TSLA New Highs Coming Before December 21
After years of being denied and shut out, the S&P 500 has welcomed Tesla to the index.
It only took Tesla being valued at half a trillion dollars to get it done!
We’ll take it.
TSLA just hit a new high. And we see another surge coming before it claims its spot on December 21.
And looking ahead to 2021, we see more disruptification — the Fourth Industrializing of the S&P 500 and the world:
- Airlines — out. Flying air taxis — in. (We’re calling one the Tesla of air travel.)
- Fossil fuels are being toppled by new/alternative energy — one of our stocks already hit 1,200%.
- Gold’s waterfall decline will send bitcoin soaring more than its current 456% rise.
- The old vice economy will transfer to marijuana.
We’re laying out some new predictions for these America 2.0 heavy hitters today. Check it out:
Exxon Gives Up Tesla Fight
After being denied and shutdown, they finally succumbed. Exxon called and said, ‘We give up. Forget it. Let ‘em in!” Guess what. The news came out and the S&P 500 committee after being blind and closing their eyes on what should have been done, they are finally putting Tesla in the S&P 500.
It only took until the company was valued at almost half-a-trillion dollars to do it. We’ll take it.
Take a look at the char below from Statista. It gives you the market capitalization of the largest companies included in the S&P 500 cap weighted.
Since we talk a lot about it, cap weighted means that it’s based on how big the company is. As you can see, Apple — that I take heat for week after week for being negative on — Microsoft are the two biggest companies followed by Amazon, Alphabet, Facebook and Berkshire Hathaway, Walmart, Visa, Johnson & Johnson, JPMorgan Chase.
They just put Tesla at the bottom, but Tesla would actually be right above Visa and right below Walmart in this chart. In a little bit, Tesla is going to be as big as Facebook.
Tesla is now bigger than Walmart.
Now that it’s going to be in the S&P 500, all the ETFs that replicate that are going to have to buy a ton of shares because it’s going to be a large part of the S&P 500. That demand for shares is going to keep pushing stocks up to new highs even from here.
It’s looking like Tesla is going to rally into December 21. It’s the short’s worst nightmare coming true again. It’s been terrible if you’ve been shorting Tesla.
Will Tesla be Bigger Than Facebook?
Facebook is number five on the chart at $783 billion. Berkshire Hathaway is underneath Facebook at $547 billion. Walmart is $423 billion. The real drama is, will it be ahead of Warren Buffett who famously told Apple, “Do not even look at Tesla. Do not consider it. Do not buy it,” when it was worth about $60 billion or $70 billion?
It is poetic justice if December 21 rolls around and it pops over the market cap of Berkshire Hathaway.
It could happen next week.
Facebook itself is an innovative company. They have Oculus Quest going on. Most people have no idea Facebook owns Oculus Quest, which is one of two or three companies that is going to dominate virtual reality, augmented reality and all the things that can happen through it.
Holograms and all these associated technologies Facebook can dominate. So they could both rise up and then the S&P 500 will start to be dominated by six companies, four of which are America 2.0 certified if you will and two that are not. The two that are not, most people take issue with this idea, are Apple and Microsoft.
The others — Amazon, Google, Facebook and soon to be Tesla — are America 2.0 certified, Fourth Industrial Revolution certified. It will make the S&P 500 a little bit more Fourth Industrial Revolutionized, America 2.0ified.
This is a theme: The big divide between what people call “the market” and the market for stocks and the fact the S&P 500 is wheezing along trying to keep up.
Today was another good example of that. The S&P 500 was either down or barely up, yet a lot of these stocks we track are up 3%, 4%, some even more than that. Solar is running. Semiconductors are way up.
Stocks like that are continuing to do really well even though when the vaccine news came out people said it was the end of the rally and they needed to buy hotels and airlines again. That lasted for a day. Now it’s back to the usual. These technologies are the ones that are growing, innovative and are definitely here to stay.
There are folks who probably went all in on ExxonMobil that day, all in on American Airlines, Delta. You know what we think of that. Both in the short and long term we are disbelievers in the notion that a vaccine is somehow going to make 2016, 2017 or 2018 come back.
We think the direction of the world is now set. We are going into the Fourth Industrial Revolution at full speed. We are in fifth gear, even though with EVs there’s no gear. It’s just a saying. There’s no internal combustion engines in the Fourth Industrial Revolution.
One of the things that is unrelated to any stock we can currently buy is the announcement from this company called Lilium that they are planning to put an air taxi base in Orlando, Florida. This is a real plan. This is not pie in the sky.
This is actual plans to put in an air taxi base to serve as many as 25 million people in and around that area. Real plans and actual contracts are being signed. Once these tangible things start to show up — self-driving trucks, when you see them on the highway in a convoy and there’s nobody driving.
You start to see air taxis start to fly and drone deliveries become a fairly commonplace thing. People are really going to want to invest in the Fourth Industrial Revolution and America 2.0. I believe our kinds of stocks are going to surge higher.
Lilium is just the first company to put this in place. That’s going to start a ripple effect I think. More companies are going to follow. Just like Tesla was way ahead in the EV space but now there are probably at least five or six publically traded EV companies.
They are lagging behind, but they are still out there making EVs. It’s going to be a huge trend in how we travel with air taxis and self-driving trucks too, which Tesla is at the forefront of.
It’s kind of Internet of Things (IoT). It already has intelligence guidance systems on there. The future is now set. The idea that a vaccine — which by the way we have talked about the vaccine itself is because of the Fourth Industrial Revolution. There’s no way we would have a vaccine if it wasn’t for these new technologies in the biotech sphere to begin with.
One more note about Lilium, they are the Tesla of air travel because none of the big airplane manufacturers — Boeing and Airbus — are getting into this. They haven’t really put any step forward in making these air taxis at all.
They use new technology in their planes but they aren’t going to be able to scale that up as big of a business as they are to where Lilium is already at. It’s going to be a big difference between them and getting on an American Airlines flight.
It is going to transform the world of regional transportation.
Once Lilium gets going and you combine it with self-driving cars, why would anyone spend 30 minutes to drive to an airport, 15 minutes to park your car, 10 minutes to get to the terminal, go through security for another 20 minutes, maybe wait 30 minutes to one hour minimum to get on a plane and then when you get on the other side wait for it to get in its parking spot?
You can eliminate all this. It’s hours and hours of additional time we are going to gain back that previously was efficient relative to other choices, but it’s no longer efficient. It’s really spelling the death knell for another set of America 1.0 companies.
The airlines and the old transportation system is creaking and wheezing and you can just sense it.
Which is why there hasn’t been much demand in their stocks. They fell flat in March and they really haven’t gone anywhere since then.
This goes to a theme that our Bold Profits Daily team has been discussing for some time now: America 1.0 versus America 2.0, the Fourth Industrial Revolution stocks. These old world stocks are in various stages of permanent decline. The airlines joined that group in a very firm way.
The Liliums of the world are going to take share. Self-driving cars are going to take more share. Autonomous vehicles of various kinds will take share. It will no longer make sense for anybody to be on the vast majority of short-haul flights. With that, there will be another section of the S&P 500 that has no investment value.
The cap-weighted version of the S&P 500, despite Tesla joining it, is still hopelessly behind.
It’s not looking good at all. That’s why we always recommend to look at RSP, which is the equal-weighted version of the S&P 500 which gives an equal weight to all the companies in there. Meaning the smaller companies have an equal effect on that price.
They have almost no effect in the market-cap version because they are so small. RSP has been doing better recently because those smaller ecommerce, software, semiconductor companies have more of a weighting in there and can push the index up higher.
There’s going to be surges into some of these stocks, just like what we experienced in our Extreme Fortunes’ stock, Plug Power. In a little more than three years, it’s up almost 1,200%.
That’s a huge winner. That’s alternative energy from hydrogen fuel cells. It’s a huge trend. It’s something else that’s in the process of taking out old fossil fuel energy.
It’s used on a different platform than regular transportation that is driven by batteries for some amount of power and effort driven around warehouses and industry. This is where hydrogen is being implemented. Plug Power is clearly a big winner here.
It’s part of something that’s happening across the world and across our country. The Fourth Industrial Revolution is now accelerating at faster speeds and, in the process, driving some of these stock prices higher. The people who disagree and dislike or do not want all this are going to stay in these old world, America 1.0 stocks.
Over time you are going to see them get crushed. We are starting to see this already with the waterfall declines in Wells Fargo and ExxonMobil which were once blue-chip stocks.
They were the biggest companies around. We saw it earlier with GE. These companies that everybody put so much faith in that they were going to stick around, they are not. It’s clear they went flat for a few years. While they were being disrupted people still said they were going to make it.
Then all of a sudden they just crashed. They are going to just sit there and keep going down slowly from here.
Many people think they are going to have time. However, Cathie Wood of ARK Invest talks about disruptification seeming slow and then just BOOM suddenly. There’s some event that is either industry specific, sector specific or overall specific.
In the case of 2020 it was the pandemic, which was economy-wide and society wide and BOOM. A number of businesses are just simply no longer relevant. A number of products are no longer relevant. A number of technologies are no longer relevant. That is instant change.
We believe irrespective of whether there’s a vaccine, these changes are permanent and going to get faster and faster and go deeper into all these industries even more. So having said that, we are bullish, optimistic, positive, which is our hashtag on Twitter.
We are #BOP on America 2.0 stocks, Fourth Industrial Revolution stocks which are there in bits and pieces in the S&P 500. However, the cap-weighted version is the one the vast majority of people are invested in, they have too much America 1.0.
They have banks and airlines and railways, all of which are going to go away and be supplanted by new innovations, companies, new technologies. This is why Ian mentioned to consider starting to measure the market by RSP, which is the equal-weighted version of the S&P if you are wedded to the S&P 500.
We encourage investors to take a look at the Russell 2000 which is 2,000 of the smaller companies in the United States that represent growth, opportunity, innovation, America 2.0 and the Fourth Industrial Revolution, which is the main focus for our flagship service Profits Unlimited.
Will Bitcoin Crash Again or Continue to Soar?
Bitcoin is now kind of rising up in terms of people starting to talk about it and people are noticing. We are nearly at new highs.
People are already calling for a crash. It’s pretty funny. It’s been amazing these past six or seven weeks since it started to take off. I think it’s only been above $18,000 three times. We’re at a historic level already. Once it gets past that $20,000 mark, we think it’s going to go up.
We think it’s done being around this level once it breaks above that strongly.
We’re going to throw this chart up so you can see. Since the bottom in December 2018 when sentiment was bad and people were talking about Bitcoin going to zero, it’s up an incredible 456%.
That first spike in 2019 was pretty loud. People were super bullish and said it was going to go to all-time highs. Turns out, that wasn’t true. It did come back down. Now it’s way above that level even. It’s right there with all-time highs.
It’s at an historic level already and now big companies are buying in. Microstrategy, Square and Grayscale owns almost 3% of the whole supply. All the Bitcoin now are going into strong hands. Corporations and institutional buyers aren’t panic sellers like the typical retail investor.
It won’t have any big crash anytime soon. Supply is getting smaller, demand is rising and that makes for rising prices.
Matt Blom is the head of sales and trading for a cryptocurrency firm called Diginex. He says,
That really gets at why this keeps going. There is massive demand on a corporate level, an institution level and an individual level. There is seriously insufficient amount of Bitcoin available.
Another thing is the law of demand at higher prices is in full effect right now. When people are making money on an investment they want to buy more. That ties into what Matt Blom said. Everyone you know who has Bitcoin, which isn’t that many people, think they don’t have enough.
The best advertisement for demand for any investment is a rising price trend. That is true for Bitcoin. In the Profits Unlimited portfolio we do have the Grayscale Bitcoin Trust as one of the holdings.
Some readers have asked, “Where will the money come from to bid Bitcoin higher?”
There’s a few places. One is gold. That’s probably the main one. We talk about this with stocks, but there is a lot of money still sitting on the sidelines. There’s still more than $1 trillion that got sold out of stocks and it’s just sitting in accounts or money markets. It hasn’t been put to use.
A lot of that could go into Bitcoin. Those are the two main sources of cash I see going into Bitcoin.
Just like higher prices drive more demand for a particular asset, lower prices generate supply. Gold is likely, whether it be in 2021 or 2022, to take a big hit.
For sure with this next push into Bitcoin. For prior Bitcoin rallies it’s been maybe $100 billion of actual rally. This time around it’s already at almost $350 billion. A 10x move from here, which is about the midpoint of our predictions, would be about $2.7 trillion.
That’s a serious amount of money that’s going to have to come from somewhere. It’s going to show from wherever it comes out of.
Our 2021 Bitcoin Prediction
This year we thought the rally would get going. We never anticipated a pandemic and crash. We thought Bitcoin could hit $50,000 this year. It’s likely that will not come true. We believe the next peak in Bitcoin is somewhere at a minimum of $250,000.
The timeframe for that is as short as one year and as long as about three years. That’s a long-term target. That’s driven by a lot of studies around various models out there. Rolling back to where the money is going to come from – store of value whether it be gold, silver or those kinds of assets, we will start to see a waterfall decline.
With that, you will start to see accelerated selling as people start to dump them as a monetary asset in instruments like GLD and others where people own it as a monetary asset as a hedge against inflation, instability or whatever the case may be. It will drive that and then turn itself as well to the physical markets.
There is actual value in the dollar, the euro, Japanese yen and some smaller currencies. However, the vast majority is in those three currencies. They are backed by each other because each of them keeps reserves of each other.
The vast majority of the world’s fiat currencies are always on a seven to ten-year cycle to zero. A lot of the money is going to flood out from there. You are going to see a weakening in a lot of these currencies. That’s one more place we believe you will see money push out and come into Bitcoin.
The higher it goes, the more it will come in. Store of values are going to see money flow out. Fiat currencies, including some of the major currencies, but there is enough to these currencies that they won’t see major, rapid destruction. Many people who own Bitcoin have a view that the dollar is going to go to zero.
Then, as we expected, as Bitcoin is rising so many of the other DeFi currencies are on fire today. Litecoin is on fire today.
The Future of DeFi Systems
DeFi has been on fire. That’s becoming a big part of the crypto market too, but it’s still small. Bitcoin is around $350 billion. Ethereum is the second-biggest currency and it’s sitting around $50 billion. All of DeFi combined is less than Ethereum.
The global financial industry is worth $90 trillion just to put that in perspective. These are microscoptic compared to that. They are slowly going to take market share and then accelerate.
DeFi already has more than $13 billion put into it after just being $1 billion or $2 billion this past summer. It’s already seeing rapid adoption. Hundreds of thousands of people are using these DeFi systems.
The Uniswap platform is essentially the world’s very first smart contracts platform.
There’s more than $1 billion that people have put into this exchange in all kinds of cryptocurrencies. Basically, it’s like a stock exchange for crypto. Everyone can buy and sell their crypto in there with the crypto that people put in. It’s like a community-based exchanged.
There’s no corporate structure. It’s as basic as you can get for an exchange. If you put crypto in for other people to trade you earn part of the fees too.
Some of these fees have been unavailable to regular investors. The brokers have kept them for themselves, the bankers have kept them for themselves. However, DeFi means decentralized finance.
The benefit is that if you are able to work out how to do it — and it does not require a lot — you can also participate in things that were largely unavailable for regular investors.
Looking at the Uniswap platform, something similar is going to take place over time in terms of the financing of houses and other things. The same setup that allows you to exchange one currency for another is the same setup for smart contracts in so many fields of life.
Something we have brought up sporadically in the past is tokenization where you will be able to invest in anything — real estate, art, collectibles — easily. It will be way more liquid because everything will be converted to tokens just like they are on Uniswap.
It’s transfer of ownership through smart contracts. All those things are easier to access and it will make markets way easier to be a part of. Right now, buying a house or land is a painful process. There is so much room for improvement that smart contracts and cryptos are able to bring in the future.
By using crypto and a platform like Uniswap you could fractionalize your house and sell a small piece of it, which was impossible before.
That would make stuff easier too. If you want to rent out your house to other people, as a landlord it could be messy. That’s just one area tokenization could help with.
There is a revolution brewing in finance that is going to take down the existing companies. Berkshire Hathaway, which owns a lot of banks and insurance companies, we think is in a massive amount of trouble with the vast majority of financial holdings it has.
The existing banking structure is starting to get it. There is a major problem brewing for them. They are wedded to their ways and are unlikely to change or it will be past time for them to do anything about it.
Once you have a company that big and that widespread with that many employees and customers, it’s almost impossible to shift your whole company to adapt to the new thing.
Cryptocurrencies, whether it be Bitcoin, Ethereum or any of the others, are part of the Fourth Industrial Revolution. This is the Fourth Industrial Revolution applied to finance and America 2.0.
You can bet next year and in a couple years you will start to see much cheaper, more efficient, less bureaucratic and less paperwork-oriented solutions that today are like pulling teeth. Try refinancing a house today. It’s brutal.
As Bitcoin goes higher, the world will see more and more DeFi companies come in to create platforms that are more useful and more adoption will occur.
The Post-Election Cannabis Rally
Post the election there has been a rally in cannabis stocks. Below is a chart of MJ which is the ETF with the largest amount of money invested in terms of cannabis.
This chart is since March 24, which is the bottom of the COVID crash in March. Cannabis bottomed out a few days before the stock market did. There was a short-covering rally and it gave up a lot of those gains into October.
Post-election, the demand and supply balance was set for a rally come year-end.
An interesting trend was that before earnings season for the past three or four quarters, pot stocks would rally. There would be a big bounce in those and then earnings would come out and they would come back down.
The election just happened to fall right in that time period before these companies reported. We saw the stocks move up and then we saw the move back down a little. Overall, they have come back up. Stocks like Canopy and Aphria are making 52-week highs.
The demand is clearly growing with every earnings season. The supply and demand dynamic is in place where the demand is clearly outweighing the supply.
To be truthful, we will fully admit we got the timing of getting into cannabis off. We bought in a couple years ago and we own a lot of them. They are sitting at losses. Nonetheless, our conviction and our belief is unchanged.
We have never seen any data point or fact that suggested this is going to be anything other than a gigantic, monstrous business to be in.
We do have a few in Paul’s Secret Portfolio service that are up big.
In Profits Unlimited we own Canopy Growth. It’s been in there for a few months. It’s starting to rise now. It’s in some ways the established player. Its performance drives MJ a great deal, as does Aphria.
Anyone who even put a $5 million stake in some of these companies would suck up so much float that the next buyer in would be forced to pay 20% or 40% higher to buy in.
We see it in their actual business and what they are doing in their operations. There’s really no more downside here in the pot stocks we track.
The standard of “not going bankrupt” is a great way to buy companies that have huge growth ahead of them. The market says, “Are they going bankrupt or not?” It allows a lot of people to put a lot of money to work. If it’s not going bankrupt then it’s dirt cheap.
In a couple weeks, myself, Patrick, Tamara and Amber are going to give our stock predictions for 2021. You will have to tune in to find out!
Editor, Rapid Profit Trader
P.S. New energy is disrupting the old in a big way. And that’s going to be huge for investors. Imagine five times more millionaires than the IanCast favorites: cryptos, pot stocks and all of the Big Tech giants — COMBINED. Here’s one way to get in on the new energy revolution in America 2.0 today. Click here to see details from our full report.