Image Source: PexelsMarket Update: A low-volume, one-day rally on an earnings report showing many government jobs. All hail Keynesianism. Perhaps that’s why gold is now at $2,350 and remains part of our Hedge of Tomorrow argument. After a four-day sell-off, this wasn’t shocking. The trend still features heavy selling across the small-cap universe, technology, and cyclical space. Stay on guard. This isn’t over. The CPI comes soon.
Dear Fellow Expat:Sometimes, I’ll tell my daughter something completely off the wall.”Did you know I invented the idea of putting sprinkles on ice cream?” I’ll say…It’s not… say… fire.This is just whimsical enough to catch her momentarily, based on what we’re doing and in something she enjoys.She’s at the age where she challenges things quickly. She’ll laugh…“You’re joking, right?”“No… seriously… it was a complete accident,” I continue. “I was eating ice cream… and making a cake at the same time… and the sprinkles fell out of the cupboard and landed on the ice cream. And I thought… let’s try it.” She’ll laugh again… “You’re joking.”The attempts to continue with such fibs offer a fleeting return on investment…She’ll eventually say… “Daddy, I know you’re joking.”And that’s the end of that.Plus she knows how the internet works.And that turns into an hour-long exercise on who invented sprinkles, whether my father sold sprinkles at McCormick, and what the best ice cream is.But what if the story wasn’t harmless…I’ve always told her… listen to people… but research what they tell you.She has to do her research… and even then… the truth becomes murky.
The Media and Musk
Today, Reuters reported that Tesla (TSLA) was abandoning its low-cost electric vehicle in pursuit of a large fleet of robotaxis.Who told the company?Reuters writes:
Two sources said they learned of Tesla’s decision to scrap the Model 2 in a meeting attended by scores of employees, with one of them saying the gathering happened in late February.
“Elon’s directive is to go all in on robotaxi,” that person said.
The third source confirmed the cancellation and said new plans call for robotaxis to be produced, but in much lower volumes than had been projected for the Model 2.
After all the headline reads: Exclusive. They stand by their coverage.Now, I do not like “sources” as a term. It has bugged me for years. But I get it. It’s necessary to protect the identity of people at a company (whose personal stock in the company will decline on the news if they put it out into the open… odd to me…)The stock tanked on the news.You don’t need much help telling where the story broke.
Right around 11:05. The algorithms went to work quickly… dumping the stock.But Elon Musk… who owns X (formerly Twitter) and is the CEO and founder of Twitter, replied 30 minutes after the stock dropped 6%.See the straight line back up? That’s algorithms reading Twitter and buying stock fast.“Reuters is lying (again),” he said.Shares immediately rallied more than 4% after that reply.Now, Musk isn’t the most truthful guy in the world. But he owns Twitter… and used four words (with no real backup) to turn this away from his company and into an indictment of the media… (Where have we seen this before?)In the middle of all this… are shareholders…This just shows the fortunes made and lost over a few keystrokes on Twitter.It’s crazy to witness this – because we’re already so overly focused on one-week stock movements – that the social media blitz and algos trading can cause these whipsaw events.Is Musk lying? Did Reuters get something wrong?I have no idea. I assume Reuters did their reporting… and they saw emails.Half of the financial blog space wouldn’t exist if Reuters journalists didn’t get out of bed.But I know a handful of traders lost much money today…And a handful of traders made a lot of money today.And I know what we need to do as investors to better protect ourselves from mayhem.What’s Happening?It’s hard to know exactly what to make of this story yet.The media got a nice Friday boost out of this… Everyone just told the story of Reuters and Musk. Few mainstream outlets offered any deeper insight into the development.But Sawyer Merritt, who runs a Tesla newsletter and covers the EV/tech space, offered his insights into the news.
“Tesla’s low-cost $25k car and the Robotaxi were always going to be based on the same platform. They were going to be very similar, but the $25k version would have a steering wheel. Maybe Elon and the team have been so impressed with how good FSD 12 has performed and were maybe thinking they should be shifting even more resources to the Robotaxi/FSD effort. This doesn’t mean the $25k car is canceled. Again, they share the same platform.”
He’s arguing that the robotaxi vehicle is just a future inexpensive EV without a steering wheel. And that this EV will eventually arrive…Elon replied to that Tweet with just this:
What goes for confirmation in news these days… right from the source?It’s hard to know what is happening… and feel any sense of conviction here.Oddly, three writers can put together an article that likely took a few weeks to put together. And it’s all refuted… in four words in less than seven seconds.All because Musk said so…Now, we wait for something. And spin will likely be part of it.
What Now?
Well, we’re not “long Tesla.”We’re not long EV.But we are “long govern,ment mandate,” playing the fact that the U.S. agencies are hellbent on making EVs the play. We still like lithium names over the long term.What should we take away from all this?First, it’s all a reminder that maybe it’s sometimes best to be boring.Focus on good companies that make things and don’t get swept up in competitive media outlets trying to be first over the wall with a report that will drastically affect the market.Trust me, Reuters won’t be writing a report tomorrow that impacts the performance of PBF Energy (PBF), Ardmore Shipping (ASC), or Arcadium Lithium (ALTM). Unless something significant happens.Second, remember to try to contain your emotions.That’s hard when there is this much noise, with wild swings and events. However, you have to be focused on the long term as an investor. Remember, you’re buying into a company… not a stock.So, do your diligence. Find out what you like about the company. Dig into the financials. Look at the 10-K and public presentations on the company sites. Don’t just buy because you hear about it on CNBC.You will become a shareholder… so act like one. When these events happen, it’s best to sit back and wait for the CEO and the CFO to announce these things. It’s unusual to see such a large strategic change announced via media.Companies have earnings calls and host conferences for major strategic announcements. I do not fully trust the media… because I have been in the media and seen exactly what happens. Most people don’t even understand business or finance.Third… and this is important.Remember – you have a pipeline to these companies.Don’t just follow the news.Go to TipRanks and look up the names of analysts who cover the companies.Focus on analysts who spend their entire days following these companies. They know the CEOs and CFOs. Read their research. A lot of it is publicly available.Be sure to go on Twitter and LinkedIn. These platforms have democratized access to these executives. Read their letters and posts. There’s always good information about their companies in there. Keeping an excellent concentrated portfolio makes it easier to manage all that information.I’m not a fan of Tesla, as I don’t understand it. In fact, I don’t like the automotive industry at all right now.Our focus remains on energy, insiders, momentum, and macro.Everything else is just noise right now.More By This Author:Russia, Risk Off, And Republic Rules Feeling Bearish For OnceClown Car Wednesday Cometh
