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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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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Chart School

Population-Adjusted Real Retail Sales: Another Perspective on the Economy

Courtesy of Doug Short.

In real, population-adjusted terms, Retail Sales are at the level we first reached in December 2004.

Earlier this month, the Advance Retail Sales Report showed that sales in September declined 0.3% month-over-month, as I reported in my real-time update.

With the subsequent release of the Consumer Price Index, we can now dig a bit deeper into the "real" data, adjusted for inflation and against the backdrop of our growing population.

The first chart shows the complete series from 1992, when the U.S. Census Bureau began tracking the data in its current format. I've highlighted recessions and the approximate range of two major economic episod...



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Zero Hedge

ISIS Claims It Hit US Embassy In Baghdad's Green Zone

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

"They know Baghdad. They've lived in Baghdad," said Lt.Col Oliver North, warning over the weekend that sources in Iraq believed ISIS was planning a "major attack" against the embassy in Baghdad. Yesterday we get some confirmation - via ISIS - that they did in fact reportedly strike the U.S. embassy in Baghdad. As Inquisitr reports, on Tuesday the Islamist militant group took credit for a mortar attack against the embassy in Baghdad. The group bragged about the attack on social media, claiming that there were likely casualties - “Four rockets strike Green Zone in #Baghdad; helicopters hovering over the Green Zone; ambulances heading that way after strikes!!” one ISIS mil...



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Phil's Favorites

Poster Children

Poster Children

Courtesy of 

IBM, Coca-Cola and McDonalds are three of America’s largest corporations and most well-known brands. They are true multinationals in every sense of the word and they dominate their industries both at home and abroad. They are numbers 23, 58 and 106 on the Fortune 500 list, respectively. Together, they make up 12 percent of the Dow Jones Industrial Average’s total weighting.

And all three are plagued by the same problem – they’re shrinking. More than this, their shrinkage is finally being recognized on The Street, now that investors are peeling back all of the layers of buybac...



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All About Trends

Mid-Day Update

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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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Sabrient

Sector Detector: Sharp selloff in stocks sets up long-awaiting buying opportunity

Courtesy of Sabrient Systems and Gradient Analytics

Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.

Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity -- i.e., th...



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Digital Currencies

Goodbye War On Drugs, Hello Libertarian Utopia. Dominic Frisby's Bitcoin: The Future of Money?

Courtesy of John Rubino.

Now that bitcoin has subsided from speculative bubble to functioning currency (see the price chart below), it’s safe for non-speculators to explore the whole “cryptocurrency” thing. So…is bitcoin or one of its growing list of competitors a useful addition to the average person’s array of bank accounts and credit cards — or is it a replacement for most of those things? And how does one make this transition?

With his usual excellent timing, London-based financial writer/actor/stand-up comic Dominic Frisby has just released Bitcoin: The Future of Money? in which he explains all this in terms most readers will have no tr...



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OpTrader

Swing trading portfolio - week of October 20th, 2014

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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Market Shadows

Falling Energy Prices: Sober Look takes a Sober Look

Falling Energy Prices: Sober Look takes a Sober Look

What do falling energy prices mean for the US consumer? Sober Look writes a brief yet thorough overview of the consequences of the correction in the price of crude oil. There are good aspects, particularly for the consumer, bad aspects, and out-right ugly possibilities. For more on this subject, read James Hamilton's How will Saudi Arabia respond to lower oil prices?  In previous eras, Saudi Arabia would tighten the supply to help increase prices, but in this "game of chicken," the rules m...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly. Just sign in with your PSW user name and password. (Or take a free trial.)

#457319216 / gettyimages.com

 

...

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Option Review

Release Of Fed Minutes, Icahn Tweet Boost Shares In Apple

Shares in Apple (Ticker: AAPL) are near their highs of the session in the final hour of trading on Wednesday, adding to the muted gains seen earlier in the day, following the release of the September FOMC meeting minutes and after activist investor and Apple shareholder Carl Icahn tweeted, “Tmrw we’ll be sending an open letter to @tim_cook. Believe it will be interesting.” Icahn’s tweet hit the ether at 2:33 pm ET and was met with a spike in volume in Apple shares. The stock is currently up 2.0% on the day at $100.75 as of 3:15 pm ET.

Chart – Apple rally accelerate...



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Promotions

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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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