Stocks Archives - The Real Jason Coleman

Most votes are in. Trump is the projected winner.

Still, I hope Harris and her team are ready to keep fighting. You cannot trust whatever “calls” the media has made. The winners are the people who get the most votes, so count the votes. Recount the votes. This election is too important to give up on. Make sure the result is as accurate as possible.

But, while Harris may still request recounts, it doesn’t seem like any reasonable swing in the recounts could be enough to change the outcome. Trump will be our next President… again.

What am I worried about most now?

A certain percentage of folks on the right see this election as a referendum on hatred. People who were just waiting for confirmation of their views on LGBTQ folks and minorities will feel emboldened to act out verbally and physically. We need to push back on hate wherever we see it. We need to look out for one another.

People will say that’s overreacting and talking like that is itself hurtful or hateful towards conservatives. Fuck off. It’s just words. Grow thicker skin. We lived through 2016 and the first Trump presidency, and we know what to expect. We need to look out for one another.

We see these assholes every day, their “Fuck Biden” flags and the beer cans they throw at our driveway. We’ve seen these assholes get upset at our short haircuts, our clothing, our fuel efficient cars, and anything their TVs and phones told them to be mad about today. We’ve see these assholes as they walk around our neighborhoods, feeling free to shout out “are you really going to vote for that n****?” We’ve seen these assholes standing at bus stops with their assault rifles. We need to look out for one another.

What’s going to happen to the economy, the stock market, and the crypto markets?

The economy has been great and is still great, but the vibes were bad. The media, and of course the guys running against the incumbents, were incentivized to tell you the economy was actually bad. Just like in 2017 when Trump won the first time and inherited Obama’s economy, everything bad about the economy will magically be good now.

So we’ve had a great economy and bad vibes. We’re now going to have a great economy and good vibes. I expect the stock market and risk-on markets like the crypto market to run up for the next year or so at least.

We were already entering the falling rates part of the business cycle, and I don’t see any reason why that wouldn’t continue. The market is going to be full of liquidity and lots of dumb, happy, rich folks will be looking for ways to get into risk-on assets.

Look for talk about “bubbles” to fall as we actually start inflating bubbles. Be on the lookout for bubbles. Remember that bubbles inflate before they pop, and it’s hard to tell when they’re going to pop.

I don’t know exact numbers and timings, but interest rates will fall, and then they will stop falling. Watch earnings to separate the reality from the vibes.

Policy-wise, there are a lot of crazy ideas being floated around like giant tariffs, strategic Bitcoin reserves, and going back to the gold standard. Ignore the talk. Wait for the actual bills to pass and go into effect. Operate in reality as much as possible.

The new government won’t come into office until next year, their dumb economic policies won’t pass until some time after that, and the impact of those policies won’t be felt until some time after that. Remember that mostly these policies just shift around who the winners are. Diversify and avoid timing the market. Stonks go up.

Who cares about the economy? Some real shit is about to go down.

You’re right, and I’ll get to some of the more serious impacts this shift towards fascism will have on our country and everyone living here. But one of the reasons I’m talking about the economy here is because those of us who can take advantage of a bull stock and crypto market should do it.

One of the tenets of this era we’re moving into is “lookout for yourself first” or “get mine”. That doesn’t jive with our values, but just like you need to put that oxygen mask on yourself before helping others, we can look out for ourselves first, to build up capital and power so we can help others.

Some real shit is about to go down, and I am not sure we have the energy to fight back again.

The government is about to be run by a bunch of folks who don’t believe in government and don’t really understand it. The professionals who run our government agencies probably don’t have the leadership or the will to stick it out and resist like they did last time. For lots of technical reasons, expect a wider and deeper dismantling of the government.

We are going to have to relearn a bunch of lessons. We’ll relearn why we need vaccines, why we need women’s rights, why we need immigration, why we need the federal reserve, why we need diplomats, why we need competitive markets, etc, etc.

A lot of people, in all times, have had to live under a government that didn’t represent them, and was often hostile towards them. For many people now, there will be more struggles, more fighting, more stress. But there will also be beautiful days, good times with friends, laughter, and love.

I’m often reminded to focus on the IRL, the real world around me. So I’m going to focus on my family, friends, neighbors, and coworkers. We will take care of each other, make the best of our lives, and do important work together.

I’m often reminded to “tend to the part of the garden I can touch”. It’s a big complicated and dangerous world we live in. We don’t have control over everything, but there are parts of it we “can touch”, and there are small ways we can push things in the right direction.

We got fascism now?

It’s definitely here. The fascist guy is going to be in charge. It’s very easy to imagine how it all goes wrong from here towards phony media, phony elections, and a phony government that takes what it wants at the expense of the people living here. Will it be better for them to leach us slowly or burn it all down and sell it for parts?

Ignoring the challenges we will face in preserving democracy itself, some things we hold dear are going to be targeted by the incoming government. At risk are abortion rights, birth control, gay marriage, trans rights, affordable healthcare, and even citizenship for some Americans. There are too many important issues to list out.

There are a couple of things I will be looking out for that might slow down or even prevent some of this backwards slide.

First, there will be infighting amongst the winning team. While the right seems aligned on many issues (trans people are icky), they disagree on many issues too. They will have a hard time figuring who to award contracts to or just how to exactly do the things they want to do.

Do we like electric vehicles or hate them? Tesla good now. Is First Solar bad? We don’t have to like windmills right? We like manufacturing, but not the Chips Act, cause Biden bad. I hate Apple, but I love my iPhone. I hate Facebook, but I’m addicted to Instagram. Repeal the ACA, but somehow keep everything in it. Do we hate Microsoft again? No, it’s Google right now yeah? On and on… the infighting might distract them.

Second, a lot of the worst things we can imagine aren’t actually goals of the ruling class. They don’t seem to really care or have the curiosity to address issues like immigration head on. Things like tariffs, marriage bans, deportations, and nuclear war often work better as boogieman issues to keep their base engaged. Once you change the policies, you can’t really talk about them anymore. The threat of war might be more useful to Trump than an actual war. The threat of deportations might be more useful to Trump than actual deportations.

I’m not saying bad things won’t happen. Trump really talks a lot about keeping our blood pure and how everyone who disagrees with him is an “enemy within” to be sentenced as traitors, i.e. killed. Politicians have to give their base red meat sometimes, and these people really believe a lot of this heinous shit. I’m just seeing the silver lining that there are incentives for some of them to at least be delayed for a while.

Here are the things I’ll be looking out for, which will indicate a crossing of lines and a step towards the worse.

Imprisonment or exiling of any politician or journalist.
Americans being stripped of their citizenship.
Increased and regular state violence towards protestors.
Reversal of nationally recognized same-sex marriages.
A US exit from NATO.

I don’t know what we do when these things happen. I don’t know where the resistance organizes. I just know I would get more and more worried as these milestones are met.

This post hasn’t covered everything at stake or all of my thoughts and feelings about the election, the state of our country, and the different information bubbles we seem to live in. If you’re in my bubble, a lot of this makes sense. If you’re in the bubble that voted for the other guy today, most of this sounds crazy. I think the existence of these bubbles and how they conflict with each other or converge is maybe the most important thing to figure out.

In short, I’m going to look out for my friends, family, neighbors and coworkers. I’m going to push back on hate when I see it. I’m going to try my best to stay optimistic, while keeping an eye on things. I’m going to take advantage of the market opportunities while the economy is hot. I’m going to embrace the spirit of “getting mines” while still adhering to my own values around doing good for others and giving back. As things get worse, I’ll try to point it out where I see it. I’ll try to find the resistance where it comes up and help how it occurs to me to help. I’ll continue to live and thrive in this chaotic world that’s also very beautiful.

I took some profits in my Tesla ($TSLA) position yesterday for the first time in 7 years. Technically, this was my second time taking profits, but the last I rolled my profit into Solar City ($SCTY), which was acquired by Tesla a year later.

Tesla’s share price was up over 50% on the week and up over 100% since the beginning of the year. This after a decent 30%+ gain in 2019. To me, the last week of action was an obvious “short squeeze” situation, making it a good time to take profits.

Another thing on my mind was the fact that Tesla stock is now about 10% of our net worth (minus the value of our business) and about 20% of my stock holdings across all of my retirement and brokerage accounts. I’m not too too worried about this. As Warren Buffet once said “If you have LeBron James on your team, don’t take him out of the game just to make room for someone else. … It’s crazy to put money into your 20th choice rather than your first choice.” Tesla is the Lebron James of my investment accounts.

The final thing I was thinking about was numbers from my Simple Tesla Model. A few years ago, I put together a simple spreadsheet to calculate the potential revenue, earnings, and share price of Tesla stock based on the production estimates Elon Musk was putting out. This is the first lesson I wanted to reiterate in light of the action in Tesla stock this week.

Lesson 1: Don’t forget Main Street. Build Real World Models of How The Businesses Behind Your Stocks Make Money.

It’s easy to get caught up in the numbers and calculations of Wall Street. What’s a good PE ratio for a certain sector? This company has grown sales at 50% per year and could continue growing 50% per year for the next 5 years. This kind of math is useful for comparisons and valuations, but you want to make sure you take a step back and think about what that company looks like in the real world (Main Street) after growing revenues 50% for 5 years. Is that REALLY possible?

At the time I built my simple model spreadsheet for Tesla, there were many people talking about how a valuation in the tens of billions of dollars didn’t make sense for a company like Tesla. Traders who were short the stock talked about how Tesla could never make enough money to justify their share price. But when I put my spreadsheet together, I found that if Tesla could sell 500k cars, they’d likely make $28B in revenue, which would justify a stock price as high as $517. If Tesla only got halfway there, they’d be worth much more than the $200 or so they were trading at in 2016.

To calculate in the risk of bankruptcy or larger failure, you would want to discount the price targets of the model to account for this, but we were already assuming Tesla would only hit 50% of their target, never grow past that, and never make money off their other business lines.

I’ve updated this model a couple times, most recently today. The current tab indicates a future share price of $494 if Tesla can hit about 392k cars sold this year. This is BELOW the current price of $734. And so I am much more comfortable selling Tesla stock when it’s trading above the values my models are spitting out.

Again, while I’ve updated the model to account for energy sales and service revenue, it assumes no growth in car manufacturing or those other business lines. If you plug in different numbers for where you expect Tesla to be 5 years out, you’ll get different targets.

I was also reminded of another important investing lesson:

Lesson 2: Stock Prices Go Up Even When Companies are Not Yet Profitable

Many investors have shied away from investing in Tesla because they feared the company would never turn a profit and thus eventually run into cashflow problems. Not even eventually, Tesla’s investments into the Giga Factory and in general have required them to raise money through special stock sales a few times in the past. Each time this happens, the value of your Tesla stock is diluted.

If you wait for a high flying companies to turn a profit before investing, you might be waiting a long time and miss out on huge returns. Another big winner in my portfolios has been Amazon, who famously hit almost exactly $0 profit each year for most of its existence. Only recently have they been showing a profit, and I would guess Bezos and Amazon would invest more to avoid that profit if they had things to invest in. (Or I don’t know, maybe they think they need the cash now.)

In any case, if you waited for Amazon to turn a profit, you missed a large gain from a well run company that is changing the world. The same can be said for Tesla. So how do you invest with confidence in a company that makes no profit? Here’s what I do.

First, I focus on revenues. As long as revenue is growing or likely to grow from current investments, I feel the companies stock is likely to grow in value as well. I lean toward valuation calculations based on revenue.

Second, I think about whether the company will be able to switch their focus from revenue to profits when they want to later. Will Amazon or Netflix be able to raise their prices? Will Tesla be able to lower their production costs? I tend to give these companies the benefit of the doubt unless there are very obvious concerns about this. You can choose to focus on the negatives, like when Tesla was forced to build cars in tents in the parking lot. Or you can focus on the positives that will drive higher production speed and higher sales margins. Things like removing purchase options that slow down production and figuring out the right mix of automated and human-powered labor will improve Tesla’s bottom line.

With more and more people switching to electric cars, Tesla continuing to own the electric car market, Tesla ramping up production in its existing factories and planning on building even more factories, the Model Y coming out soon, and so much potential in their other products… Tesla is set to potentially become a very large company making a lot of money. Tesla stock has generated a lot of returns for its investors and has a grand enough vision to continue doing that. That said, while the stock is temporarily inflated from a short squeeze, I booked some profits. Tesla is still a large percentage of my investment accounts, and I will continue to try to add to my position if and when the stock’s price falls below my fair value calculations.

Category: Stocks

On the 2024 US Elections