One of those unfortunate aspects of the stock market is that you’re often better off being wrong than right, as long as you’re wrong early enough, before the horde of drooling morons shows up who are also wrong. That is the case with cryptocurrency for example. When I bought Bitcoins in 2013, I was the count of the drooling morons and it earned me the sort of absurd return on my investment I will most likely never see again, although it ended up not being a lot of money because I threw just 500 bucks at it back in the day.
And yet, the king of the morons has to be my old coworker who just bought himself a two million euro house from his internet NEETbux. As the whole thing is a negative sum game, that just means he inevitably has to impoverish the sort of idiots he shilled the negative sum game to. I can’t imagine myself buying a two million euro house anyway, because my expectations in life are pretty modest:
-I want a house with a garden, where you don’t have to worry about neighbors getting pissed off if you make noise because you don’t share a wall with them. This really doesn’t have to be hard, it can be arranged for 300k.
-I want to be able to spend every day vaping weed (even though I regularly take tolerance breaks of a couple of days) or taking psychedelics, without ever having to worry about running out of money and being forced to go back to waking up early in the morning to go to a cubicle.
If that can be arranged then I probably wouldn’t even know what to do with the money left. I have no Muskoid fantasies of colonizing Mars to save humanity. I doubt Musk himself believes in that crap, he just knows it’s the sort of stuff that makes low status white males throw their money at him. I don’t have some sort of genius solution that will solve our problems. We can solve our problems by demanding less material wealth from life, there’s no easy technological solution left to be found. If I had more money than I know what to do with it would go towards a charity, probably one that hands out anticonception.
One of the pillars of the low status white male religion (commonly referred to by adherents as “libertarianism” or “conservatism”) is that you have to deny our dependence on nature and the physical limitations to our ability to reduce our dependence on nature. Brown people, feminists, soyboy beta cucks, preachy malnourished vegans, hysterical climate change alarmists, shape-shifting reptiles at the WEF, all of us realize to some degree that there are limits, but low status white males can’t accept this. If you can get them to accept for a split second that global warming is a problem, their immediate knee-jerk reaction is that it’s all the fault of environmentalists who don’t want to build nuclear power plants.
And yet, I will say my ego would really benefit from being right when the drooling morons are wrong, rather than being the first drooling moron to lead a parade of drooling morons towards a furnace where we burn our money with Chinese coal. And I will say I have been right a couple of times where it fed my ego. As an example, allow me to show you my Shopify puts:
The first bunch I bought in 2020 expired worthless, but I knew the stock was overvalued as it was trading at anywhere around 40x revenue, I just didn’t know in advance how long it would take the drooling morons to realize it. The answer of course was that people suddenly stopped being retarded once interest rates went up. My general advice is that any established large cap company trading above 10 times revenue is likely to be overvalued (hi Eli Lilly). If you can identify a catalyst, it’s a potential good candidate to buy puts.
But the reality is that right now, I’m just not really beating the indexes. And so I will make a confession: About 10% of my net worth is tied up in out of the money options on Tesla @150 dollar, that expire in 2024. My expectation is that I found a stock that is overvalued, along with a catalyst that will inevitably force a revaluation by the market. If I’m wrong 10% of my net worth vaporizes, which sucks, but isn’t immediate grounds to go back to picking up the phone and talking to the customers (I was born with the wrong type of genitalia to live off Onlyfans).
There are of course different possible catalysts. There are indications of accounting fraud, the CEO is a narcissistic psychopath who releases self-driving software that doesn’t recognize children, the CEO uses his own stock as collateral to buy Twitter and burn it to the ground (margin call cascade would be epic), the guy is tied up in numerous lawsuits like the one where he and his cronies argue he needed a compensation package bigger than the top 200 CEO’s in the country combined so he had enough money to go to Mars (lol) and there are hordes of low status white males (along with Koreans) who bought this stock on margin (again, hi margin call cascade).
But the catalyst that I’m personally anticipating, is that the company just isn’t going to achieve anything resembling 50% year on year growth for the foreseeable future. I also anticipate that the market isn’t going to be retarded enough to accept a “Chinese lockdowns did this!” narrative: People just don’t want his self-combusting child-splattering deathtraps. Perhaps the biggest problem Tesla faces is that the sort of high status white males (ie Twitter bluechecks) who can afford this car, no longer want to be seen in a car associated with low status white males. How could you not be embarrassed at this point, to drive around in a Tesla?
If Bitcoin made you rich (it didn’t make me rich, I made bux by short-selling stupid cryptocurrency scams in early 2018), you will forever be haunted by the creeping realization that you’re just another low status white male who is such a stereotypical low status white male that he was first to jump on the biggest low status white male ponzi scheme of all time. They won’t acknowledge it, but they know it’s true: You lucked out. You drew the herd to a gold mine, sold them shovels and then the gold wasn’t there.
But allow me to show you the problem with Tesla. Right now, Tesla is valued at 8.8 times sales. That’s not as absurd as it was when I bought my puts (above 10x), but it’s still absurd for a car company, an industry with low margins. There are three main arguments given by the faithful, to justify this valuation, respectively:
It’s not just a car company RRREEE!
If you want to value it as something other than a car company, then it’s just even more overvalued, because its other shenanigans (the solar panel shit) shows negative growth. Or do I seriously need to engage the new narrative, that they’re going to build humanoid robots?
But it’s going to grow by 50% for years to come!
They’re not going to hit anything near 50% growth in deliveries this year:
And if they’re not hitting 50% growth in deliveries this year, rest assured they’re not hitting it next year, when there’s a bunch of second-hand vehicles with crashing resale prices piling up that people in a global economic crisis will readily prefer. It’s inevitable that 2023 will be a year without growth.
But the margins are much higher than boring old car companies!
Yeah, I’m skeptical here for multiple reasons, which include:
-Margins go down over time as companies become established and new competitors enter the scene.
-They’re not including all costs in their estimate, unlike other car companies (R&D is excluded, along with maintenance expenses for cars on the road).
-They’re lying sacks of shit.
-If you really want to keep growing at 50% a year, you will need to make cars for poorer people too. Margins for such cars inevitably will have to be lower. It’s luxury car companies like Ferrari that trade at higher price to sales ratios, because they will always keep higher margins.
“Alright you have a nice thesis there-” Yeah hold on. Let’s be honest to each other for a moment. I knew I had to go all in on this, when I saw a video of a bald divorced white man, who explained how he was investing all his savings in Tesla to have enough money to put his kids through college. That’s just when it dawns on you: “This is just another de facto ponzi scheme for desperate people.”
The longer it takes before this de facto ponzi scheme implodes, the more desperate people it victimizes and the more economic damage it causes.
My expectation is the scheme implodes once the 50% growth narrative becomes impossible to sustain. That’s when it becomes valued like just another car company.
What are those valued at? Well let’s look at a big BEV manufacturer, that is beating Tesla in China and is now valued at a price where Warren Buffet is unloading his shares: BYD. Mr. Market values them at 1.53 times sales. For Tesla that would mean a price of 32.5 dollar. You can argue about the established combustion engine car manufacturers, typically valued at around 0.8 times sales, that Tesla deserves a higher valuation because it’s a dying industry. You can’t argue that about BYD.
So how did it reach this sky-high valuation then? Because the people investing in Tesla just don’t understand investing:
Yeah this is stupid. Do you think Warren Buffet could talk for hours about GEICO? No, he bought his first investments because they were trading at two times earnings. My best investments were very simple: They had more cash minus debts on their balance sheet than their market cap, the CEO was announcing it was undervalued and that he was buying stock himself (Finvolution), or I looked up the share price of a fund’s portfolio and realizes the value of its investments + cash greatly exceeded their own market cap (ARIX biotech).
“Can you sperg for 12 hours about your investment?” Is not a proper metric by which to judge whether a company is a sound investment, sorry. If anything, being able to sperg for 12 hours is a bad signal, because the reason a company is undervalued should be obvious to explain within minutes. If this guy isn’t careful, he will soon have to wake up at 7AM to pick up the phone and talk to the customers again.