Referring to this Twitter thread:
https://twitter.com/truth_tesla/status/1332613785572532224?s=21
It’s been funny to watch Gary Black’s tweets the last few weeks.
When S&P inclusion announcement came, he was pumping TSLA and calling an expected top around $550.
This seemed quite low to me, and it seemed obvious that we would go higher, even though his experience and knowledge of Wall Street far surpasses mine. (I am expecting $700-800, but what do I know? At least I admit I have no idea where this beast is headed, lol).
Just a few days later, his tune has changed again, drifting like a fart in the wind now that he has taken a position against the stock’s further rise.
He also doesn’t see how the stock could rise nonlinearly when you remove a big chunk of the float?
A basic economic principle is Price Elasticity of Demand. Cost on the supply/demand curve is nonlinear.
Stock prices tend to be price elastic. That is, as increase in the demand and decrease in supply of a stock occurs, the price tends to rise more quickly. This is because stock can be sold back for a profit, therefore it is an investment. Other things such as groceries tend to be price inelastic, because they are not investments and alternatives can be found. For example, if the price of beef goes up, you can just buy chicken instead. If the price of Tesla goes up, there tends to be MORE demand for TSLA as it rises, because investors can sell shares back at a later time for a profit. Investors want to ride that train.
Sorry, but he doesn’t seem to be any more prophetic than a typical retail investor. I posted as much here a few days ago, and it boggles my mind that a guy with an engineering degree and a total of 2 college economics courses under his belt (me) can understand this whereas a big-time Wall Street guy doesn’t.
Most of these Wall Street types, as well as the “vocal” traders on Twitter such as Squawksquare, Valueanalyst,
etc. don’t have any more of a clue where the price is going than the average Robinhood investor. They can just “speak the language” which makes them look like they know what will happen.
The people who REALLY seem to know what’s happening, such as
@DaveT, Rob Mauer, Truth_Tesla, Artful Dodger, and Nafnlaus spend far less time talking Wall Street nonsense such as P/E ratios to value the stock and far more time talking about the core businesses of Tesla itself.
I’ve taken note of this and my investment strategy is following accordingly.