Investing

Tesla Stock Buy or Sell?

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Wall Street gave up giving honest buy and sell rankings years ago. Everyone knows “Hold” is code for sell, without making the company you are covering too mad to use your bank for future deals. But, even that wasn’t enough, with most firms adding a slew of not-so-easy to decode terms like overweight, moderate buy, underperform, underweight. All of this is to obfuscate the actual track record of these analysts which is often abysmal. The less accountability on Wall Street, the better. Is Tesla Stock a Good Buy? Traditionally, I don’t do buy/sell on stocks. It’s a slippery area, but when folks show up in my comments and email asking over and over again for the same thing, I at least consider it. Tesla and Bitcoin I’m writing about Tesla stock today, because I wrote about Bitcoin 20,000 last week (or was it the week before? — Holidays are tricky). Bitcoin and Tesla might sound unrelated, but their performance and trajectory as late are very similar. Bitcoin is a revolutionary idea in currency that is so new there is no real way to know how it will react or behave in the long term. Recently, however, all the naysayers have …

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Bitcoin Hits 20,000

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If you’re a bitcoin fan, or if you just follow along, you know that today bitcoin hit 20,000. Meaning you can turn one bitcoin into $20,000. Is Bitcoin A Good Investment? Bitcoin, like the dollar, and Google stock, has no intrinsic value beyond the fact that people decided it is worth something, and there is a limited supply of it. Unlike the dollar, gold, and Google stock, bitcoin doesn’t have a history, or set of like assets that it can be compared against to determine its theoretical value. In short, bitcoin is so new, nobody really knows what makes it tick, although there are many people out there who claim to know. So, is bitcoin a good investment? It depends on what you are investing for, and what money you are using. Some bitcoin analysts are calling for much higher bitcoin prices than 20,000. Before you get caught up in bitcoin euphoria, don’t forget the previous high for bitcoin was set three years ago in December of 2017. That green arrow is very real, but that red arrow is very real too. If you invested your kid’s college fun in bitcoin in September of 2017, you were a genius, provided …

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DoorDash IPO Worse Than WeWork Disaster?

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Yesterday in my December outlook for stocks, I alluded to the fact that the DoorDash IPO was perhaps overly optimistic about its profitability and the company’s ability to keep any semblance of that profitability in a post-pandemic world. MarketWatch Calls DoorDash IPO “Most Ridiculous” Someone over at MarketWatch isn’t waiting for investors to read between the lines with an opinion piece claiming that the DoorDash offering is the, “most ridiculous IPO of 2020.” The piece goes on to make the claim that the DoorDash IPO offering may even be worse than the WeWork IPO disaster that they previously proclaimed, the Most Ridiculous IPO of 2019. The article goes into the numbers in details, but the long and the short of it is this: DoorDash barely squeezed out a profit on $1.92 billion of revenue for the first nine months of 2020. That amount of revenue is 3x last year’s revenue due to a huge increase in the food delivery market thanks to the Covid pandemic. If you can’t squeeze out a profit in the very best possible market, how can you be profitable ever again. DoorDash can’t raise fees and expenses due to numerous competitors. In fact, its fees are …

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7 Important Things To Look For From the December Stock Market

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Here we go. December 1, 2020 is a Tuesday, so the markets already got started on this week yesterday. This December is packed with interesting scenarios, events, and reports for investors. Without further ado, let’s jump into the 7 most important things to look for from the December stock market. Tesla Joins the S&P 500 Over a long enough period, the FOMO (Fear Of Missing Out) at the SP500 and the Dow Jones Industrial Average drives some interesting decisions. Some of them prove to be remarkably prescient, others embarrassingly reversed. There is no denying that Tesla dominates news storylines in the automotive industry. Its market capitalization certainly qualifies for inclusion in the central S&P 500 index. On the other hand, Tesla stock is highly volatile, often tied to words its CEO blurts out on Twitter, or based on meeting tight-rope high production goals. More commonly missing those goals but getting credit for being kind of close. What is Rakuten? Joining the S&P 500 will give Tesla stock a new stability that comes from being part of all those market index mutual funds and market index ETFs. At the same time, the company may inject a bit of volatility back into …

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7 Deeply Out of Favor Stocks?

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7 Deeply Out of Favor Stocks? 1

Marketwatch is a finance website that survives by cranking out hundreds of articles per day. There isn’t hundreds of articles per day worth of actual financial news out there each day, so there is a bit of filler. Sometimes, I scroll right by. Sometimes, I wonder if a particular bit of financial analysis is legit. Analyzing Financial News Articles Check the person’s track record first Once you’ve been in the financial writing business for a while, you develop some contacts that you can go to for quotes and looks at finances and the stock market. If you have a big enough platform, financial gurus and analysts will come to you for some publicity. All you have to do is fill in the words around their quotes and fire up some graphs. Ironically, what is NOT part of the job is seeing how and when a particular analysts has fared in the past with their predictions. Accountability is not part of the finance writing world. A smart investor starts by seeing what, if anything the finance person has said in the past, and how right, or wrong they were, beyond the flattering, “He picked the last run up in technology stocks!” …

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Covid Investing – Just 1 Tip

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People keep asking me about how to invest based on Covid. Covid investing would be the idea of investing in the potential vaccine manufacturers, distributors, the company that makes glass vials, and things like that. Those company’s stocks are already up on the hope that they’ll benefit. It’s unlikely they are underpriced relative to risk at this point. However, there is an easier way to make a Covid investment. Covid Vaccine To update the original post I must point out that the potential Covid vaccine has arrived faster than I thought it would. The economy is still on the bring thanks to Congress’ inaction on a stimulus package, but in the short-term, expect investors to focus on the vaccine and what might mean for companies, with or without a stimulus. Watch for a lot of over-optimism in the vaccine manufacturers such as Pfizer. If one of them comes out as the dominant winner, then that could really move the needle for them, but present a lot of risk for the others. In my opinion being the main vaccine provider is now priced into all three stocks with vaccines pending before the FDA. Unless they all get something like a third …

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ANOTHER Stock Market Correction?

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Monday’s trading left the S&P 500 down a big chunk, and closing in on another stock market correction for the year. As we’ve talked about before, the stock market this year is very volatile moving up and down in big moves as investors, and their computer programs, make trades based upon how they think the economy will play out among the coronavirus issue. The most recent trend has been down. A Stock Market Correction The definition of a stock market correction is a decline of 10%. The catch these days is that the stock market peaks are often the result of a fast runup in the markets. As a result, the first three or four percent of any correction is nothing more than taking the top off of a potentially unwarranted wave that rose too fast. Check out my Acorns review So, here in we are in September facing down another correction for the market during 2019. As I write this, the stock market isn’t quite down enough to count as a recession, but it may very well get there later today, or even tomorrow. It is also possible the computer algorithms get tripped and start buying. Either way, the …

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Stock Market Highs Main Street Lows?

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The stock market is hitting new highs. These market highs erase all previous coronavirus lows. Many are wondering how can the stock market be doing great while many Americans are still out of work, and experts worry about the potentially large numbers of evictions that may be coming. The Stock Market Looks Forward Many people forget, or don’t understand, that the stock market is a leading indicator. That means that the markets don’t really care about today per se. Rather, the markets look to the future. Knowing what IBM is trading at today, for example, is worthless to an investor. Knowing , or predicting, what the price of IBM stock will be in a month, or a year, is what allows investors to profit. So, why is the stock market racing to new highs? There are several reasons the stock market is rising. First, the return on non-market investments is abysmal. Every article you read about the mortgage rates falling to new lows, also means that U.S. Treasuries are also falling. The rate on a current 10-year treasury bond is around 1/2%. Would you be willing to lock up your money for 10-years in exchange for half a percent? Neither …

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Food Delivery Apps Face Backlash

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It looks like food delivery apps, which had previously flown under the radar of scrutiny have overplayed their hands during the pandemic recession. Food Apps Charge Restaurants Huge Fees Restaurants are no strangers to the outrageous fees charged by delivery apps like Grubhub, UberEats, and Door Dash. Restaurant owners can be charged up to 30% of the price of the overall order. This is on top of the fee charged to the customer ordering food. All three apps actively post a laughable “delivery fee.” This amount is displayed predominately and is typically a low number, like $2.99. Then, this fee is often “waived” as part of some sort of promotion, giving the impression that the customer is getting free delivery. The real fee charged for delivery, however, is hidden by combining it in a line called “taxes and fees.” Obviously, the apps hope people don’t pay too much attention to this line. Pandemic Recession and Restaurant Survival Before the pandemic recession hit, customers and lawmakers all had pretty much the same thoughts. If you want to use the delivery services to reach customers, then you have to choose to pay their rates, whatever they are. If the charges were too …

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What Does Oil Crash Mean for My Investments?

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The expiring May oil contract trading for less than $0 made big headlines, but what is zero-dollar oil, and what does it mean for your investment portfolio? Zero Dollar Oil The trick to oil contracts, unlike similar stock options is that execution requires the delivery of a physical good. If you buy 100 options for IBM stock, on the day the contract expires, they put shares of IBM stock in your brokerage account. Obviously, this requires no effort, nor ability to “store” those shares somewhere. When an oil contract expires, its owner has to take possession of the barrel of oil. That doesn’t actually mean that an investor drives up a truck and loads it with barrels of oil. Instead, there are numerous storage and refinery facilities where that oil can usually be directed. However, as the May contract came up for expiration, there wasn’t any room for storage (which isn’t free), and there is no demand at the refineries, so investors were looking at having to take delivery of a good that they had no place to put, and no use for. In this case, it actually would cost such an investor less to dump his contract for pennies, …

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