Flagship Pod: How Thursday Will Change The MarketOct 10, 2022
Every single Friday we host a live discussion in our Discord Channel at 12:00pm EST. This gives you the opportunity to ask us questions and hear our thoughts on the things you want answers to!
Here are the 4 key things we went over for this week:
The pain OPEC is about to inflict on the market with widespread oil production cuts
In what ways new regulation is going to affect the cannabis market
Why we're still very concerned about the developing war in Ukraine
- How badly this Twitter deal can hurt Elon Musk and Tesla's stock
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Check out a broader summary & transcript below!
For Moby.co. This is The Flagship pod, a weekly podcast about the stock market, the economy, and the various market forces that power the world around you. As always, I'm your host Peter Starr, bringing you this time a week where in labor just cannot be defeated.
We had a lot of up and down signals from the labor market, but finally, unemployment came in today finally at levels beneath where we were when 2020 started, which kind of signals that the Fed's job is not done, which is bad because we kind of want the Fed's job to be done by now considering how poorly the domestic market and international markets are reacting to Fed policy. To help me sort of untangle this big macro web we have sort of choking out the stock market and the economy, this week as always, I am joined by Justin Kramer, CEO, co-founder, and chief analyst here at Moby.co. Justin man dude, what's good? How do we begin to untangle this thing?
Hey, that's a good question Peter. As we always say to start the show, I'm excited to dive into all the intricacies and nuances. It seems like every week is getting, not progressively worse and worse but there's just more fear on the table, which shows us that we're getting closer to closer to the bottom. The more fear there is, the more things, again, are bottoming out.
If you think about the curves of a normal market cycle, you have markets that are growing in, I won't say pessimism, but growing in skepticism. Then they move into full euphoria, it peaks, then markets start falling and people aren't sure what's going on and then people are panicking and the market crashes and usually bottoms and then again it starts growing on skepticism. So not obviously great given what's going on right now that people are panicking because is things to be scared of. But I think we are starting to approach a bottom or get close to it if you think about it, just in terms of just your overall worriedness.
Exactly. And I think for me, the critical thing that happened this week was the S&P 500 finally achieved 25% down from their all-time high, which is a very critical indicator for bear analysts like me who kind of look at bear markets and see what's happened moving forward from those markers. We'll get into that later though.
But first of all, obviously we're sitting here in an inflation situation. The main thing driving the market down is the fear that the Fed will just absolutely pump the brakes even harder on the economy. We've gotten a lot of really positive indicators this week from various sides of the labor market saying that hey, things are going to get better, the Fed's not going to hit us as hard anymore. But then when unemployment comes out at its lowest possible level, labor stays strong no matter how much the Fed is trying to weaken the economy.
What tools does the Fed even have right now, Justin? Do we just raise rates like a full 200 basis points, just bring the hammer down and put a stop to this or is this one of those things where labor can stay strong with the Fed forcing a recession on us or anything?
Yeah, I mean, so the Fed has been moving, I mean they're moving quickly. It's every single month at this point that they're raising rates, but they also didn't raise it from the get-go up 400 basis points or 200 basis points from the initial kind of go at it because they want to put us in such a quick recessionary environment. I mean their overall goal is to reduce inflation ultimately at all costs, but if they can do so while avoiding recession, it's obviously to everyone's benefit. And so they've been slowly raising rates anywhere from 50 to 75 basis points over the last several months. And it's getting to the point now where, I mean it's an interesting scenario because on one hand, the unemployment numbers come out today, they dropped so it looks even better. It shows how resilient the US economy is.
But globally there's taken a real hit. The housing market globally is really slowing down with the rising of interest rates. You have other parts of the economy that's not doing well and now there are real fears that we are already in one or going to be moving towards some sort of mass recessionary event. So I think ultimately the Fed is in a very precarious position. They should have moved faster, they didn't. So they're kind of now stuck in between two areas of trying to make inflation better while also not putting us in recession. I think ultimately what will happen is they will put us in a recession, but at the same time they can't be raising two, 300 basis points because it's just going to make a bad situation even worse. So I think they have to continue to move slowly. Unfortunately, it's going to continue to be more of this slow bleed-out, but ultimately it will set us up for a good period of growth over the next decade.
And that's the whole point of the boom and bust cycle. That's why we've kind of consented to almost a century of this sort of neoliberal experiment in capitalism. The bad times are bad, but they're much shorter than the good times and you get a lot of good growth during pre-correction and post-correction. And so when I say I'm excited to see that the S&P 500 is 25% down, the main thing I'm excited about is that if you look at the year-on-year returns after that S&P 500 crosses that barrier for every other downturn that's happened since 1950 returns are positive a year later. So year on your returns are at bare minimum 10%. There's only one occasion where it was still down 9% after the 25% mark a year later and that was the 2008 great financial crisis, which I don't think we're at a full-on that level unless Putin goes all the way to nuclear land.
More on that later. That's the other main thing we're going to talk about today, but it's really encouraging to see that we've been through a lot of pain, labor has stayed strong and it's one of those things where we'll have to keep raising rates but not maybe in a way that completely just tanks the US economy. We're at a period where we're in the depths of the pain. The bottom could be soon, could be far away, but it's one of those things where it's really encouraging to see that we are approaching one of those indicators that says, hey, the bottom is kind of close at hand so to speak. You're never going to time the bottom of course, but it's really encouraging to see that staying the course in being a long-term investor right now, you're already going to potentially see year-on-year returns that are a little bit better once we get through the real depths of it the beginning of next year and start fighting through what could be the resurgence of bold territory come the back half of next year.
Anyway though, Justin, it's not just the fed trying to put us in a recession. Our good friends over in Saudi Arabia are trying real hard too. The other thing that's kind of gotten swept under the rug with a bunch of other news, nuclear war, marijuana pardons and all of that has been OPEC deciding, hey, we're going to actually cut oil production by 2 million barrels a day despite the fact that energy prices are a single thing driving inflation right now. So I hope you guys really liked 1975 and all of you people who are real vintage heads, let's just bring back exact 1975 level economics and we'll just get straight-up stagflation. Inflation in the US, OPEC raises rates, gas prices are going to go spiking right back up. How do you even react to something like this? This kind of little backs stab from our good friends over in OPEC, Justin
Yeah, I mean just when things are getting better for the average person, obviously OPEC has to come in and change it a bit and for those of you not familiar at a super, super high level, OPEC basically dominates a lot of the oil production in the Middle East. It's like a consortium of a few countries and just overall like kingdoms in the Middle East, and basically we saw oil prices start to really spike over the summer.
In the US specifically, we saw gas prices depending where you were, anywhere from five into the sixes and obviously that was not good for the average person. Since then, gas prices and oil prices have actually fallen significantly to the point now where they're in the threes and fours outside of Europe, which is a whole other bag of worms, but at least here things have gotten better and now because they're getting better, the profit margins for a lot of these Middle Eastern producing countries for oil, which is their primary source of income for a lot of these countries, has decided to lower their production about 2 million barrels per day in order to stimulate, not demand, but stimulate prices going back up because with less supply and the same amount of demand, ultimately prices have to only go one way. So ultimately that is not good for the average American consumer who relies upon oil and gas for most of their day-to-day needs. It's anticipated that prices are going to now go back up due to that. We'll see how much of an effect it takes given where the US government can kind of step in. But over the short run, definitely not a step in the right direction is going to add to inflation more. I mean the only net benefit out of this is that oil stocks and energy stocks are going to continue to do well. I think the index is up by 10 to 15% over the last five days. And so a lot of the energy names and dividend stocks that we've been recommending, they're definitely getting tailwinds, which is great but not great for the overall economy and consumer.
And that's just what you have to deal with, especially with these OPEC member nations who only really have a one major source of income and are dealing with the fallout of inflation the same way we are. So the good news audience is that we may in the short term actually get hopefully good inflation news. The CPI print is next Thursday, October 13th and that only prices in all of the energy and whatever prices from September. So we got the July print in August, which was really positive. We got the August print in September, which wasn't the best. So fingers crossed we're going to see an improvement in September that will reflect the lower energy prices before this 2 million barrel reduction came in, which will make us seem like we're in a much better position than we may actually be, which can kind of stimulate a little bit of a bull period because again, the real go time for the US economy is right now we've got the CPI print on October 13th and after that it's right back to Q4 earning season.
And it's one of those things where we're going to be watching really closely to see how well a lot of these companies have weathered inflation, that's too consistent quarters of bad inflation of kind of a recessionary environment. And we're going to see how well companies have done in this, how have the cuts at Meta impacted Meta's profits? Has Amazon managed to weather the storm? Is Apple going to do well despite the fact they to do production cutbacks and not sell as many iPhones this year or whatever. This is going to be the big time period and it all kicks off next Thursday and that's going to kind of dictate how deep of a recession we are in. I mean it's a classic recession right now, right? No one's calling it a recession because the economic board that actually calls it a recession or not has yet to actually declared a recession.
Whether or not you think that is for political reasons, this is up to you, but the main reason is because it's not just two consecutive quarters of negative economic growth, it's a bunch of different factors. And again, this is just such strange and unprecedented period of decline. There's too many factors to say whether or not this is a recession or so to say a correction from a wild, wild bull run for the last decade, followed by an unprecedented pandemic, followed by all the supply shocks from that, followed by a war in Eastern Europe and just everything else. And so when you look at that again, go time is next Thursday. So talking about what's going to happen really depends on this CPI print as it comes out. So instead of just speculating, oh, what's going to happen if inflation's down, how much is it going to be down?
We have no idea. But the main thing to speculate on right now, Justin, is how the market is going to react to other growth factors. And I think I'm just going to jump to the other side of the topic here. Speaking of indexes that have risen more than 15% in five days, every cannabis ETF is up 30%. Our old pick Canopy is up 33% after being way down from our original price targets that we made at the absolute peak of cannabis interest, which was in April of 2021. Jesus.
But it's really exciting to see all of this positive news on cannabis because Joe Biden has announced that he's going to pardon every single federal marijuana conviction forever, which is basically his way of saying this is the first step for decriminalizing and then legalizing cannabis consumption in the United States of America on a broad base. Of course the real thing for the criminal justice folks is purging state issues, but we don't need to get into that. This is pretty solid for the cannabis side of the economy. What do you think about this though, Justin? Is this kind of a head fake or is this a solid indicator that we're going to get some sweet cannabis taxes and slash or way more cannabis business in the next five years?
I mean, at the very least, we're definitely getting some very solid memes and social media play out of it, so definitely have enjoyed seeing that. But on a more serious note, I think this is definitely a step in the right direction. We saw Tilray, Canopy Growth company, and a lot of these stocks over the last several years really get their stock prices elevated outside of the valuation kind of norms due to regulatory reform both in Canada, the US and kind of abroad. Obviously there's been a slow down in that given what else was going on in the world. They're just not as much as a pressing factor and when you see that happen combined with just valuation and multiples get compressed like crazy, those socks have gotten absolutely destroyed over the last year and there just hasn't been that much talk on it.
So when we see Biden coming out and making such a strong stance on pardoning all these people, which is like, I don't want to understate, that's kind of a massive deal, and then saying that he's going to lay out an actual regulatory reform towards getting this pushed through, this is a very long process, but ultimately is actually extremely promising for getting regulation curve back and getting cannabis ultimately out of the classification right now of LSD and cocaine with the way the US government looks at it. So by no means is this becoming legal overnight and Tilray and all these other cannabis companies are going to make millions and millions of dollars, but these are steps in the right direction on what is a long road towards an actual reform process. The only thing that will be interesting to see is how midterms kind of shake out and where the next four years of presidency goes past that.
This is a multi-year process and what we saw when Trump came in for example, was him curving back a lot of the reforms that Obama had put in. There could be a very similar situation where Biden makes a ton of progress on this. A lot of cannabis stocks are doing really well over the next few years. There's a lot of promise, but then a new president comes in and has a hard line stance on how the reforms that Biden is trying to put into place happens. I mean a lot of that is very TBD and unknown. We don't know who's going to win. We don't know what their stance on this is, how much a priority it is, but we do know that it's definitely a risk factor. So I wouldn't put all my eggs in one basket. We're not, again like everything steps in the right direction and we're making incremental bets, but we are definitely not saying, hey, this is the next one, let's go put a massive position of our portfolio into it.
Yeah, definitely the time to buy cannabis stocks was either a week ago or two months from now once all of the over buying mania has kind of calmed down a little bit. If you've been a long term holder of cannabis stocks like we have, you're still deep in the hole. I'm still deep in the hole. I started working at Moby.co the week before we put out our first Canopy growth report and I was like sick, I'm just going to, I'm all in on being an analyst here at Moby.co. I'm buying everything. So my first two big buys based on our analysis were Canopy Growth and Desktop Metal. So I was humbled pretty quick and I stay humble in terms of our recommendations in making sure that we follow growth cycles and all that because I will be experiencing going a little too hard in on speculative industries for a hot second.
But we've done good after that. It was really hard to kind of call five year cycles back in April, 2021. Regardless, the other main thing that is clouding our macro environment right now, Justin, is the situation in Eastern Europe. The Ukrainian army has managed to push 200 more miles into Eastern Ukraine in just the last week alone. There's a lot of really interesting concerns happening right now. What's your take right now in terms of where we're potentially going in the Ukrainian war right now, Justin, how do you think we're going to be able to shake this out or is this just becoming more of an unpredictable situation as well?
Yeah, I mean it is definitely unpredictable. I think we're in an interesting situation right now where there is a lot of pride in the matter, which is hard to price in and actually project what will happen. But at a very high level, long story short, the war is not going the way that Putin originally thought that it would. So he's in a position now where he's kind of backed into a corner where he needs to save face with his internal circle and the Russian people internally and have some sort of win, it can't all be lost for him, while also trying to avoid further conflict internationally with a nuclear war. So I don't see a very good scenario where he and the Russian people walk away feeling like they won this and while the rest of the world also feels like they walked away, this is safe and we are moving in the right direction.
They're very conflicting, especially given the way the war's going. So I mean it's going to play out over the next few months and I mean it's interesting to see the US now start to stockpile some medication that helps fight a lot of harmful effects of radiation. If a nuclear bomb was to go off, that's definitely not exactly what we want to see just from an overall kind of peace perspective, but we thought it was getting better and now there's a real threat of escalation with nuclear or chemical warfare.
Biden came out on Thursday saying that he does not think Putin is joking in the slightest. And so obviously that would turn the entire world on its head from talking about inflation and interest rates to just talking about are we in a situation where the world is going to move forward?
And so hate to bring this back to the investing world because this is more of a real life scenario, but there are certain ways to play this. Looking at defense stocks continue to get defensive there with defense stocks, no pun intended. Looking at some stocks in the medical sector that will help from fallout from any radiation.
I mean there are ways that, if you're truly fearful this is going to happen that you can try and get ahead of it from that perspective. But I mean at the end of the day, even if you do well, it's kind of a lose-lose all around. So we'll see. Long story short we'll see how it plays out. I think it's a little too early right now for us to confidently say this will or won't happen in any direction.
The most important thing the market craves is predictability. And the minute you add anything nuclear, even if it's a limited nuclear engagement in only Eastern Ukraine, all predictability gets thrown out the window. That is a red line you don't cross back. That is a membrane that is breached, that cannot be unbroken. So you will see massive shifts as people divest and go into more tangible assets. So yes, you can do plays like that, you can be defensive with defense dunks. You can buy Amgen, which is the US manufacturer of one of the most potent and most effective anti radiation sickness medications out there, which is popping off about 15% today because the CDC yesterday bought about 250,000 doses of said radiation sickness medication. That's not for the US of course, 250,000 doses are not enough to treat any limited engagement that would be in the US.
That's for Ukraine aid, period end of story, just in case because the main threat is that Russia will, as Ukraine advances, they'll just kind of leave a nuke in a semi-truck in the Donbas region. And once Ukraine finally pushes them all the way back, kind of just do an FU type style thing. Don't over respond to these reports that the US has lost track of a Russian nuclear sub that is capable of launching in air quotes "radioactive Poseidon tsunami" that can affect the entire US eastern seaboard. The US is clearly not preparing for that kind of disaster. And it's one of those things where nobody wins in that scenario.
And so what you're going to see is just the continued nonsense in the Eastern European situation where Russia should not have done this invasion in the first place and they'll probably just dig in for the winter. We're hearing a lot of scary stuff right now because this is kind of the final push before that entire region of the world completely shuts down around about middle of November.
Having actually lived in this region let me tell you, winter's super weird over there in that it's a light switch. You go to sleep one day, it's just kind of cold outside, you wake up the next morning and there's six inches of snow on the ground and nobody told you it was coming. It's literally just, it flashes over you so you can clearly see that the Russians are starting to dig in and sort of set up battle lines and there is going to be no emotion once that happens. So we're in a period where people are pushing really hard so that they can be in an advantageous position once spring hits again.
But this is going to lock down real quick and just completely just shut down for a couple of months while the classic Eastern European force of winter locks it in. So I wouldn't worry about anything getting too hot right now. Things are actually going to get very cold, very slow, but that does mean that this conflict will probably continue at least into Q2 of next year. So it's going to be one of those things where it's going to still be affecting our overall food supply worldwide. It's still going to be affecting energy prices and everything else. So stay the course, be defensive, but you probably can't actually on a portfolio basis profit off of this because of the amount of losses you'll see everywhere else despite the fact that you're buying Amgen, buying defensive stocks, that sort of thing. Is that a good view of Justin or is that a little bit too cynical do you think?
No, I mean it's fair. We're in very interesting times right now. It seems like every week something new pops up on the news that makes us more fearful. So I mean, I'm excited for things to reverse, I hate to use this cliched saying, but things typically are darkest before the dawn, so I'm hopeful things will turn around. But obviously given what's going on with Russia, given what's going on with inflation, given what's going on with just seemingly every negative thing going sideways right now, it definitely feels like there is certainly things to be fearful of.
But again, we're taking long-term outlooks on this. So you just got to have that mindset because again, when we look back in a few years from now or even a decade from now, there's going to be a lot of opportunities that you wish that you had more conviction in and that you held through.
There's a stat that came out recently that actually said if you sold on the way down the 10 biggest rebound days over the last 10 years, then your returns got cut in half over a decade plus period. So in other words, if things are going down and you ultimately sell the way down because you're fearful, those huge days, just 10 days alone on the biggest recovery days that you'd miss if you sell, you end up over a decade period getting your returns chopped in half. So it just adds further conviction that you should be always invested in the market and not be taking money out just because you're fearful that things won't rebound because history has shown us they always do.
And it's one of those things where if you take that long view, you're always going to win, which is why I'm going to lapse back into the short term real fast to your audience just so we don't get too bogged down thinking about, oh, big spooky things happening on the macro side. Sometimes you can see short-term trends and profit long-term from them, which is why I'm really excited that we got our analysis out about Porsche when we did. If you managed to be on the international exchanges and grab some of this Porsche stock that went out last Thursday, biggest European IPO of all time, super huge dud, but then the market was like, wait, this is actually super cheap and people have been gobbling it up ever since we released our analysis. The stock is up 11.66% in the past, what is it, four days?
It's popping off currently today. So very excited to see that the market realized they were undervaluing the stock despite the fact that Porsche is a, I don't know if I'm pronouncing that right. I don't care, I'm sorry, I'm not a car guy. You want me to pronounce things right you should be giving me medicine names. That's where all of my pronunciation brain is currently. But Justin, what do you think about this? Is Porsche still undervalued or is Porsche just finding its actual level now that it's trading at 92 euros per share as opposed to 80 at the beginning of the week?
On our site, we discuss it in a lot more in detail, so it's a little hard to go in-depth right now, but we definitely have a lot of conviction in Porsche or Porsche to your point, over the long run. Yeah, I mean I think the technical way is Porsche, but as an American, it just feels weird saying that. So long story short, we definitely have the stock, there's a handful of reasons that we are not going to dive into for the purpose of a podcast here that we again discuss on the site.
But long story short, I mean yes, they're not growing as fast as Ferrari and not growing as fast as Tesla and their margins aren't as much, but they're also being valued significantly less. I know 75 billion for an IPO feels ridiculous, but if you're looking at their multiple, whether it's on their EBITDA, revenue, you name it, they're actually being slightly undervalued and they actually have a really good long term push strategy into going into EVs. They want 50% of their revenue by 2030 to be from electric vehicle-related sales.
Obviously the multiple you get on that and the mergers you get on that or significantly higher, especially in the luxury vehicle segment. So I mean if they make pushes in the right direction, not only in five years from now, but also just showing progress now not only. One, will they grow and just their company will be worth more, but ultimately they're able to just get a higher multiple in the same exact revenue.
So we're really excited for what they can do over a multi-year period. Right now I mean outside of energy names and super defensive names, no stocks are doing well, so it's not surprising to see things selling off. For Volkswagen specifically, this was very much a liquidity play, spinning out a company, getting billions of dollars seemingly overnight for just having it as two separate entities, I totally get it. Even if the company isn't being valued right now, they'll grow into their valuation and help portion, not only now, but over the long run, be able to build out the infrastructure needed for what they're hoping to do. So long story short, definitely like the play. If you want to see more on it, definitely head to the site, we give a lot more details like price targets and some other stuff that's definitely good to check out.
It's very exciting for me because Volkswagen is the biggest car manufacturer in the world and they have stated with a lot of conviction for years now that they intend to go toe to toe with Tesla on the EV front of things. And this IPO now that it's becoming way more successful in the last week as opposed to when it first came out, has given them about a 10 billion war chest with which they can just buy a big pile of lithium and start beating Elon Musk with it at a time where Elon Musk may look like that he has to literally sell a huge chunk of Tesla stock to finance this Twitter deal that he's been forced into. And I'm amazed we actually hit time before we could even talk about that. Justin, it's honestly a wild week in the markets. Just a lot of interesting, interesting things happening.
The main thing I just want to get in here real quick is that there's going to be an absolute blood bath battle for the raw materials to make EV batteries, and Porsche being successful right now is an indication of that. Volkswagen now has the money necessary to really go toe to toe in sort of these buying markets for lithium on Australian markets. But an interesting winner here is actually going to be the United States of America and specifically the state of Idaho because we just got approval to start opening up more cobalt mines in the state of Idaho.
So more analysis on that coming. Cobalt is one of those secret ingredients to EV batteries nobody ever talks about. Everyone's so obsessed with lithium when the real big dogs are going to be cobalt and nickel as well. And it's really exciting to see the US being a competitive mining power in this ongoing war as well. Australia's going to rule the lithium wars of the next 10 years, but America's going to be a big, big player in the cobalt space and we'll have more on that for you next week.
But like Justin said, there's a lot more detail and other analyses on Porsche over at Moby.co. If you want to actually get a free trial, see what our analysis is like up close, you can go to Moby.co/go and see what we do week, over week, over week to make sure that we can help up our audience attain focus in the market and make sure that you're not timing the market or anything, but you have a more focused perspective on your portfolio so you can have the confidence to grow your portfolio over time and achieve what the stock market is there for, which is achieving long term wealth and long term security in your financial growth.
Regardless Justin, I'm amazed we talked about what felt like nothing, but we still talked about it for half an hour. We're very, very close to time here, Justin, technically over time. Any final thoughts for me before I go ahead and read the credits here? Again, there's a lot more to cover, but a lot of the inflation stuff is going to be us talking about it next week once the CPI drops next Thursday.
Yeah, to your point, I mean there's a lot more I would love to talk about, but we only have 30 minutes here. I think the last thing I just want to briefly touch upon, because people have been asking about it and it is on the front page of fricking every news website right now, but it is the Twitter Elon stuff. So I will briefly go over time and talk about that quickly. So for those of you following or just not super sure, basically obviously Elon came in, reached a deal to buy Twitter and then Elon for a handful of reasons decided that he wanted to back out of the deal after he signed it. So over the last few months they've been going back and forth, back and forth and it got to the point where Elon realized that he was not going to win in court.
He signed the deal they had to go forward. However, a lot of his financers to ultimately get this deal done are no longer comfortable given a lot of the risks associated with the deal and just the overall volatility with the situation. And due to that now, he's in a really interesting position because he has to buy this company that he clearly doesn't want to and he doesn't have the capital necessarily to do it anymore. So he either needs to find new people to finance this, which is seemingly going to be at definitely worse terms for him, or he's going to have to liquidate some of his own equity, whether it be in Tesla, SpaceX, in a secondary sale, you name it. But take some serious money off the table, which as investors no one really wants to see. Plus it just creates another distraction for him.
I mean, it's hard to be the CEO of Tesla, of SpaceX, of Twitter of a thousand other companies that he's involved in. The line has to be drawn somewhere. So long story short, this definitely is not super encouraging for Twitter. It's not super encouraging for any of the companies he's involved in, it's just more of a distraction. I mean, over the long run, he definitely can potentially work it out and we'll see how it plays out. But at least in the very short run, if you're trying to buy the acquisition price, there's a lot of risk baked into that for the Twitter deal. If you're looking at Tesla, there's also now incrementally more risk if there's going to be severe drawbacks from liquidity or sorry, severe drawbacks of equity of Elon stakes. So this is an ongoing situation. We are definitely not adding to our position now, we want to see how this shakes out there's a little bit too much risk in it for us.
Justin, just to really, really qualify that real fast. Again, we're probably going to cover this a lot more next week once we get a lot more clarity. Again, the actual trial for this Twitter situation is set for 10 days from now and there's so many moving parts right now that this whole letter might have just been a delaying action since Elon Musk historically does not hold up well under deposition.
We'll get into more of that next week and probably even have a whole analysis on it. But a lot of our audience is right in the same boat as you me are in which we bought the Tesla IPO, we've been adding to our Tesla's position and riding that high since things really started popping off at the end of 2020 during that bull run. Obviously, we took some profits at the end, November of last year because once Tesla hit a trillion dollars, that was like, oh, it's a little spicy. But is this one of those things where we should really consider taking more steep profits or should we just hold the line and wait this one out? Is this one of those things where we could see a really bad, difficult to recover from kind of downturn if he's forced to do a fairly significant liquidation?
Yeah, I mean it's a very good point. There definitely could be. It really just depends on the magnitude of the liquidation, how much capital he has to draw out over what time period. There's just so many moving pieces. Even if he has to do it, how does he do it or does somebody else come in and help out? I mean to your point we're going to need some more clarity into the situation and see over the coming weeks if not months how this plays out.
Exactly. And one thing I think nobody's talking about is that he has probably a much easier path to liquidate some of his position in SpaceX because that's not going to destroy his public reputation and his actual money, which is the publicly traded Tesla stock. And there's a lot of shares that he can make play out in the SpaceX situation. And does he really benefit from owning SpaceX? I mean, he barely even runs the thing anymore. That's Gwynn Shotwell's entire operation. So if he's going to actually liquidate something, he's probably going to either a sell Neurolink while it's still kind of a mystery and not as high as he wanted to or get rid of some of his ownership of SpaceX and kind of turn that over to be more of an air quotes "public concern" run by people outside of the Elon universe.
Again, we'll see but it's one of those things where, kind of examine your position and see where you are but understand the risks on the, the Tesla song is going to get weighed down for the next, who even knows how long. It's going to be a very interesting period on the market, it could create a lot of value if he actually follows through with his X brand and turns Twitter into everything app, which is something the United States has been interested in trying to develop for the longest time, contenders for a while where everyone from Uber to a weird combination of Lyft and Door Dash and Snap.
But it's interesting to see if he's forced to buy Twitter if you can pull this off. But again, that is a temporary value destruction that leads to potentially a lot of value creation over the next five to 10 years. We'll have to see though. Either way Justin, we have gone massively over time. Any other final thoughts before I go ahead and read the credits? Again, really excited we managed to go through as much of this detail as possible, dude.
Yeah, so no, I think that's it we're definitely over time. A lot more again, I'd love to discuss, but we have a lot of information on the site through the app. Obviously connecting with us one to one via Discord is a great way as well. So if you want more information there are plenty of resources. If not, we'll see everyone next week.
Awesome, and audience as always thank you so much for sticking with us till the end here. Just so you know, audience this podcast is produced, hosted and voiced by me, Peter Starr.
All of the intellectual value from this podcast comes from our analysis team, which is headed up by CEO, co-founder and my co-host here, Justin Kramer. If you have any questions for us, you can either hit us up at [email protected] or in our Discord where this is actually hosted live. Or you can ask questions live in the audience with us and I'll try to address them as best I can throughout.
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That's Thursday. Regardless, audience, feel free to hit us up in any one of those channels and regardless, we really appreciate your time and as always, we like to leave you with peace, love, and incremental gains. Everyone, be well. Thank you so much.