Understanding Markets

Even under optimistic assumptions, Tesla's EV segment is significantly overvalued. Current stock value prices in resounding successes in Tesla's other ventures such as its energy generation and storage segment, Optimus robots, and full self-driving. Anything short of a definitive success would make Tesla overvalued. Tesla is facing increasing competition from traditional automakers. Its operating margin has fallen from 17% in 2022 to 11% in Q1 2023, levels similar to some traditional automakers such as Mercedes and Stellantis. It has begun cutting prices to remain competitive. Target price: $106 even under assumptions of a 10% market share of the world's total cars produced, maintaining a 17% operating margin in the longer run. High sales to capital ratio of 4 in the longer run. Valuation Presentation  (PDF Slides)                                 Valuation Workbook (Excel)

Almost two months into my internship at Masterlink Securities, I want to consolidate on the things I have learnt throughout this rewarding experience. I especially enjoyed my time in the macroeconomics research team, where I learnt the usefulness of tracking different economic indicators to gauge market sentiment and help forecast market movements. I will summarise how the macroeconomics team thinks about equity markets and the indicators we look at.  3 Main Drivers of Equity Markets 3 Main Drivers Economic Fundamentals, Monetary Conditions, and Pricing On a very coarse level, the equity market is most often influenced by economic fundamentals and monetary conditions. The most significant drivers change all the time as macroeconomic events occur, so it is important to keep a wide perspective and understand the reasons behind these relationships.  Next, I will explain the indicators I look at when trying to understand and forecast the market. Economic Fundamentals Indicators In...

On March 5th, I published a blog post titled “Bitcoin Revisited: Why I am Still Bearish,” in which I made a case for shorting Bitcoin. Despite my prediction, the cryptocurrency has since risen by approximately 30%. However, I ultimately refrained from shorting Bitcoin due to the poor track record of the only investment vehicle available: the ProShares Short Bitcoin Strategy ETF. This fund failed to rise even when Bitcoin declined. For more information, please refer to my original post. Recent developments have led me to reconsider my stance and open a short position in Bitcoin. Despite the uncertain nature of the investment vehicle, I now believe that the potential upside outweighs the risks. Scenarios 1. US economy remains robust overall, inflation remains sticky, rates keep rising : The US economy remains robust overall, with persistent inflation and rising interest rates. St. Louis Federal Reserve President James Bullard has hinted at this possibility.   Probability: 40% (self...