Tesla market cap cut in half

After failing to decisively break through its 200 day moving average TWICE since November 30th, coupled with a couple brutal beatings last week, this market is still willing and able to ravage the bulls.

Let’s see what this week brings, but with a p/e near 20 and Jay Powell repeatedly ELI5ing to the market that a pivot is the last thing on his mind (most likely to avoid the mistakes of the 1970s (i.e. easing up too soon)), the market is hardly a screaming buy right now.

Source: CNBC

There will come a point that this changes, and it could come quickly – and at that precise moment, going long might feel like the dumbest move.

Bottoms aren’t always acute, but the best ones are. If we get blood in the streets I’ll get excited about going long again. The lower the market drops, the more willing I’ll be to put cash to work. Sitting in 4%+ yielding paper is boring, but a nice respite from the chaos.

I don’t know if we’ll see a cataclysmic bottom, like in March 2009. Perhaps we muddle through this, inflation eases, growth moderates without recession and Powell becomes a dove. There are too many potential paths right now to get married to a single forecast, so the best one can do is either completely ignore everything (i.e. stick to a long term systematic strategy) or sniff out the market week to week.

Looking beyond the next 12-18 months, however, I wonder if any return to normal will be short lived. But that’s a story for another day…


A few charts to start the week:

1: How the mighty have fallen. As Musk fiddles with Twitter, his OG baby TSLA -2.19%↓ is running head-first into sharp objects. Tesla’s market cap is less than half of its peak value.

2: Speaking of epic collapses in market cap, the total value of Bitcoin is less than 1/3 what it was at its recent peak. Neither proving itself as a store of value, currency, inflation hedge or vol hedge I ask you “what’s the point?”.

3: The United States is experiencing its second broad-based housing correction (crash? collapse?) in 15 years. Both, the opposite sides of fantastic bubbles driven by easy money and FOMO. The last housing bear market took years to unfold and almost brought down the financial system. While we won’t necessarily see another ‘Lehman’, the negative wealth effect alone is enough to make for a few crappy years.

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