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☕ Musk says Robotaxi reveal will be one for the history books, which gives me an idea

Sep 26, 2024

Good morning! 👋

Just yesterday I mentioned that the path of least resistance is still higher.

The markets agree, at least for now anyway. 🤷

The S&P 500 is flirting with record highs (again). Tech is, of course, rockin’ but may give some of that up early if Wall Street traders decide to take the FOMO crowd for a bit of a ride or “run the stops” - a nasty practice of blowing out short-term traders who lack the nerve, discipline, and experience to compete.

This brings up an important point.

Naysayers are already out in force with such sage commentary as “what goes up must go down.” Others are voicing ongoing concerns about the inevitable crash they see ahead.

If you’re tempted to listen, I get it.

Many are super smart and make even smarter sounding arguments. Just remember that this bunch has collectively predicted 10 of the last 2 actual corrections and recessions.

Stay focused.

The markets have spent 83% of the time at or within 10% of new all-time highs since 1927 – which means making new highs constantly is exactly what they do and why you want to invest accordingly.

Missing opportunity is always more expensive than trying to avoid risks you can’t control!

Here’s my playbook.

1 - What d’ya know... good data is actually good again

The markets have reacted as expected by taking off sharply higher in the early going.

The Fed is on the sidelines, which goes a long way towards assuaging fears “the big cut” was really a sign that things were worse than expected.

Weekly jobless claims fell more than expected, which implies a steady labor market.

Durables orders were unchanged for August; economists expected a decline even though anecdotal evidence from real CEOs running top-tier companies like Apple, T-Mobile, Verizon, and others continue to voice strength.

And the Q2 GDP reading was unrevised... at 3%.

Hooyah!

2 – Chips are still it

People continue to talk about AI as if it’s “a” tech.

That’s a mistake.

AI may well be the single most important technology in recorded human history.

9 of 10 businesses have ongoing AI investments

AI technology will help companies generate $15T+ in revenue within the next 10 years, a figure I think is at least an order of magnitude low, btw

100M+ people will work in AI by 2025

Not surprising to me that Micron Technology beat estimates and cited robust AI demand a positive outlook.(Read) In fact, I would have been shocked if the company didn’t.

Micron has returned 36.14% YTD, up 16.98% today alone as I type.

Personally, I like a few other choices with more robust business models better but that’s just me. NOW is the time to be sure you’re on board with your favorite chip makers.

Btw, and I cannot say this strongly enough, history suggests there are 5-10 Nvidias, Microns and AMDs out there right now in various stages of maturity and that NOW is the time to get on board. If you’ve got this covered, fabulous, and well done. If you’d like some help, I’ll be here .

3 – No, Mr. Pelosi’s trades are NOT a political issue even though many want to see ‘em that way

Fox Business reported yesterday that Paul Pelosi (Representative Nancy Pelosi’s husband) sold 2,000 shares of Visa for at least $500,000 ahead of the DOJ's lawsuit. (Read)

Many folks want to make this a political issue.

It's not.

One of the most fundamental and critical elements of our law is "innocent until proven guilty." And that applies to Mr. Pelosi just as it would to anybody else, regardless of personal feelings on the matter.

At issue is a highly connected individual who may have had access to material non-public information and who has seemingly and repeatedly demonstrated a remarkable propensity for personal financial gain ahead of significant market events involving the stocks he is trading that would otherwise likely draw intense regulatory scrutiny.

If Mr. Pelosi is innocent, the SEC should exonerate him and put this issue to rest once and for all. If he is guilty, the SEC should hold him accountable just as they would any other citizen.

Either way, the public's trust needs to be reestablished.

4 - Musk says “one for the history books” and I agree

Robotaxi event invites went out yesterday.

Musk says the unveiling will be “one for the history books” and I agree which is why I’m hoping to snag one.

I find the use of the term “We, Robot” particularly interesting because it implies that this is about more than just autonomous vehicles... could Optimus be a part of this event too?

Musk is known for using words to play on themes, products, and concepts he’s exploring... often months or years ahead of the public latching on.

Channeling my inner Elon, I’m thinking he could pull a Jobs.

Imagine what happens if Optimus calls a RoboTaxi or struts on stage to get in one!

Think about the nexus between robotics, data, AI, and energy... all of which will play a role in making Tesla’s next moves reality.

Now, what to do.

Expectations are so high I’ve got to believe that Wall Street will attempt to engineer a pullback based on a company that news agencies will almost certainly try to position as “struggling to meet hopelessly high expectations” or something similar.

The investor in me is thrilled.

Tesla has returned 1,511% and 1,484% over the past 5 and 10 years, respectively. The S&P has returned 92.95% and 189.58%, by comparison. Any pullback will be a chance to go shopping.

The trader in me is jonesing for some volatility which, in cases like this, is usually an amazing opportunity.

A one-two punch could work nicely.

Buying slightly OTM (out of the money puts – a bet prices decline) immediately prior to the event would help catch any downside move. Then, when that exhausts itself – likely in the overnight markets...
Buy calls (a bet prices rise) with strike prices as close as possible to where Tesla closed the day prior to catch the snap back.

I can’t be more specific unfortunately because the event is still several days away, so let’s plan on revisiting this trade idea as things get closer.

5 - What the heck is up with OpenAI??!!

Mira Murati, Open AI’s CTO, has apparently decided to move on to do her “own exploration.” As have Bob McGrew, the company’s chief research officer and Barret Zoph, VP of research. (Read)

Talk about things that make ya go hmmmm!

This comes at a time when OpenAI’s board is reportedly considering restructuring the firm for profit which, according to anonymous sources being widely reported will make it more straightforward to investors and employees to “realize liquidity.”

That’s rich.

Realize liquidity is Wall Street speak for “make a killing.”

The company is also mid-raise in a funding round that reportedly has it valued at $150B, possibly more. All the biggies are reportedly at the table including Apple, Microsoft, Nvidia as well as Tiger Global and Thrive Capital.

Something’s off.

OpenAI says the decisions were all made independently but I have a hard time believing that if for no other reason than random usually isn’t.

CEO Sam Altman has used the word “amicably” to describe what’s happening, but my experience is that’s almost certainly a dead giveaway that something isn’t.

And finally, OpenAI may lose $5 billion this year if I have my facts straight. Key products like Sora and GPT-5 are non-starters. Meanwhile, Meta is giving away similar software for free, Tesla is making huge strides and even Google is on the hunt, albeit at the back of the back of the pack imho.

I can’t help but wonder if we have the digital version of WeWork on our hands?

Hmmm.