Foreword
For the past few months, I have been working with my favorite financial journalist, Matt Levine of Bloomberg on a new series of podcasts that will be released all at once at a date to be announced. Here’s a sample of some choice clips.
As usual, a reminder that I am not a financial professional by training — I am a software engineer by training, and by trade. The following is based on my personal understanding, which is gained through self-study and working in finance for a few years.
If you find anything that you feel is incorrect, please feel free to leave a comment, and discuss your thoughts.
#1
ML: So, JB, what do you make of the Tesla stock price action today? Tesla previews some bad delivery numbers and TSLA stock is down?
JB: Yes, Matt. That’s because the stock market is forward looking. The numbers suggest strongly that demand for Tesla vehicles is drying up — the wait for a new Tesla vehicle is dropping and Tesla is still ramping up production. Soon, the legendary line of buyers may just run out and then they’ll have a huge oversupply problem.
#2
ML: We talked about TSLA stock being down the other day, but it seems the stock is up strongly today. What’s your take, JB?
JB: Well, Matt, that’s because the stock market is forward looking. Elon announced a series of price cuts, and it appears demand for their vehicles is up again, despite the ongoing supply ramp. It appears the market is pricing in a steady state of more demand and supply, leading to high growth for the foreseeable future.
#3
ML: Wow! TSLA stock just dropped 5% today after hours. What’s on your mind, JB?
JB: That’s because the stock market is forward looking, Matt. Investor Day was a dud — the market was expecting new products at lower price points to attract new customers, but Elon kept talking about their existing products and incremental improvements. The market is looking at the future, and right now, there’s not much in that future to be excited about!
#4
ML: And just like that TSLA is BACK! What’s up with that?
JB: Matt, Matt, Matty! That’s because the stock market is forward looking! The consumer spending numbers are good, so future demand for Tesla cars should be good, and the market sniffed that out.
#5
ML: So what’s the market sniffing out this time? There’s no news and TSLA is down 9%!
JB: Ah, Matt, that’s because the stock market is forward looking! The last consumer spending numbers were too good, and the market is now predicting higher inflation for longer. The Fed will need to hike harder, driving stocks down. It’s all about discounting the future, and the discount rate just went up!
#6
ML: So… TSLA is up 15%. In one day. What?
JB: We’ve talked about this Matt, the stock market is forward looking — the Fed is going to hike rates too much, and that is guaranteed to lead to a recession. The market sniffed that out, and is now pricing in the Fed cutting rates to fight the recession! Rates down, stocks up. Simple as!
#7
ML: … and TSLA is down 14% since the last episode. Any comments?
JB: Well, the stock market is forward looking, and it appears the stock market is pricing in the Fed hiking rates again after the coming recession to fight the next wave of inflation. It appears they’ll overdo the liquidity injection in the future.
#8
ML: Holy <bleep>, TSLA is up 50,000% since we started recording. What is happening?!
JB: Ah yes, the stock market is forward looking and hard at work. With the next wave of inflation so high, and the Fed forced to hike to 20%, it appears stocks will drop by 99%. With Tesla’s Bitcoin holdings, the market is pricing in Tesla buying out the entire US stock market for pennies on the dollar. TSLA is the new SPY, baby! The future is bright and the stock market sees it!
#9
ML: After the last session, I bought TSLA with all my life’s savings and now it’s down 99.99%. This podcast better work, or I’m ruined!
JB: I’m sorry Matt, but the stock market is forward looking. After Tesla buys out the entire US stock market, Elon sold a large chunk of his TSLA shares to fund SpaceX’s research. It won’t happen for another 20 years, but the market sees the future, and is pricing that in now. I’m sorry man, Elon selling stocks 20 years from now is causing you the pain, I’m afraid.
#10
ML: OK, for some reason, TSLA is up again and I’m at least at break even. What a ride!
JB: Indeed, Matt! The stock market is forward looking, and pricing in SpaceX coming up with a fast and cheap transport to Mars, leading to a whole new world of resources for humans to gather and exploit. The future is bright again!
#11
ML: Yep, down again. I’ve been meaning to ask you JB, I get that the stock market is forward looking, but why would TSLA stock go up if SpaceX discovers transport to Mars?
JB: Oh Matt, Matt, Matty… the stock market is forward looking, and it appears it thought of the same question! Tesla and SpaceX are two separate companies, duh! That’s why the stock market is correcting, it is looking forward and it sees this!
#12
ML: … words fail me.
JB: The stock market is forward looking, and it’s apparently pricing in Elon Musk attempting a private take over of TSLA 40 years from now! $420million per share, funding secured!
#13
ML: <bleep>, <bleep>, <bleep>!
JB: Ouch. Matt. The stock market is forward looking, and it appears it is pricing in space aliens attacking Earth after Elon Musk, our future lord and savior departs for Mars permanently. Earth will be in ruins Matt, your life savings is really quite insignificant compared to that. Kids will be murdered, Matt! Kids! Oh, why does nobody ever think of the kids!?
#14
ML: … And we’re back again. To the Moon! I mean, Mars!
JB: The stock market is forward looking, truly amazing! It appears in the future humanity fought off the aliens! Whew, that was close! For a moment I was worried that I may have to learn a new language.
#15
ML: Wait, is TSLA trading at $0? Is that even legal? Who is giving away TSLA shares for free?!
JB: Yep, I was afraid of this. The stock market is forward looking, and it appears it is pricing in the Sun imploding — no Sun, no plants. No plants, no oxygen. No oxygen, no life. No life, no customers. Imagine what that will do to Tesla’s ROI. Man, what a nightmare!
#16
ML: Wait, is that $8? Why is it sideways…?
JB: That’s infinity Matt. The stock market is forward looking, as always. With the Sun having imploded, all life is gone, and money is worthless. So you might as well buy TSLA shares with infinity dollars per share. I guess hyperinflation is coming after all.
Podcast details
Thank you! I hope you enjoyed the little selection of clips from our new upcoming podcast.
If you are looking for details on how to download the podcast when it comes out, or if the talk of the Sun imploding is causing you trauma, and, this is very important, if you are a financial advisor, follow these instructions in bold and immediately stop reading: Look up, smile politely and say, “I’m afraid I can’t help you”. Then show the person in front of you out of your office.
If you are looking for details on how to download the podcast when it comes out, or if the talk of the Sun imploding is causing you trauma, and I guess you can’t be a financial advisor — I think it is probably prudent for you to stop managing your own finances. Go out, find a financial advisor, show them this blog post, and they’ll know what to do.
If you are either laughing, rolling your eyes, or trying to get the last 10 minutes of your life back, and you are a financial advisor, please treat the person in front of you delicately. I think they desperately need your help.
And finally, if you are either laughing, rolling your eyes, or trying to get the last 10 minutes of your life back, and just a regular person, here’s the truth: Given any situation, it is always possible to find reasons for why it would make stocks go up, down or sideways. This is even more true if you have an arbitrary “future” point in time for which to extrapolate to.
“The stock market is forward looking” is true to some extent, but the stock market is just a bunch of people trying to outsmart each other — there is no magic. Yes, some of them are indeed very smart and have done the research. But the vast majority are just regular folks like you and I, and we’re just doing our best. So, not everything the stock market does is rational, and not everything can be explained, and sometimes the stock market moves, simply because it just wanna.
Stockclubs
There is no podcast, but if you want to see what I’m doing in one (out of 10+) of my brokerage accounts, do check out Stockclubs, an app that I’ve invested in, which lets you share your trades and see what others have shared.
Janky Thoughts 