That was the case during the oil boom of 1972-1981. Recall Eddie Chiles’ Western Company sported models in Hot Pants declaring, “If you don’t have an oil well get one, you’ll love doing business with the Western Company!” Eddie then branched into buying the Texas Rangers. Western was sold to BJ Services in 1995.
I suspect we are seeing the same thing via Sam Bankman-Friedman and Elon Musk. SBF always appeared dressed as though he were headed to the Dollar Store. The whole FTX shenanigan evaporated in a matter of days. SBF is now under arrest and extradited to the U.S. for trial. But he was a liberal darling while dispensing millions of client funds to Democrats.
Musk’s Tesla traded at $30 a share in January 2020, just two years ago. Awash in government subsidies and debt, the stock soared to $400 in two years on scant if any earnings. Now less than happy investors make Elon look a bit less talented. Tesla now trades for $137. If Tesla trades at the same P/E multiple as Toyota, it would be worth $35, well back to January 2020, eh? South Texas residents are unhappy over the noise and growth of Space X and Boring Co. Worse, progressives (this would be the media) are distraught over his handling of Twitter, even as he looks for another CEO. Well good luck with that now that you are putting tossed Twitter accounts back in business.
There can be no question that the NASD is in a bear market, 16,000 to 10,500 this past year. And the social media darlings have been hit hard. The New York Stock Exchange Advance Decline line has peaked again in early December, the brief year-end rally now has it paused. Expect a stock rally into year-end before turning down in January.
Energy stocks have done well this year though oil prices peaked at $130 and now trade at $78. I expect this is the dawning realization that we had best not abandon carbon fuels quite so fast, take note that Germany is scrambling to re-trench after going green.
Problems abound. The failure of Russia to take Ukraine leaves Putin all alone, and dangerous. We have no southern border, El Paso is now a state of emergency. Congress spends sums usually associated with numbers astronomers use. As interest rates have calmed temporarily but are likely to resume moving up this spring. The danger here is that the astronomic U.S. debt interest payments will consume more and more of the Federal Budget.
Still gasoline prices are lower, enjoy the season, and avoid the airport.
