This article popped up on my feed on the weekend:
All companies in a capitalistic system need to earn profits and those profits need to be attractive relative to the amount of shareholder capital employed. Tesla has never earned an annual profit. Along with digital currencies and Unicorns, Tesla appears to be caught up in a gold-rush-fever type of emotional response, both from a “they will take over the world” and a “they will save the world” combination of hopes, instead of their owners looking at the numbers …
… As anyone with automotive experience knows, profit margins are far higher on bigger, more expensive cars. Therefore, the faster Tesla makes Model 3’s, the more money they will lose.
I’ve been saying this for a while now. Elon Musk is the biggest fraud the world has ever seen. He recently approved an increase in his annual salary to $5 billion per year, more than every other CEO of a top fortune 500 company combined.
And this is the problem that I have with shorting Tesla stock – the timing.
Yesterday afternoon after a big lunch of Normandy oysters, barbeque pork ribs and grilled vegetables I laid myself down on the couch and watched The Big Short. I’ve seen it a few times but I always enjoy it. I was reminded of the fact that before the 2008 crisis hedge fund manager Michael Burry bet against the mortgage backed securities. He made his bet in 2005 which turned out to be two years too early, meaning he had to pay high monthly premiums.
Not only that, when the banks realised what was happening they refused to value the securities accurately, essentially making the entire system fraudulent. I am sure that one of the main reasons that they did this was a deep unwillingness to acknowledge the ugly truth. If Burry was right then they were wrong and being wrong has consequences.
Back to Tesla. The company is a giant fraud built on a pile of sand, but the entire green economy is exactly the same. Windfarms do not make money. Solar panels do not make money. Recycling garbage does not make money. All of these things, and many more, (lets not even talk about wave farms), lose money.
If people have bet big one way they don’t want to know that it is bad. Worse than that, they will continue to throw money at it right up to the point when it falls off a cliff. So if you were to bet against this market, by shorting Tesla stock for example, you’re not just betting against market forces; you’re betting against global delusion.
Of course it will happen. The market will crash. If anything this is an even bigger opportunity than the 2008 financial crisis. There is far more taxpayer money invested in this green energy bullshit.
But when to bet against it, that is the question. It is a fraudulent market already, let alone when people deep in it begin to wake up to the fact themselves. You could be paying a lot of monthly premiums before it all goes bad.