I want to buy options against QQQ so badly -- but Tesla has traded at a crazy multiple of revenue/profits for a very long time, so I'm wondering if Elon/AI hype will keep these stocks high longer than I want to pay the risk premium for (options).
Tesla is a meme stock like GameStop, but for a good fraction of America, so the market cap can be much larger. As long as TSLA owners don't care about the stock defying gravity, it will continue to do so.
I'm with you on this. I think the market bubble can stay alive and well a lot longer than you can survive an open short position.<p>I think we're still a ways away from CEOs admitting that AI actually can't cut the cost of human capital in half.
IMHO, still too much. Someone posted this link [1] recently.<p>[1] <a href="https://www.youtube.com/watch?v=IHD8BDFYyGI" rel="nofollow">https://www.youtube.com/watch?v=IHD8BDFYyGI</a>
Holy crap is that an amusing/depressing video. Assuming the financial shenanigans outlined in it are even partially accurate, how the heck is this getting allowed?
300B given its revenues would be a huge stretch. 780B is ridiculous. 1.5T is science fiction.
Additional concern is the push to get it added to indices immediately. Forcing it into our retirement funds, 401ks and IRAs.
>Forcing it into our retirement funds, 401ks and IRAs.<p>Not just forcing it into. Forcing the funds to fight for it betting the stock rice higher and higher in a runaway style - the effect created by limited float and high valuation as the funds tracking indexes would try to get the amount reflecting the proportion of the valuation of the company vs. the whole tracked index valuation, and with limited float it leads to the price rise and the higher the price on the float the higher the valuation, rinse and repeat...
The best you can do is avoid the exposure with changes to your portfolio composition while everyone else gets grifted. It's regrettable.
I think this is poor advice. Its share of the index will be relatively small and if it is indeed a dud, the index will organically rebalance. If you’re a long-term investor, this would just be a temporary blip. On the other hand, if this is thr opposite of a dud, you’ll get the benefit of that.
Nothing wrong with finding a low-cost large cap ETF that matches your investing preferences.
If one wants to gamble on the grift, that is what options are for. Otherwise, we might as well start adding NFTs to the indexes if fundamentals do not matter. Luck for some, risk management for others. Regardless, informed consent is important imho. Relevant precedence is ETFs that exclude Big Tech.<p><a href="https://www.defianceetfs.com/xmag/" rel="nofollow">https://www.defianceetfs.com/xmag/</a> ("XMAG, the first ETF designed to provide investors with exposure to the S&P 500, excluding the “Magnificent 7” (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla). XMAG offers a unique opportunity for investors to access the broader market while reducing concentration risk in these dominant tech stocks.")<p><a href="https://www.aboutschwab.com/mss/story/how-investing-and-gambling-are-not-the-same" rel="nofollow">https://www.aboutschwab.com/mss/story/how-investing-and-gamb...</a> ("Investing and gambling can both be fun. But they are not the same.")<p>(none of this is investing advice, educational purposes only)
Patrick is my youtube finance news GOAT. Hilarious and deeply detailed videos on some of the craziest shit going on in finance. If you're interested in the nitty gritty details of portfolio management, he also has a bunch of lectures at the beginning of his channel pre-"content creator"-era that are like sitting in a university classroom. Very good stuff.
I knew it was going to be Patrick Boyle before I even clicked.
Man I'm so eager to find out how all this unfolds and when does the music stop for Elon and his shenanigans.
Which is still 10x what it is worth
As is the case with Elon's companies (and a bit of the market itself), it feels like any logical valuation has no impact on the actual stock price.
The market can stay insane longer than you can stay solvent.<p>In the short term the market is a popularity machine but in the long term it is a weighing machine.
> <i>in the long term it is a weighing machine.</i><p>This has not been the case for a long time.<p>What do you suppose is BTC's correct valuation? How about TSLA?
> > in the long term it is a weighing machine.<p>> This has not been the case for a long time.<p>I think this comes down to a disagreement about what "long term" means. In finance, I would suggest a _lower_ bound on long term is 10 years. More comfortably, I'd suggest something like 20-30 years. This is long enough to ride out most depressions, and it is still fits within a persons working life-time. It also roughly matches the scale at which people should be planning for retirement and long-term care (imagine if you started your retirement planning just 10 years from retirement, it would be very difficult). So I think neither BTC's not TSLA's hype has reached long-term yet. They have been around long enough to meet some of these timelines, but the excessive hype really hasn't been so long -- maybe 5 years or so.
If the scales are only checked after the heat death of the universe, does it even matter?<p>If the market can’t actually detect crooks and charlatans until long after they have stolen investors money, its ability to be “correct” is worthless.
The irrational exuberance around Tesla was at least somewhat grounded in reality. There were some possible future(s) where it was really going to take off and completely redefine the auto industry. Then of course things went really off the rails with the Cybertruck, pivot to robotics, and just seemingly giving up on their existing line of business to go chasing whatever bong fueled dream Musk is having this quarter.<p>SpaceX is on a whole new level of bullshit. I think all these guys know how to do is double down. If the hype isn't working, its not stupid and big enough, so you start talking about transhumanism and singularity and other BS in your SEC filings.
That's going to be interesting to see if others follow this as an anchor or buy more into the hype. Regardless it's still a large multiple of earnings...
While I love this, Morningstar isn't a fiduciary
Related:<p><i>Michael Burry says neither SpaceX nor Anthropic is worth $1T</i><p><a href="https://news.ycombinator.com/item?id=48368187">https://news.ycombinator.com/item?id=48368187</a>
Doesn't matter, as soon as they can they'll shove it into the indexes, meaning pension funds all over the world will be let holding the bag.
So I don't fundamentally care if SpaceX is overvalued or not. Like, that's on you for whatever you want to invest in or not.<p>What I object to is all the rule changes by NASDAQ to essentially fix the IPO so massive pension funds and index funds are forced to invest in it. There have been multiple submissions about this but in short small floats are normally prohibited for index inclusion (not anymore), the trading days required for price discovery have been dropped to almost zero, the voting share structure would be an issue, the insider lockouts have been fixed and on it goes.<p>There should be extra scrutiny for a trillion dollar company.<p>SpaceX does have the Falcon 9, which is the completely dominant launch platform and first-stage reusability gives it an almost unbeatable advantage. Starlink has a lot of potential if satellite handsets can get small and cheap enough to compete with 5G effectively. Obital data centers are bullshit. Starship is going to be a significant drain on finances and the program as a whole faces significant headwinds.<p>The big problem is xAI. It's a significant drain on SpaceX (costing allegedly $1B+/month). SpaceX would be a better company without it. But it's only there to rescue Elon from his disastrous Twitter purchase and the xAI investors from Elon's first bailout (of himself).<p>There's almost no point in trying to figure out what a valuation should be because in many cases, nobody cares. Tesla is the posterchild for that.
Ultimately it was inevitable that as passive investing got more and more popular, people would seek to game it. Not that I'm happy about it, but if this works, it is probably just the beginning of sneaky ways being found to trick passive money into taking on way more risk than it intended to. And of course passive investors are passive, so they may not even notice, and probably won't fight back until the inevitable crash.
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