Overlords Investment Conclave [OIC] Recruitment Thread

[LordMortis]

How many Tesla's would they have to sell per year to be worth $200 share? If you can't answer that, you shouldn't buy it.

I think I learned the answer today. I think I can understand how Tesla can essentially lose money selling cars but reach profitable probably for ten years coming while they continue to grow. Someone talk me off the cliff. Beginning next year that could be as low as a couple hundred thousand cars in Europe annually.


https://ec.europa.eu/clima/policies/tra ... roposal_en

https://www.dieselnet.com/standards/eu/ghg.php

https://www.businessinsider.com/tesla-s ... ser-2019-6

Tesla can literally sell 100% of emissions credits and the heavier the car, the more credit they can sell. And unlike ICE vehicles weight is not the primary savings for energy in an EV as weight energy is largely reclaimed when a vehicle is told to slow.

This could be billions of revenue a year. Zax tell me this is already built in to the price and they're losing $5 a share while they release more stock and take on more bonds. ND, tell me (and show me) I'm off base and ignorant. Please.

Incentive mechanism for zero- and low-emission vehicles (ZLEV)

A ZLEV is defined in the Regulation as a passenger car or a van with CO2 emissions between 0 and 50 g/km.

To incentivise the uptake of ZLEV, a crediting system is introduced from 2025 on.

The specific CO2 emission target of a manufacturer will be relaxed if its share of ZLEV registered in a given year exceeds the following benchmarks:

Cars: 15% ZLEV from 2025 on and 35% ZLEV from 2030 on
Vans: 15% ZLEV from 2025 on and 30% ZLEV from 2030 on

A one percentage point exceedance of the ZLEV benchmark will increase the manufacturer’s CO2 target (in g CO2/km) by one percent. The target relaxation is capped at maximum 5% to safeguard the environmental integrity of the Regulation.

For calculating the ZLEV share in a manufacturer’s fleet, an accounting rule applies. This gives a greater weight to ZLEV with lower CO2 emissions.

In addition, for cars only, during the period 2025 to 2030, a greater weight is given to ZLEV registered in Member States with a low ZLEV uptake in 2017, and this as long as the ZLEV share in the Member State’s fleet of newly registered cars does not exceed 5%.
Pooling, exemptions and derogations

The provisions on pooling between manufacturers are the same as under the current Regulations. Pooling between car and van manufacturers is not possible.

The exemption possibility for manufacturers registering less than 1,000 cars or vans per year, as well as the derogation possibility for “small volume” car and van manufacturers, has also been maintained.

The derogation possibility for “niche” car manufacturers, i.e. those registering between 10,000 and 300,000 cars per year, will end after the year 2028. In the years 2025 to 2028, the derogation target for those manufacturers will be 15% below the 2021 derogation target.

Flexibilities. Certain flexibilities are available for manufacturers, as follows:

Pooling—Several manufacturers may form a pool to jointly meet their CO2 emission targets.
Low volume manufacturers—Manufacturers with fewer than 10,000 new cars registered per annum may apply to the European Commission for a derogation from the specific emission targets. Several conditions apply.
Eco-innovation—Manufacturers may apply for credits for innovative CO2 reducing technologies which are not accounted for in the current test cycle—for example, energy efficient lights. The total contribution of eco-innovation credits is limited to 7 g CO2/km in each manufacturers average specific target.

Excess Emissions Premium. Manufacturers who miss their average CO2 targets are subject to penalties:

From 2012 to 2018, the penalties are €5 per vehicle for the first g/km of CO2; €15 for the second gram; €25 for the third gram; €95 from the fourth gram onwards.
From 2019, manufacturers pay €95 for each g/km exceeding the target.

[noxiousdog]

Well, it's taken them 7 years to make 1.7 billion in credits. That doesn't sound that impressive.

It's a nice offset that helps legitimize a higher profit margin than traditional automakers, but you still have to know how much profit they get on each vehicle and then multiply it accordingly. It doesn't really change the original question.

[LordMortis]

Well, it's taken them 7 years to make 1.7 billion in credits. That doesn't sound that impressive.

It's a nice offset that helps legitimize a higher profit margin than traditional automakers, but you still have to know how much profit they get on each vehicle and then multiply it accordingly. It doesn't really change the original question.

That's the thing. I can't see how they are making any money on each vehicle. But if Fiat isn't going anywhere for the next ten years and Tesla builds a presence. It's not about what they've paid in the last 7 years. It's about what will be paid in the next 10 years.

https://arstechnica.com/cars/2019/04/te ... -chrysler/

Over the weekend, the Financial Times reported that Tesla and Fiat Chrysler Automobiles (FCA) have entered into an agreement that will deliver Tesla a fresh influx of cash and deliver FCA from the hands of Europe's tough new emissions regulations. Beginning next year, new European Commission rules begin to phase in that require a car maker's fleet-wide emissions to average no higher than 95g/CO2/km—a figure that works out at roughly 57mpg for gasoline vehicles, or 76mpg for diesel-powered vehicles.

From 2020, 95 percent of an automaker's new cars sold in the EU have to meet this target, with the remaining 5 percent falling under the law in 2021. And the penalties for failing are draconian: a €95 ($107) "excess emissions premium" per gram of CO2 over the target, for every single car registered in the EU that year. For some OEMs, this has the potential to be ruinous; if FCA's portfolio were the same in 2021 as it was in 2018, the automaker would have to pay some €2.77 billion ($3.12 billion), out of total net global profits of €3.63 billion ($4.1 billion).

But please talking. I need to come to my senses.

[LawBeefaroni]

Fortune favors the bold. So does ruination.


If there's going to get rich on emission offsets in the next 10 years, you have at least 1 or 2 to see how they do. And to see how other automakers fare.

[noxiousdog]

But please talking. I need to come to my senses.

Although the exact financial terms of the deal are unknown, the FT says the agreement is in the range of "hundreds of millions of euros." Interestingly, the FT also reports that Tesla had extended the offer to other OEMs to join this emissions pool but that none had accepted by the March 25th deadline.

So, hundreds of millions of euros and nobody else is interested.

I'm also guessing that that hundreds of millions of euros is a multi-year agreement.

[LawBeefaroni]

Am awful lot of that income is dependent on fickle European governments and presumably the destruction of many of their own existing automakers.

[malchior]

Am awful lot of that income is dependent on fickle European governments and presumably the destruction of many of their own existing automakers.

Agree on the 2nd half but I think they'll lean in on the credits. They've been pretty forward thinking about using credits to develop incentives to move the carbon/green mix inside the EU markets. That is how they got ahead on the energy production side and I expect they'll also work the consumption side pretty hard especially as actual impacts on the climate front get worse for them.

[Zaxxon]

Zax tell me this

I think everyone here knows my thoughts on Tesla. In any event, I'm comfortable gushing in the Tesla thread, but not in the investment thread. I have a pretty high tolerance for risk in my TSLA investment, and I would not want anyone to make that jump based on my advice. I'll recommend the cars highly, but not the stock.

If you're interested in someone else's long-winded diatribe on TSLA, though, I did come across this manifesto over the weekend. This dude largely lays out the bull case in a fairly coherent way. I will say that his higher-end estimates are ridiculous even in my view, he's more defensive of Musk in the 'pedo guy' incident than I am, and that he has a serious case of it's-vs-its confusion that boils my blood. But if you take the 30 minutes to read it, you'll get an idea of the general reasoning behind those who are still in the stock.

[Isgrimnur]

CNBC

Stocks fell on Friday after the release of stronger jobs data dampened hope for easier Federal Reserve monetary policy.

The Dow Jones Industrial Average pulled back 41 points, while the S&P 500 lost 0.2%. The Nasdaq Composite also slipped 0.2% as semiconductor stocks fell broadly.
...
Investors were betting heavily on the Fed cutting rates later this month heading into Friday’s session. CME Group’s FedWatch tool showed expectations for a rate cut in July were at 100%. Last month, the Fed said it would “act as appropriate” to maintain the current U.S. economic expansion, which is the longest in history.

But Friday’s jobs report tempered expectations for aggressive monetary policy. Market expectations for a 50 basis-point rate cut fell to just 9% from 29%, CME’s FedWatch tool showed. Expectations for a cut of 25 basis points, however, rose to 91% from 70.8%.

[LawBeefaroni]

41 points on the Dow isn't a pulback. That's flat.

[noxiousdog]

Zax tell me this

I think everyone here knows my thoughts on Tesla. In any event, I'm comfortable gushing in the Tesla thread, but not in the investment thread. I have a pretty high tolerance for risk in my TSLA investment, and I would not want anyone to make that jump based on my advice. I'll recommend the cars highly, but not the stock.

If you're interested in someone else's long-winded diatribe on TSLA, though, I did come across this manifesto over the weekend. This dude largely lays out the bull case in a fairly coherent way. I will say that his higher-end estimates are ridiculous even in my view, he's more defensive of Musk in the 'pedo guy' incident than I am, and that he has a serious case of it's-vs-its confusion that boils my blood. But if you take the 30 minutes to read it, you'll get an idea of the general reasoning behind those who are still in the stock.

I admire his efforts, but it doesn't pass the smell test. Analysts estimate 19.66/share of profit in 2022 for 3.4 billion as a total number with current shares outstanding. That guy is predicting 16.2 billion. Analysts have overestimated earnings predictions in 10 of the last 15 quarters.

The value of Tesla is going to boil down to can they sell enough cars at a high profit margin to justify the stock price. The idea of a $35,000 model 3 has already gone by the wayside. It's worked for Apple. I'll be interested if the car market can have a similar model. You could argue that as a singular purchase (and look how many premium SUVs and trucks are sold) people are more willing to buy a premium vehicle than a premium phone.

[hitbyambulance]

super late to the party here. i figured i should get over my fear of the stock market and not have basically all my savings in a savings account. where do i start? if anyone can help via email, i can provide more of my details.

[Isgrimnur]

Exchange-traded funds (ETFs). They allow you to play the overall index. SPYders are a commoditized share of the entire S&P500. It goes up, SPY goes up.

You can then specialize into different industries such as defense of you think certain aspects of an index are going to outperform others.

They’re essentially mutual funds picked, indirectly, by those that choose the index companies without all those pesky management fees.

[noxiousdog]

super late to the party here. i figured i should get over my fear of the stock market and not have basically all my savings in a savings account. where do i start? if anyone can help via email, i can provide more of my details.

There's no time like the present, but this seems to many people (including myself) like a bad time to start.

Depending on how much "all my savings" actually is, dollar cost averaging over the next 24 months would be a good way to do it. Divide it up into 8 chunks and then buy an equal weight S&P 500 index like RSP each quarter.

I have sold everything broad based myself and gone to cash with the exception of 401(k) investments. I do have a few specifically chosen stocks.

[LordMortis]

I have sold everything broad based myself and gone to cash with the exception of 401(k) investments. I do have a few specifically chosen stocks.

I think you are smarter man than I am. Buy and hold sort of demands I don't pull everything. However, in the last 12 months, 5/6ths of all new money not put in to long term retirement (aka 401k and IRA) have been put in to CDs. I'm hearing more and more people say prepare for 36 months of tubulance/"bear market" and then re-evaluate. Eventually if enough people say it, it becomes self fulfilling even if "the economy" doesn't dictate it and it seems to me "the economy" has already been asking for a correction and we have been ignoring it because collectively we don't know where else to put our retirement or investment in our future being. Essentially, as society, we've taken Bush the Elder's advice to heart, forget Social Security, let American choose how to invest in their retirements... Only we still pay social security...

[LawBeefaroni]

It's coming soon.

I know because my dad, who demanded that I take his account to cash a year ago is now asking me to load up on index funds. He also asked about some OTC "drone company". He's like a retail behaviour bellwether.

[noxiousdog]

we don't know where else to put our retirement or investment in our future being.

This, to me, is the underlying issue. We have an option of 30 year bonds at 2.6% or corporates at 3.3%. That means for a high quality company you're chasing P/Es between 30 and 38 before even thinking about growth.

I'm not willing to take that kind of risk, but a lot of people either don't mind or have no other choice (see: pension fund managers).

[LordMortis]

It's coming soon.

I know because my dad, who demanded that I take his account to cash a year ago is now asking me to load up on index funds. He also asked about some OTC "drone company". He's like a retail behaviour bellwether.

Heh, your dad and I have the same weathervane, only I do it with new money, not moving my money around. I'm just now starting to put money in things other than CDs and that is mainly indexes... and a token in to Tesla, as much as $220 a share can be considered token. This why 5/6ths money is in CDs not 100%. I know I'm going to regret it but my ladder is built and CDs are paying so little and I don't want to stall my retirement.

Wherever I put money is where you don't want to be.

[noxiousdog]

I came across this chart in a Berkshire discussion.

[LawBeefaroni]

That's how you do it. More debt equals bigger assets after you saddle the bag holders with the burden.

[noxiousdog]

That's how you do it. More debt equals bigger assets after you saddle the bag holders with the burden.

That depends on if you're a bag holder, no? Eventually there's not a greater fool.

[LawBeefaroni]

That's how you do it. More debt equals bigger assets after you saddle the bag holders with the burden.

That depends on if you're a bag holder, no? Eventually there's not a greater fool.

Right. But nobody thinks that they're that fool. It's why we have the finance industry and LBOs.

Going from 6x to 7x EBITDA isn't a backbreaker.

[noxiousdog]

That's how you do it. More debt equals bigger assets after you saddle the bag holders with the burden.

That depends on if you're a bag holder, no? Eventually there's not a greater fool.

Right. But nobody thinks that they're that fool. It's why we have the finance industry and LBOs.

Going from 6x to 7x EBITDA isn't a backbreaker.

I'm not sure I agree. There's a lot less people willing to pay 7x prices, and people weren't doing it very long back in 2007.

[LordMortis]

That's how you do it. More debt equals bigger assets after you saddle the bag holders with the burden.

I am under the impression that assets aren't something "exponential growth" companies want, which only increases their reliance on debt and high operating costs. Earnings or lack there of are their dirty little secret, which I can only assume goes back to waiting for the music to stop to see whose holding the bag. Something that sucks for buy and hold investment and conservative 401ks. I can't speak to multiples of EBITA... Google suggests 8x or higher is not uncommon to information, mining, and utilities but then how many information and raw resource companies leave people bag holding?

It all seems ominous and makes you want go hide it in your mattress but I can't work forever and social security ain't the solution and even if it was my body and mind won't make it 62 or 65 or 67 or 72 at a 40 or 50 or 60 or more hour work week. I'm not even 50 and I'm breaking down fast.

[Alefroth]

I've decided to get some Beyond (BYND) stock and signed up with Robinhood to do that.

If you feel like using it, using this referral will get us both one randomly chosen share of stock-

https://share.robinhood.com/kevino1509

[LawBeefaroni]

That's how you do it. More debt equals bigger assets after you saddle the bag holders with the burden.

I am under the impression that assets aren't something "exponential growth" companies want, which only increases their reliance on debt and high operating costs.

Assets and cash flow are usually what is leveraged so the more, the better.

[noxiousdog]

I came across this article today, and it makes a compelling argument.

CPI numbers have now been up 2 months in a row, which is something you'd see from tariffs since consumers pay for either the tariff or the more expensive product. Even Trump is scared of that number as he is delaying tariffs to at least December. If inflation is near 2%, then the Fed isn't going to cut rates. If inflation goes higher, they will even raise rates which would tank the bond market.

It's something to keep an eye one.

[Isgrimnur]

CNBC

General Electric shares saw their biggest drop in more than a decade Thursday after Madoff whistleblower Harry Markopolos targeted the conglomerate in a new report, accusing it of issuing fraudulent financial statements to hide the extent of its problems.

A website has been set up to disseminate the report, www.GEfraud.com, where Markopolos calls it “a bigger fraud than Enron.” The financial investigator, who was probing GE for an unidentified hedge fund, writes that after more than a year of research he has discovered “an Enronesque business approach that has left GE on the verge of insolvency.”

“My team has spent the past 7 months analyzing GE’s accounting and we believe the $38 Billion in fraud we’ve come across is merely the tip of the iceberg,” Markopolos said in the 175-page report. Markopolos alleges that GE has a “long history” of accounting fraud, dating to as early as 1995, when it was run by Jack Welch.
...
GE’s CEO issued a statement calling the allegations false, and driven by market manipulation.

“GE will always take any allegation of financial misconduct seriously. But this is market manipulation – pure and simple,” Lawrence Culp, chairman and CEO of GE said in a statement. “Mr. Markopolos’s report contains false statements of fact and these claims could have been corrected if he had checked them with GE before publishing the report.”

Culp said the fact that Markopolos never talked to company officials before publishing the report “goes to show that he is not interested in accurate financial analysis, but solely in generating downward volatility in GE stock so that he and his undisclosed hedge fund partner can personally profit.”

CNBC

GE CEO Larry Culp bought nearly $2 million worth of the company’s stock after fraud accusation

This is breaking news. Please check back for updates.

[LawBeefaroni]

CNBC

General Electric shares saw their biggest drop in more than a decade Thursday after Madoff whistleblower Harry Markopolos targeted the conglomerate in a new report, accusing it of issuing fraudulent financial statements to hide the extent of its problems.

Biggest percent drop maybe. ~20%. But it was less than a $2 decline. Keep in mind that GE was around $10 before the drop but it was $32 a few years ago. And it went from $40 to under $6 in 2008.

However, if the report is true, hoo boy.

[Isgrimnur]

A Thursday evening filing with the SEC revealed that Culp bought 252,200 shares for about $7.93 each. Culp, who took over the struggling industrial conglomerate last year, has roughly doubled his holding of GE shares this week, according to the filing.

Shares of GE were up about 2.5% in after-hours trading.
...
Leslie Seidman, a GE board director and chair of its audit committee, also pushed back on the Markopolos report, which she said contained “numerous novel interpretations and downright mistakes about the actual accounting requirements.”

[LawBeefaroni]

$156K in paper profits for him at the moment (GE $8.55).

Anyone who bought 8 or 8.5 AUG calls yesterday after the bloodbath is up around 200%.

[Isgrimnur]

NY Times

G.E. is already under investigation by the S.E.C. and the Justice Department for potential accounting problems within its insurance holdings and power division. It has denied accounting fraud in that case.

[LordMortis]

It's been a while so

https://markets.businessinsider.com/new ... 1028557770

Peloton joins a slew of unprofitable unicorns now trading on public markets. Both Uber and Lyft, two of the largest companies to go public this year, have fallen below their IPO prices as they struggle to turn a profit.

I learned my lesson after buying a token number of SNAP shares a few years ago. Even a token amount of SNAP was a costly lesson.

Also I continue to put nearly 100% on my new non 401K savings in CDs. I did break down a bit ago and increase my SPY as my my CDs approach half my total savings and renewing them at under 2% makes me sad. I probably should be pulling money out, not putting more in. It feels like that is going to change and I'll start putting more into indexes at the least, but I just have a hard time seeing a good short term future and that may turn on me and my personal finances the same time it turns on the market. So I continue to feather the nest.

[Isgrimnur]

CNN

Charles Schwab fired the latest shot in the war over fees charged by online brokers, announcing Tuesday that it plans to eliminate commissions for trading stocks, ETFs and options on its mobile and web platforms.

The move, which will take effect on October 7, will be available for securities listed on US and Canadian exchanges.

Schwab's news comes a week after rival Interactive Brokers Group rolled out its new IBKR Lite service, which also eliminated commissions for US-listed stocks and ETFs. The entire discount brokerage industry is dealing with tough competition from upstarts like Robinhood, which already offer trading services with no or low commissions via popular mobile apps.
...
Shares of Schwab (SCHW) fell 10% on the news, as investors clearly seemed worried about the loss of a lucrative stream of revenue from fees and the potential impact this would have on Schwab's profits. The company had been charging commissions of $4.95 a trade.

Interactive Brokers (IBKR) shares tumbled 9%. Competitors E-Trade (ETFC) and TD Ameritrade (AMTD) were hit even harder, plummeting 16% and 25% respectively. Investors will probably expect both discount brokers to counter the moves of Schwab and Interactive Brokers or risk losing market share.

Both companies still charge standard commissions of about $6.95 a trade.

TD Ameritrade spokeswoman Becky Nilya said in a statement to CNN Business that it was too soon for the company to respond directly to Schwab's move.

[xwraith]

So far liking my choice in Leaps -- Sold half of my January 2021 $13 AMD Calls for 133% percent gain. Holding the other half a bit longer as I'm bullish on earnings and I'm hoping for some 52 week highs. At that point I'm going to sell the rest and wait for the inevitable drop to buy back in. Really should have done this on the last run up but I waited too long to exit the position the last time. That's the nice thing about leaps I'm finding -- the longer time horizon works better for me and the amount of attention I can give this.

[LordMortis]

Over the summer I bought 4 shares of TSLA at around $220. Since that time my broker has ended commissions for trading. I've never sold stock before, even for my huge losers, figuring the money is already gone. (This has been a historically poor model but at least my losers stare me in the face every time I consider buying individual securities and beg me to ask myself how informed I am) Anyhoo, is it weird that I am considering my first sale. With all the losers I own, if sell 3 of my 4 shares of TSLA I will forever own 1 share that can't lose money. If my understanding of future taxes is correct, I could also counteract the gain by selling $300 of losses in other stocks.

If I sell any stocks, it will be the first time I have to worry about the new tax implication.

Aside from that, nothing new going on. I still put most of my money in CDs. I winced tying up money for two years for 1.7% just yesterday. Moving to commission free trading has seen me buy a share or three of VT/VTI over the last month, feeling that CDs are waste and small purchases allow me to invest without noticeably moving my financial security needle. I may need to readjust my method and make a habit of this, like find a way to commit to 1 or 2 units of an index stock every month. Something that made no sense at all at $7ish a trade.

[LawBeefaroni]

"Losers" do indeed have value as tax offsets. To keep things simple, you'll want to sell them in the same tax year as any realized gains.

[LordMortis]

"Losers" do indeed have value as tax offsets. To keep things simple, you'll want to sell them in the same tax year as any realized gains.

That's what I figure. Even if the cost is small at this point. I would guess a $300 gain and offset would be the perfect way to learn how the mechanism works and the taxes that report it.

I'm afraid to have seller's remorse right now, though. Like if I sold, say 3 shares of TSLA end enough shares of CVS to show $300ish in loss, that both will instantly jump to spite me.

[LawBeefaroni]

"Losers" do indeed have value as tax offsets. To keep things simple, you'll want to sell them in the same tax year as any realized gains.

That's what I figure. Even if the cost is small at this point. I would guess a $300 gain and offset would be the perfect way to learn how the mechanism works and the taxes that report it.

I'm afraid to have seller's remorse right now, though. Like if I sold, say 3 shares of TSLA end enough shares of CVS to show $300ish in loss, that both will instantly jump to spite me.

Keep in mind that the tax rate for long term and short term cap gains are different so if you've had the CVS for over a year it's not going to be a 1 for 1 offset.

[stessier]

"Losers" do indeed have value as tax offsets. To keep things simple, you'll want to sell them in the same tax year as any realized gains.

That's what I figure. Even if the cost is small at this point. I would guess a $300 gain and offset would be the perfect way to learn how the mechanism works and the taxes that report it.

I'm afraid to have seller's remorse right now, though. Like if I sold, say 3 shares of TSLA end enough shares of CVS to show $300ish in loss, that both will instantly jump to spite me.

Keep in mind that the tax rate for long term and short term cap gains are different so if you've had the CVS for over a year it's not going to be a 1 for 1 offset.

I'm confused. I always thought you did the math before applying the tax rate. So if you have 10k profit and 5k loss, you have 5k in capital gains to tax (say at 20% for a 1000 tax bill). You seem to be suggesting that if it a 10k profit taxed at 20% but a 5k loss taxed at 10%, then you'd end with a tax bill of $2000-500 = $1500.