only reason which of course it is not).
Buying the dip generates over 80 Billion additional market value in one single trading day? For context: Mecedes Benz market value: 56 Bn €. Toyota: 233 Bn €. Volkswagen: 21 Bn €. Stellantis: 33 Bn €.
Yes, manipulation is a strong word. It is also a crime. I wonder how long they (whoever “they” are) can keep this up.
I guess I just don’t understand why “something goes against what I think should be happening” on a certain day = it’s manipulation and a crime. It’s not knowable, definitely not in the moment.
I certainly don’t. I’m just offering up plausible explanation of why stocks do weird things on certain days (day trading, buying Tesla in a fund, etc.). It looks like the 10% is being driven by retail investors like us.
Sure, but the market cap of the S&P 500 is about $50 trillion- which means in that one index alone there’s that much money sloshing around, and it’s up $690 billion today. Nvidia is up 98 billion in market cap today.
And it’s estimated that investors collectively have $7 trillion on the sidelines.
So I’m not shocked when a stock that’s down by 1/2 bounces a few percent.
Some of those reasons very well could be Trump and commerce secretary Lutnick encouraging people to buy TSLA. I don’t think it’s manipulation like we’ve seen with meme stocks, but when the government picks a winner, buying the dip might be reasonable behavior. So manipulation with words, not money.
One of Musk’s primary concerns has to be keeping TSLA above any level where loans he has against it are called in. That level is likely in the $10-20 range, so probably not a big concern, but it’s also possibly in the $150-200 range, which would make having loan issues a much likelier possiblity.
Well I guess you probably know my opinion and bafflement at Tesla jumping yesterday. I’m so exposed to Tesla that I had my biggest losing day since I started investing by a little more than double. I can only hope we’ve hit a price the big institutional holders of Tesla can get out of it and a big sell off makes it come crashing back down. Cause if it goes up again today I’m going to set myself on fire.
I’m glad I have most of my Tesla puts set to expire in May because I don’t know how we can possibly maintain this farce after the earnings report goes down and we can see Tesla is down 50%+ internationally in sales.