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  1. lvmoda

    TSLA – I'd be careful shorting this stock.   Full disclosure:  I have been quite long since last year, in fact having paid for my tesla with long calls.  However, I also thought the stock had run too far ahead of earnings and closed most positions leaving only a Jan15 42C/May 75 spread open.  So I've also been shocked and awed by the move, fortunately not to the point of any losses (yet).
     
    There are so many intangible and unpredictable factors to valuing TSLA, and there have been many articles arguing both sides, but I'll share my things to consider:
     
    1.  This car has the simplicity of design that very rarely comes along.   It really is simply a battery, a 4G-connected computer (with a 17" display – and yes I've already been caught reading emails and PSW while driving, lol) and a big inductor motor with a few servos, fuses and pc boards.  That's it….almost no moving parts to break or wear out.  Take a look at a the chassis in one of their stores and you'll see what I mean.
     
    What this really means is that this car and the platform was designed to be very easy to build and support.  This means scaling should not be compared to traditional auto company scaling business models.  The ecosystem/supply chain is very different.  The hard part (design) of the platform is done, the moat (patents) is cast and the fortress (factory) template is being optimized right now.  Yes, the supply chain will need more work, but this is more like scaling an iphone – all the value add is in the design, not production.   Does anyone really think TSLA will have a problem raising capital to build more assembly centers?  I think not.
     
    2.  The traditional auto companies have been burned on every effort to change their propulsion model, whether it be hybrids, electrics, etc.  A lot of money spent, but not well and one can argue they did not have the commitment to succeed – only to satisfy regulators.   Look at the Chevy Volt, the money spent, the time involved in design, the price of the car, the 'intelligence' of the car and the resulting sales: fail.  Even Toyota has not been able to grow Prius sales beyond the niche of greenies.  
     
    This is why telsa IS disruptive, and now has broken into a clear run for the goal line.   They have the design instincts, human capital and nimbleness of a classic silicon valley start-up.   Kind of what GM wanted with the acquisition of EDS a long time ago, but how did that work out for them?   Even Toyota does not have the culture to drive this transition to electric cars conceived as a mobile, digital platform – the more they spend the more they will lose and the more validated the disruptor becomes.  Classic Christensen disruptive innovation…google it.
     
    3. Sales will accelerate beyond expectations outside of US.   Europeans have much more to like about Tesla cars than Americans – higher fuel prices and shorter travel distance requirements and more supportive governments/regulators.  Of course, not everyone can afford a Model S (although one can argue an affordable luxury @about $570/mo in the US on lease and about $400/mo in Europe). If you think this will be the last car TSLA makes then go ahead and short the stock.  However, the Model X SUV is already designed (with cool gull-wings) and the Gen III design is active ($40K sedan with 500 mile range).  Umm….short if you don't think they know what they are doing, or if someone won't buy the vision or fund the capital, or if you don't think they will be the first movers on this innovation.
     
    4. Elon Musk is in the process of becoming the new age Edison.  He's already made the money and is motivated by solving the worlds' big problems.  Do you think the CEO's of Ford, GM or Toyota are wired or motivated that way?  He may be a little loose, not unlike the old Steve Jobs, but you really have to ask yourself a couple of questions:   Are electric cars a fluke or fad?  If you think yes, then stick to your bikes and zip cars and I can't help you.  If no, then what horse are you going to bet on?   My bet is on the one with no legacy costs, unions, cultural and competence impediments and vested interests within their firm who do not want to lose their position and power by encouraging the demise of the ICE.
     
    These points are for those who are shorting out in 2015.  I do think and actually hope that TSLA comes in from 80 after the current shorts cover.  I have May 75 covers that I'm managing and would love to see the stock get back to the 60's.  But this has become a cult stock and now the general public has latched onto it.  What other car has achieved Motor Trend Car of the Year, and Consumer Report's 99/100 score?  None.   They will be many trying to play the 'buy the car, pay with stock gains' game, which I can't put down because it did work for me, but I wouldn't try it now.   I'm just making the point that there will be many drivers of stock demand – rational and irrational.  And I don't think this will be the last wave of short covering (especially seeing the comments on the board).   Just remember that irrational is indeed irrational, but it is also real and can last for a long time.
     
    I've seen this movie before, namely AMZN in the early 2000's when no one could believe the stock valuation based on traditional valuation metrics.  Even still to this day.   It still surprises me that people buy the vision story without regard to valuation, but it happens over and over again.   Looking at the long-term AMZN chart from 1998 until now is evidence that scalable digital business models can defy gravity for a very long time.   Things happen much faster now, so AMZN's chart performance curve for 10 years may only take 3 years for TSLA.    In fact, I think a good pair trade would be Long TSLA/Short AMZN LEAPS, playing the momo's against each other.
     
    I've had my share of covers and hedges blow up on me and the only repair left is to roll way out and say a prayer.  And of course, with unlimited time and margin, selling premium can fix most surprise gaps up and down.   I'm just saying that TSLA in 2015 is a very uncertain and risky play, mainly due to the irrational factors that defy gravity – witness AMZN.



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ValueWalk

Pershing: Despite Recent Vol shares of Fannie & Freddie "will be worth a multiple of their current price"

By VWArticles. Originally published at ValueWalk.

Pershing Square latest presentation slides

Also see 2017 letters

Ackman ’16 Letter On Fannie: “Various Scenarios” of “a … – V

Chipotle Mexican Grill (CMG)
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?Founded by Chairman and CEO Steve Ells in 1993
?High quality, simple, predictable, unlevered, free-cash-flow-generative business
?Recovering from food safety issues beginning in the fourth quarter of 2015 which c...



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Zero Hedge

France Is 'Fixed'? - Credit Risk Collapses Most In History

Courtesy of ZeroHedge. View original post here.

French credit risk has collapsed by almost 40% this morning - the most ever - as it appears investors are satisifed that 1) Macron will win the presidency, and 2) Centrist banker/Hollande-lackey Macron will solve all of France's problems.

Notably, European VIX has plunged (back to historical norms absolutely and relative to US VIX)

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OpTrader

Swing trading portfolio - week of April 24th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Kimble Charting Solutions

Fear Index tanking, after hitting this resistance!

Courtesy of Chris Kimble.

Below looks at the VIX (Fear Level) over the past few years. A rally had taken place in the VIX, driving it up to falling resistance and its 50% retracement level at (1), in the chart below.

CLICK ON CHART TO ENLARGE

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Digital Currencies

BDC's Crypto Corner

Hello fellow PSW-ers, it's biodieselchris here. I've been an interested in cryptocurrencies (informally, "cryptos" or "coins") since 2011 when I first heard about Bitcoin, Since that time I've become somewhat of a subject matter expert and personal investor in Bitcoin and other alternative cryptocurrencies ("altcoins"). I have even started one of my own!

I've been posting comments about cryptos in Phil's daily post from time to time. Recently, Phil and I got on a call and he asked if I would like to run a blog on his site specifically about cryptos, which I thought was a great idea. My goal would be to educate members on what I know about how coins work, how I research coins (what I find interesting), how exactly one can invest (buy, hold, and sell) coins and a basic, easy-to-follow general how-to on all things crypto. In addition, other members have expressed an interest in learning more directly i...



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News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Now's a great time to be a stock picker (Business Insider)

Companies in the S&P 500 are moving independently of one another to an extent rarely seen, and that's good news for stock pickers.

The World’s Advanced Economies Should Think Twice About Curbing Migration (Bloomberg)

Analysis of United Nations data by Fitch Ratings shows halting immigration would drastically reduce the potential working population of Group-of-Seven nations, leaving aging societies more dependent on a smaller labor force and resulting in greater f...



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Chart School

The Tax Cuts are Coming! It's the Stock Trader Weekly Recap.

Courtesy of Blain.

Forgetting the traditional market news, as we began last week both the NASDAQ and Russell 2000 were at critical support.  A rally Monday showed those support levels held, giving bulls breathing room.  We’ll discuss this more below after we get through the more fundamental news items that transpired.   Traders seemed to breath easier on Monday seeing no escalation with North Korea and came in ready for a bit of a relief rally.

The lack of a nuclear test from North Korea over the weekend did much to reverse defensive positions adopted by traders heading into the weekend, said Ian Winer, director of equity trading at Wedbush Securities.

It was a very heavy week of S&P 500 type earnings with banks leading the way in the first half of the week. Then a series of large sized companies ac...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Wall Street gears up for busiest earnings week in years (Reuters)

Corporate America is set to unleash its biggest profit-reporting fest in at least a decade next week, with more than 190 members of the S&P 500 index .SPX delivering quarterly scorecards, according to S&P Dow Jones Indices data.

Draghi Says ECB Hasn’t Seen Evidence of Durable Eurozone Infl...



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Members' Corner

Should I buy that stock?

Courtesy of Phil Stasukaitis (pstas)

I was asked by my local investment club to do a presentation on "how to buy a stock?" As I pondered the question, I began by noting all the elements that I monitor regularly and which come in to play as part of my decision process. As the group is comprised novices to experts, I tried to gear my discussion to cover both basics and more advanced concepts.

Four Part Discussion

  1. Macro Economic Indicators
  2. Market Indexes
  3. Fundamental Analysis
  4. Technical Analysis

1. Macro Economic Indicators

We'll start with reviewing some basic concepts and measurements that have direct effects on the stock market. 

A. Gross Domestic Product (GDP)

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Mapping The Market

Bombing - Right or Wrong?

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I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

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A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

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Biotech

CAR-T & CRISPR - the Future is Now

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

PSW Members....it has been a while since my last post, but since many have all been on the board following the chat, it is time for a scientific lesson in a few of the companies we are long.  In addition, another revolution is coming in the medical field, and it will be touched upon as well.

CAR-T - stands for Chimeric antigen receptors (CARs) and the T is for T-cell.  

From the picture above, T-cells are one cell type of our immune system that fight off infection as well as they are one player at keeping rogue cells from becoming cancerous. Unfortunately, cancer somehow evades the immune system and so it begins.

CAR-T came along in the late1980s via a brilliant scientist, Zelig Eshhar...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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