Last week I said to buy gold and short Tesla. That was good advice. You’re welcome.
I bought some Tesla puts on Monday, sold them on Tuesday (at a profit), and then took another position on Friday. It’s not a big position, but enough for fun. I bought the $300 strike price, expiring in September.
My thesis is simple: Tesla is a gigantic con, bigger than Theranos, bigger than Enron. They build fancy cars, but the cars aren’t that good, and they lose a lot of money on every car they build, and there is no path to profitability.
None.
They needed to raise more capital a few months ago, and didn’t, even though they were riding high with a stock price, then, of around $350. Why didn’t they? Because when you raise capital you have to disclose stuff, like, you know, facts, and they didn’t want to do that, because the facts are bad.
Executives are leaving, and they are leaving with a lot of options on the table. Why would you walk away from a potential multi-million dollar payday? Because you know that payday will never be there, so you want to leave long before it goes bust, so you can say “I was gone long before it happened”.
If the price pops up, I will buy more puts. And I’ll enjoy it.
As for gold, it appears to be slowly waking up from the doldrums, which is good, so I will hold.
Again, the weather is fantastic here in Southern Ontario, so off I go to enjoy it.
See you next week.
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The Cash Accumulation Phase Begins
by JDH on July 14, 2018
We are in the dog days of summer. The weather is hot. Everyone is on vacation. Nothing much is happening.
As I have previously predicted, TSLA – Tesla Inc. will eventually go bankrupt, but it hasn’t happened yet. The next quarterly earnings announcement will be around August 1, so presumably we will get more insight into whether or not they continue to burn cash at an alarming rate. They have not raised cash, and so even though sales may have slightly increased, they are nowhere near profitable, so unless they can raise cash, the end will eventually arrive. (If you are playing with the numbers, it is difficult to raise cash, because you are required to disclose all material events, so that’s putting a damper on it now).
Gold is meandering around, going nowhere.
The pot stocks are meandering around, stuck in a rut.
Amazon keeps making new highs, but do you really want to buy a stock with a PE ratio of 228? If that isn’t the sign of a top, I don’t know what is.
It would therefore appear that the prudent course of action at the moment is to accumulate cash. If we have a dip, or a crash, cash will be king.
In the medium term the pot stocks will do well. They had the initial bump when legalization was announced, and will likely have another bump around October 17 when legalization actually happens, so between now and then, place your stink bids and slowly accumulate. We are entering the buy zone for many stocks, but we aren’t quite there yet, so again, cash is king.
That’s how I see it.
More next week.
Keep your powder dry.