Stocks & Equities

 

Elon Musk’s younger brother, Kimbal, appears to have made more than $8 million on Tesla’s stock this week, as he exercised options to buy the stock, two days after he sold those shares at 6.5 times the price he paid for them.

Good timing for board member Kimbal, as the sale of share was made Tuesday, with some of the sales executed above Monday’s record closing price of $498.32.

 

The stock TSLA, -13.64% bounced sharply to close Friday up 2.8% at $418.32, reversing an earlier intraday loss of as much as 8.6%. The stock snapped a three-day losing streak, but has still tumbled 16.1% since Monday’s record close.

This week’s selloff comes after a 5-for-1 stock split went into effect on Monday, and as Tesla disclosed a $5 billion stock offering and a large shareholder reduced its stake.   Full Story

Apple, Tesla Both Under More Pressure Early As Profit Taking Appears To Surface

For weeks, there’ve been people saying stocks can’t go straight up forever. And today it looks like they’re right. The market actually has a softer tone this morning as caution kicks in ahead of tomorrow’s jobs report and the long weekend.

Crude is especially weak, diving more than 2% back toward $40 a barrel. Worries surfaced about U.S. demand possibly flagging, analysts said. U.S. fuel consumption has flattened, which isn’t great news from an economic perspective. Energy was the only sector in the S&P 500 that fell yesterday, and it’s down more than 40% so far this year.

Meanwhile, the “split brothers,” Apple Inc. and Tesla Inc, both fell in pre-market trading after losing ground yesterday. There might be some profit-taking going on after the amazing rallies these two have had. Nothing too surprising there. However, their pre-market losses are weighing heavily on the Nasdaq (COMP).

The early weakness drew a challenge from weekly initial jobless claims, which fell to a post-pandemic low of 881,000. That was well below analysts’ expectations for 950,000, and down from 1 million the prior week. While claims remain historically high, it’s always good to see fewer people needing to apply for jobless benefits, and major indices started to come back a little in pre-market trading after the data.

Claims data and early softness aside, the fundamental feeling most of this week has been positive. The buying mood is partly due to speculation about a coronavirus relief package, and also reflects optimism that a vaccine will become available this year….CLICK for complete article

How to survive in a market infested by rookie investors

 

I am not trying to imply that the current market is a bubble. But surely, investors have moved from panic to optimism (I won’t say euphoria). Expectations are high and investors seem to be generous on valuations. It is time to be watchful and well calibrated.

I would just like to say what Warren Buffett articulated extremely well, “The less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs.” Read More

 

“In order to save the village we had to destroy it…”

 

The market is not stupid. Data compiled by Deutsche bank shows new money and flows into the equity markets is almost all going into Tech or healthcare – the rest of global commerce is essentially flatlining or negative. If your cash is invested in index-followers on the basis the rising Tech tide will lift all boats – then beware, it’s a false connection. These stocks could be dragging for years. (And explains why a V-Shaped recovery was never realistic.)

Of even greater concern is what is going on in debt.

This year we will see global corporates raise some $4 trillion from the debt markets – ostensibly to fund themselves through the Pandemic. I read a great interview with sage investor Lacy Hunt“The Pandemic will eventually go away, but the debt will still remain.” He went on to describe how: “Debt is a double edged sword: it’s increasing current spending in exchange for a decline in future spending unless it generates an income stream to repay debt and interest.”    Full Story

 

‘A tale told by an idiot’

 

‘The S&P’s new highs are a tale told by an idiot, full of sound and fury, signifying nothing about the hardship of millions of people on food stamps, or the millions about to be fired from service jobs, or the homeless, or the people who are just huddled at home waiting for the vaccine, which currently feels a lot like waiting for Godot.’

 

That’s CNBC’s Jim Cramer summoning his inner Samuel Beckett to talk about the disconnect between equities and the harsh reality of what’s going on in the U.S. economy.  Read More

Technically Speaking: S&P 3750. Is It The Light, Or A Train?

Mentally, it has been a challenge to marry a market challenging all-time highs against a backdrop of weaker earnings, falling profits, surging unemployment, and a recessionary economy. Yet, here we are. While the bulls have set S&P targets to 3750 over the next 12-months while bearish signals persist. For investors it will be the difference in determining the “light” from the “train.”

Of course, we also discussed the importance of the issue of the “capitalization effect” on the market’s advance, mainly since Apple and Microsoft make up such a significant weight. As noted by Sentiment Trader last week:

“The most significant stock in the U.S. and nearly the world, Apple, keeps powering higher. At the end of June, the value of Apple alone was almost 80% of the Russell 2000 index’s market capitalization. As of today, it’s nearly 90%. Such is astounding – in the past 40 years, no single stock has come close to dwarfing the value of so many other companies.” CLICK for complete article