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☕ I strongly disagree that Tesla’s Robotaxi Day was a failure

Oct 11, 2024

Good morning! 👋

The markets are now headed for a 5th straight week of gains.

Makes sense.

The latest PPI (Producer Price Index) readings remain unchanged which allays fears that Fed Chair Jerome “JPow” Powell gets antsy. Put another way, the CPI was “hot” but the PPI was “not.”

Here’s my playbook.

1 - The real reason Tesla’s down after Robotaxi

Right on cue, Musk shows us the future (again) and exactly as I told you would happen yesterday, the media calls it a letdown, unimpressive and disappointing. 🤦‍♂️🤦‍♂️🤦‍♂️🤦‍♂️🤦‍♂️

Musk could have done anything from having dinner with King Charles, lunch with the Pope or taking over Stark Enterprises... and the outcome would have been the same.

Now let me tell you what’s really happening.

Wall Street’s merry marauders counted on the media’s reaction – and some who shall remain nameless because I don’t want to get sued – appear to be actively stoking fear.

Tesla shares are down 8.7% as I write and could fall farther.

Here’s why you need to pay attention.

The stock markets work the way they do because every seller has a buyer.

What you want to ask yourself is this.... if retail investors are being scared into selling and the media is unknowingly complicit in making that happen... just who in the Sam Hill is buying?

Short answer... the very institutions and traders that are taking everybody to the cleaners right now.

Don’t let yourself get all worked up about what’s happening.

The media poo-hoo'd Windows, clobbered the iPhone, didn’t buy into Bezos, hammered Sir Richard Branson early in the Virgin Airlines days.

Some examples I recall off the top of my head:

Newsweek published an article in 1995, “The Internet? Bah” and in it mused that no online database will replace your daily newspaper and – I love this one – no computer network will change the way government works.

The Guardian ran an article in 2001 slamming the iPod while calling it a “toy” and noting, “the End of the Music Industry.”

Darryl Zanuck, who co-founded 20th Century Fox predicted in 1946 that TV wouldn’t last 6 months because “people will get tired staring at a plywood box every night.”

There’s undoubtedly a special place in financial hell for the “yeah but-ers" right alongside a bench for those foolish enough to listen to ‘em.

Keith’s Investing Tip: If I’ve said it once, I’ll say it 1,000 times. If you really want to be successful in the markets you have to learn to think like a hunter, not the hunted. Your portfolio will thank you and sooner rather than later.

Now with regard to Tesla itself...a few key takeaways:

The robots showed how advanced the tech is becoming

There's tremendous interconnectivity on the horizon

Nvidia and other chip makers have a loooooooooong way to run

Game on!

The event was a massive home run to my way of thinking.

OBAers: Stick to the plan – and I’ll have an update in today’s AMAs.

2 - Buffett knows something

At first, I was willing to say that him selling down shares of BoA was simple de-risking, rebalancing or profit taking. Or, that he’s raising cash to afford a kerfuffle after he passes.

Now, though, I’m thinking there’s something else at work.

Buffett knows something.

Buffett’s Berkshire stake in BoA is now below 10% after selling over 9.5 million BoA shares – reducing his stake to 9.987%. (Read)

That's significant because a stake below 10% means Berkshire is no longer required to disclose transactions involving BoA within 2 days. (Read)

He is clearly preparing for a major move of some sort... something that involves moving quickly for reasons that are still unknown.

BAC’s performance has been underwhelming of late so I’m wondering if he’s attempting to front run the Fed’s rate cuts because he suspects rate cuts will obliterate the bank's net interest income.

At the same time, Buffett doesn’t tend to make this kind of move unless he feels that the competitive “moat” he often prioritizes has vanished.

If I could tie Buffett’s thinking – not just his moves - to BoA, I’d think seriously about shorting or buying BoA puts, but that’s just speculation on my part and too risky.

Hmmm. 🤔

3 – Palantir’s EV foothold is a smart move, just not like you think

I can’t imagine Karp is happy.

Palantir now owns 8.7% of Faraday Future, an EV startup according to a recent SEC filing. (Read)

Faraday Future initially agreed to pay Palantir $5 million for services rendered but could only pay part of that in cash. So, Palantir seems to have taken shares in lieu of a write off.

A smart move.

If Faraday’s financial situation improves, the shares received may increase in value, providing Palantir with a better return than it would have received by writing off the debt to nil.
Depending on Palantir’s tax situation, accepting shares instead of writing off Faraday’s bad debt allows Palantir to potentially defer recognizing a loss until the shares are sold, which, in turn, helps Team Karp to manage tax liability more effectively.

Keith’s Investing Tip: Many people will look at a situation like this one, yet not connect the dots. Learning to think like a CEO/CFO can help you make better, more consistent, and more profitable investing decisions by getting to the main course, not just the appetizers.

$50 per share up next.

Vivat Karpus Maximus!

4 – JPM beats

JPM beat the street’s expectations (Read)

Reported revenue was $42.6 billon, +7% YoY

Managed revenue was $43.32 billion, +6% YoY

$4.37 a share EPS, +1% YoY

The net interest income was $23.5 billion, +3%, while noninterest revenue rose by 11% to $19.8 billion.

Yet, ‘Profits fell’ is what’s making the rounds in the headlines today.

They’re missing the point.

Profits fell as JPM was setting money aside to proactively cover future loan losses if the geopolitical risks CEO Jamie Dimon is concerned about materialize.

Sign me up.