Tesla did a 10 X from March low of 85 $ today at 850 $ per share . if you had invested 1000 $ on Tesla in March today you will be sitting with 10 k by December 2020.
But is that it ? did we not miss the value stocks at good valuations?
There are still plenty at very comfortable valuations and are real steal for your money.
As usual many of us only saw the market chasing some growth stocks over value ones . We all had our eyes glued on Tesla ,Amazon the Tech FOMO stocks
(Google ,Apple,Facebook, Square,Snowflake )
Does that mean value investing is really dead ? Can the world survive only with a few Tech companies growing.
Value investing will never die ,because after all the results define the actuals ,hype and expectations cannot hold the fort for long.
We all know that tesla and tech is not the reality.
Value stocks are all going to come back with a vengeance in 2021 , when there will be more sellers than buyers on this unscrupulous gambling .
Historically on every uncertain environment ,people have chased growth stocks.But this hasn’t lasted long as the fundamentals kick in after a while and quarter results fails to show the same magic on company’s balance sheets.
At confusing time with so much of economic uncertainties ,it’s quite easy to just stick to a few growth stocks as the money has few avenues to grow.US market being 80 % saturated by algorithmic trading makes matters worse.
Any buyer interest in growth stock results is huge rallies in seconds as Algorithms detect the bullish pattern.
Lets discuss the most storied poster stock of 2020 ,Tesla.
Is Tesla worth buying ?
I will still say a big fat NO , but after 2022 or a few more years down the lane , yes we should reconsider seeing how the EV adoption picks up.
If there is anything history teaches us in business then its that good business doesnt end with good ideas.
Yes Tesla could be a pioneer on the electric vehicle front and Elon Musk could be the iconic poster boy who killed petrol cars , but the growth that is being sold in market today is at-least 10 years away for Tesla ,the valuations are far more than crazy gambling !
Valuing a car company that sold less than a million cars at 1150 times P/E is nothing short of the very peak of gambling.
A successful business is not just an idea its also about how you compete in the market , product pricing , how you convince the regulators, customer retention .Stock price has to be realistic to reflect revenue of the immediate few years . if its just based on theory and hype than actual figures just stay away!
Over time GM,Ford ,Toyota,Daimler which has been intensely competing in the consumer car space for over 50 years now , are all going to have a piece of this pie of the electric car market.
They will all catch up and have equally compelling products when they see a real business opportunity with electric vehicles. Today none exists !
Let’s not forget that businesses that survived for 50 years have some essential components in them right , and they have overcome lots of disruptions successfully.
Just because a new idea came to market doesn't mean that all of them have lost the game or may never catch up.
And the reality is that the electric car future has just arrived , its needs to be seen if they become the only true alternative to the IC engines as after all electric car is not the only promising environment friendly solution.
The EV battery manufacturing process is a nightmare .
Today’s way of generating electricity with coal and fossil fuels using steam turbines is an even more inefficient drag on environment than individual IC engines of cars.
Fact is IC engines are far more efficient in burning fuel than a typical electic powers station. The steam turbine used to produce electricity leads to a large energy wastage and comparatively an IC engine in car is 50 times more efficient.
Be fearful when people are greedy.