TSLA $2K! Time to Be a Super Bull
TSLA hit $2,000 yesterday! What a great kind of crazy.
You can count on us to bring you the #BOP (bullish, optimistic and positive) here. Even when the other guys are still down on Tesla Inc. (Nasdaq: TSLA).
Tesla is so much more than a car company, and it has so much room to soar higher.
This is just one example of a really defining moment for America 2.0.
We’re calling this era the Super Bull market. Tesla is just one of the many home runs we’re seeing.
To be honest, we’ve never been more bullish.
This is so big that Paul is holding a live event all about these opportunities on Tuesday. Don’t forget to reserve your seat at the Super Bull Summit now by clicking here.
And check out our video today for three more stocks to buy with Tesla, our bitcoin $50,000 prediction and game changers in the cannabis world:
Patience Is Key In the Stock Market
It seems so long ago when Tesla was at $350, but it was just four or five months ago.
It’s been a straight line up this year. Even with the price rise, it still feels like an out-of-consensus stock.
Back when it was $200 or $300 everyone was saying it’s overvalued and going bankrupt. Now it hit $2,000 yesterday. It’s crazy — a great kind of crazy. Now people are saying it’s way overvalued and worth more than all the car companies. It’s still the wrong perspective.
There’s still a lot of short interest. TSLAQ is still around.
It’s impossible for Tesla’s stock to go up every single day or to continue to go up in a straight line. To make it clear for people who are completely obsessed with Tesla … We like the cars, we like the company, we like that’s it’s leading the transition to electric vehicles, neural network, vision-based cars that drive themselves — we are fans of all of it.
Nonetheless, at some point in time people who have made a lot of money will come and come to take profits. The nature of markets is that some of them will have large blocks of stocks to sell. There’s no way they will get the top price if they come with several hundred million dollars of Tesla to sell.
You are going to have to take a haircut on price and that’s the normal back and forth of the market.
Full disclosure, Tesla is in our Profits Unlimited portfolio and it has been in the portfolio for a while. It was a bit of a saga. I put it in and then it went through the whole 420 scandal where Elon tweeted he had funding secured for a 420 bid.
Then I believe it might have been the Model 3 scale up where the shorts were able to stimulate panic in the stock market. I went in and sold out twice. You feel a lot of pressure as a result of how much hate Elon Musk and Tesla seems to draw from people.
For a while during the worst of that, during the Model 3 scale up, the consensus view was that they were going to go bankrupt if they didn’t sell enough cars. They are selling enough cars, so their stock was going to go up, it was just a matter of when. And then it happened all at once.
Everybody has an expectation that when you buy a stock that somehow from that moment on it becomes something that is destined to only rise. The truth is, stocks lead a more complicated life.
They can rise and they can fall. Your conviction, faith and belief in the stock is going to be tested. If you are simply a flipper who wants to be in and out, yes, there’s money to be made. However, you can see what our readers have experienced. There’s far more money to be made by finding a company that is doing something that is of significant value.
And also, where we believe that either between the short interest needing to cover or mutual funds and hedge funds coming in to build a position up, they can bid up the stock way more than whatever you can make by buying and selling day to day. You might make 3-5% maximum. It’s a completely different kind of game.
Patience is the key virtue in the stock market. If there is a situation like Tesla where a business is clearly succeeding and you are riding through a tough period where the stock is flat or down over an extended period of time, holding on is the only option unless something goes horribly wrong and you need to sell.
It’s worked out with countless stocks over the years. Tesla is probably one of the biggest examples of how patience can pay off.
There is such a huge difference between old and new stocks this year. It’s a defining moment for America 1.0 versus America 2.0. On one hand you have all the banks, the oil companies, airlines and things like that that have barely recovered from the crash in March.
On the other hand, you have a bunch of tech companies that are up 200% or 300% this year. I have never seen a difference this big between two sections of the stock market.
The average investor who is paying very little attention has no awareness that the S&P 500 — we did this work last week in our investment team meeting and saw the equal-weighted version of the S&P 500 is outperforming the cap-weighted version. However, regular folks are mostly invested in the cap-weighted version.
Effectively, it’s driven a lot by Apple. We continue to get a lot of grief on Apple. I have a troll on Twitter who comes at me every day Apple is up. Every week I say I got Apple wrong. I can repeat that endlessly. I got the stock completely wrong. However, I still believe what they are doing at that company is completely wrong.
Buying back $400-plus billion worth of stock instead of focusing on innovation during the greatest era to make huge bets and have it pay off.
Whether it be in blockchain, artificial intelligence, electric vehicles, neural networks, quantum networks — look at the number of opportunities and they are sitting there rich with cash simply buying back stock every day and bidding its stock price up.
I have a number of Apple devices. However, I feel this company sooner rather than later, irrespective of the stock price, is going to run into trouble given what they are doing.
One of the questions we get is if it will cause markets to go down. That’s a reasonable question. However, I feel that given the equal-weighted version of the S&P is starting to outperform, it’s telling you that there are a number of companies underneath it — like Tesla for example — are starting to offset.
Even if Apple went down, it would probably start to lift the S&P 500 even faster if more companies started to participate.
If you look at the cloud sector and things like that, their companies have gone from a billion in market cap to $20 billion in market cap in the past couple of years. It’s a slow buildup that’s going to become faster. A $1 billion company has much less weighting than a $20 billion in the weighted S&P.
As these companies get bigger, it’s going to have a bigger impact for when Apple and the other bigger companies start to steady off or even shrink.
Tesla in all likelihood will join the S&P 500, so that will reduce Apple’s weight. Then there are other companies. STUF is one of my portfolios I have given people. It’s Spotify, Tesla, Uber and Facebook. Tesla is now a multi-hundred-billion company and Facebook is also, but Uber is still pretty small.
Spotify is also small and they dominate their businesses. As those go up in value it will also displace the Amazon, Apple effect on the S&P 500. In time, I can see the S&P 500 and the Nasdaq 100 slowly becoming more America 2.0.
There’s one thing that’s heresy and I wonder if it could happen. I wonder if we were thinking three years out if Bitcoin could be part of the Dow, S&P 500 or the Nasdaq.
You would need a whole change in governance of those organizations. Eventually I will assume it will have some weighting in there. There’s already huge demand for it. These funds like Grayscale are putting billions in it, more than they’ve ever bought before.
Crypto Revolutionizing Finance World
I saw recently that 95% of Bitcoin are being held at a higher value than they were bought. That means people are profiting and it means people are going to buy more.
The Dow is unrelated to any exchange, so that’s the one that could put Bitcoin in. That would definitely be an America 2.0 moment. That’s a good moment to transition from Tesla and the stock market to crypto. These defi coins are on fire. They are crazy volatile.
I get constant notifications from Coinbase telling me that one of my coins is up 10%, down 10% and seemingly sometimes within the same hour.
One of the craziest things I’ve ever seen for something that is traded. Some of them are up thousands of percent in the past month or two. The whole thing is blowing up. The amount of money people are putting into these defi systems in which the main thing is borrowing and lending.
You can actually put in your Bitcoin or Ethereum into an account on one of these defi sites and you can earn interest on it because people are lending it out. People are using them for loans too. It’s amazing. Otherwise, to get a loan you have to go through paperwork and all this hassle.
With defi, you just put your money up as collateral and get money without doing paperwork. It takes five minutes. It’s way easier.
We think crypto stacks in three stacks. There’s the store of value crypto which is Bitcoin, Bitcoin Cash and Litecoin. Then there are platform cryptos. Ethereum is at the very top of that stack, then XRP, Lumens and other ones that have far fewer projects.
Ethereum blockchain has now drawn a number of these tokens or coins into what is called decentralized finance (defi). In other words, essentially, they simplify many types of transactions today that would be very expensive and very complicated and might never happen.
You just mentioned one which is to borrow money against some asset you might have. It’s almost impossible other than to go to a pawn shop or informal lending where the lending rate would be usurious. It would be 100% or 140%.
I saw a note from Cathie Wood talking about the Cash App introducing something where they would be willing to give people $200. One of the things that’s unknown is that many people in this country, as much as 40%, are unbanked. It was a shocking number to me.
The Cash App has been downloaded by an excess of 40 million people. That’s a lot of people. A lot of them are in this unbanked category that use payday lending to get access to your paycheck. If you lack a bank account you take your paycheck to a payday lender who will often charge you for a short period of time with rates as high as 200%.
Anyone who can find a solution to this is just right. For people who make very little money to pay that, I’m all for a solution that eliminates this. Something that is as easy as using your phone, I believe it’s going to have a lot of take-up.
And you can use Cash App and Venmo as a bank account. You can even get direct deposit now. Really there’s no reason to have a bank account. You can get by perfectly fine without one at this point. This chart shows the amount of money that is currently sitting in defi platforms.
It’s a straight line up. This is seeing rapid adoption because of its ease of use and most people still don’t know they exist. When the public starts to catch on that this is a possibility, that’s what these coins are starting to anticipate. It’s really only the beginning at this point.
Many of these coins are going to end up being things that facilitate our transition from our existing financial structure, which is driven by banks, insurance companies and other intermediaries that charge high fees and very slow relative to what crypto can deliver.
We believe that the old world of finance, which is banks and insurance companies, is ultimately going to go away. A lot of their activity and economic value is going to transition into crypto. We believe that what is going on now is quite real. It will be volatile.
However, we do believe because there is an actual reason for these coins to exist, which is different than in 2017 when it felt purely speculative. It was much more of just a movement of coins and people trying to extract money.
Back then it was marketing basically. Now this time around we are doing it and here’s what it is and you can use it right now if you want to and see how much better it is.
We are believers in Bitcoin. We have laid out a prediction that some people like to give us some amount of stick for, which is Bitcoin at $50,000 this year. Longer term, over $100,000. I believe the next peak will be somewhere in the $200,000 or $250,000. I’d say the outline for that might be 2024 or 2025.
That’s based on looking at the scarcity of Bitcoin. It’s a fixed quantity that can be had. There’s 21 million Bitcoin to be had and 18.4 million are already mined. It’s estimated there are a few million lost forever. Meanwhile, it’s the first true global digital currency. You could argue that gold in a different time was a global currency.
However, given the fact that nearly everyone in every continent has a cell phone and that’s all you really need to carry Bitcoin, it’s more ubiquitous and accessible than gold ever was or will be.
You can’t do anything with gold. You can’t take it to a store and pay for something with it. With Bitcoin, you can not only pay for something with it but you can easily transfer it to a different coin that you can use on some other network or lend out. Or you can transfer it to a stable coin, which is a coin that’s pegged to the dollar.
So, there are so many more uses for it than there are for gold or silver or any of those.
Essentially, you can see an entire replacement infrastructure being built that’s very different. The banks and insurance companies are largely uninterested, not participating and probably never will.
They will eventually be like retail and internal combustion car makers. It’s clear those companies are all going to fade and end up in terminal decline.
U.S.-Based Cannabis Stocks’ Rapid Growth
I saw a cool story that in Colorado you can now get cannabis from a vending machine.
From my perspective it goes to show you that many people look at cannabis and for sure there was hype around it a couple years ago. However, this is a real and fast-growing business. If some of the impediments were removed, for example legalization in all 50 states and access to banking, you would see this have far more significant take-up very quickly.
The companies based in the U.S. are doing well with growth and expansion in the states where it is legal. There is extremely high demand for it. With the lockdowns and quarantines, they started delivering a lot more.
As a result, these company stocks are going crazy. One of our Twitter followers asked why are these skyrocketing when so many other ones in MJ and other ETFs are standing still. Really, it’s liquidity. Not a lot of people are aware of ones like Curaleaf and the other ones based in the U.S.
A lot of people hear pot stocks and automatically think Canopy Growth. Those are the ones where it’s going to take a lot more money to push up. When you have a more illiquid stock, if someone comes in with $5 million or $10 million and wants to buy, it’s going to have a crazy effect on the stock because it’s rare that it ever sees a buy with that much money at one time.
The nature of bull markets is it starts with smaller ones that get bid up and then there’s a transition that goes to bigger stocks.
It takes a lot more money to bid up the Canopy Growths of the world. Nonetheless, we still believe people will come to bid cannabis stocks up. I believe it will happen by the end of this year in MJ and the stocks we have across our services given that these companies, during the de-hyping of these stocks, have done generally good things.
They have turned their businesses around. They were trying to do too much in too little time. They had to scale back, which they’ve done. They’ve announced it for at least two quarters now. It’s only a matter of time before we see demand come back in these companies.
As people get more confident, they can actually scale their production without having issues with having enough money to operate and having enough demand in the market. We know that those things are now pretty much a certainty. It’s only a matter of time.
I saw another story which was pretty cool about a cannabis REIT. It has $80 million in equity to lend to various operators of facilities with respect to cannabis. It’s another indication that money is still pushing in despite the performance of the stocks over the last couple of year.
This is funded, according to this, from 20 family offices. It’s intended to be a $200 million investment vehicle. It just shows you that money is coming into the sector wanting to solve some of the problems. It’s probably still a little hard to rent real estate.
This REIT is going to fund a real estate investment trust to encourage operators to allow cannabis folks to move in and allow them to operate their businesses.
Crypto is another answer to some of the financing issues that many cannabis operators face. So, there might be some overlap between our crypto and cannabis ideas and coverage.
Misconceptions About Tesla Split
The Tesla split is coming at the end of the year. I have seen this idea out there, which we want to make clear is untrue and false. Many people think they are going to get extra shares and that Tesla stock will be at $2000 after the split.
We want to say that is categorically wrong.
It doesn’t do anything to your account. If you have one share at $2,000, you will have five at $400 after the split.
There’s no free lunch here. After the split, the price of the shares will adjust for the split downward. The number of shares will adjust for the split upward. In the end, when you multiply one by the other, the amount will be the same.
There are a lot of people out there thinking there is a free lunch here and coming to bid Tesla up. In all likelihood, these people are going to be disappointed. Just like everyone thinks there’s going to be a huge surge in demand. Generally thinking, in our experience, that surge in demand happens when people are anticipating these things.
As we always say, the market is forward looking. I would say that is 100% true. The market knows about this and a lot of people do. There is no value to be captured from that.
Editor, Rapid Profit Trader
Editor’s Note: Mark the day: Tuesday, August 25, at 1 p.m. EDT Paul is going live to reveal the No. 1 investment every American should own today. He’ll tell you how being a Super Bull helped him pinpoint 332% in three months and 400% in a day for his readers … even a personal 2,539% gain in eight months. Now it’s your time to be a Super Bull. Seats are filling up. Just click here to RSVP today.