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☕ Tesla’s big day is here – buy ahead of time or afterwards?

Oct 10, 2024

Good morning! 👋

The markets are pulling back on the heels of inflation readings that came in “hotter than expected.”

We know better.

Here’s my playbook.

1 – Inflation hotter, WWJPD?

Ruh-roh.

The latest inflation reading came in at 2.4% versus the 2.3% expected.

Predictably, the markets are pitching a fit because... you know... WWJPD (what will Jerome Powell do)?

Don’t much care.

Beating inflation isn’t all that challenging.

You simply need to invest in companies making “must-have” products and services that are growing revenue and expenses faster than inflation. Especially tech.

And if you’re interested in learning more about how to actually do that (rather than simply banging around in an echo chamber because everything you’ve been taught about inflation is wrong despite the fact that it’s taught as dogma), I suggest you read The Inflation Myth and the Wonderful World of Deflation.

If you’re an OBAer... be sure to read the exclusive interview with Dr. Mobius in the March 2021 issue which is available via the Portal.

2 – Airlines schmarelines

The headlines are filled with airline stories this morning.

Airbus reported lower monthly deliveries (Read)

Delta posted Q3 earnings (Read)

United is planning to expand destination options to grab customers (Read)

Should you get on board?

Not me.

The sector is problematic at best.

Especially when there are choices like FICO, AVGO or TSLA that have returned 3,602%, 3,246% and 1,412% respectively over the past decade.

JETS – a popular ETF choice for airline investors – has returned –12.16% by comparison... over the past decade. 🤦

Just sayin’

3 – Boeing, still a bug in search of a windshield

I suggested in March that Boeing was a bug in search of a windshield and that it would likely break $150 a share.

That happened yesterday.

Now what?

JPM credit strategists note that Boeing may become “the largest fallen angel on record” with some $52B in index-eligible debt. (Read)

Here’s why you should care.

A drop from investment grade paper – meaning the stuff that you want to buy – to so-called high yield grade – meaning junk – would require a downgrade from 2 of three ratings agencies and become the largest on record. Ford, btw and in case you’re wondering, holds the current record at $51B in 2020.

JPM reports that Boeing would be the largest high yield issuer by far, representing 3.6% of the high yield index—double the size of the next largest issuer – and I don’t doubt it.

The reason I bring this up is that high yield bond ETFs and funds are a popular choice for many income-oriented investors and – if this happens – potentially a lot riskier than you’d think.

Earlier this year I thought Boeing might be worth a speculative punt at $140 but now I think based on this information that $125 could be more likely if there’s a downgrade, the strike continues, and earnings take an even worse hit.

The company may burn $10-20B more cash than it’s got this year.

With a “B.”

Trading/Investing Ideas: Continue to short or avoid – there are bigger and considerably better-run manufacturers with actual profit potential and actual profits. And if you fancy a speculative turnaround bet akin to visiting your favourite casino, consider a LowBall order at $125.

4 – Delta blaming CrowdStrike is like saying the dog ate my homework

Delta is blaming CrowdStrike for earnings woes but that’s like saying the dog ate my homework. (Read)

CrowdStrike didn’t get the memo.

CRWD +68.15% over the past 1 year even after a 40% fall, while DAL is +40% all in.

What’s next?

I think CRWD regains highs pretty quickly, an implied ~28% run if I’m correct.

Hmmm.

Keith’s Investing Tip: Investing is a constant series of tradeoffs. People tend to think about picking this stock or that but what they really should be thinking about is picking this stock or that because it’s a better opportunity. In other words, there’s always a tradeoff which is why you constantly hear me say that “missing opportunity is always more expensive than trying to avoid risks you can’t control.”

5 – Robotaxi Day is here – buy now or later?

Super interesting how the media has gone dead quiet this morning.

Unka Elon referred to this as a ‘product launch’ event rather than just an ‘unveiling event’ or ‘Robotaxi event’.

I continue to believe that he’s going to unleash something the likes of which the world hasn’t yet contemplated and, if I’ve got to guess... it’ll involve the nexus of AI, robotics and, yes, probably even robotaxis.

The countdown is on. (Get ready)

Many investors are wanting to know if they should buy ahead of time or afterward.

Wrong question.

Wall Street will game anybody trying to game the event which is why they will whip out every trick in the book to jack volatility, run the stops and otherwise force your hand over the next 24-48 hours. Especially if you have neither the nerves nor the discipline needed.

My guts are telling me that the media will ramp up at the same time with yet more reasons to hate on Musk. They’ll poke fun at the debut, say it falls short or doesn’t merit all the attention... something that inevitably induces doubt and attracts legions of clickbait artists.

Stick to the plan!

You do have one.... right??!!

The OBA Family does and – shameless sales plug here – I'd love to welcome you to the table if that’s of interest. 😊

Meanwhile, I’ve encouraged investors to buy off April 2024 lows and I hope you have.

$300 is well within range at this point.