Not Financial Advice
I wanted to make this update because Tesla's bubble might finish popping in this year. Ultimately months ago it was pretty much obvious that Tesla was overvalued and overhyped because of the technology aspect to it. At all time highs it was at or near 1 trillion dollars in market cap which was larger than all other car companies combined while ALL electric cars represent only 5% of all cars made at the time. This was all possible thanks to the Federal Reserves monetary policy.
If Jerome Powell does not get a grip on inflation which looks like it seems to be happening we will have to chase interest rates even higher and higher. I believe during the time Vulkor was in charge they made the same mistake of backing off early but this time the debt to GDP ratio isn't 34%. It's 120% now so we really don't have room to make this mistake again. Higher rates than 7% in this overleveraged economy will result in a lot more zombie companies that can barely service their debt. Vulkor had to go slightly above inflation to stop it which we aren't doing now. Companies in the stock market will most likely take any chance to dump shares because they understand the interest rate thing.
If Tesla went to around $20 per share it would basically be put in line with other car companies and it would do what most Cryptos had done in 2022. I'm not sure how long it will take but it looks very similar to what it did on the way up where it dumped during Covid-19 march crash to retest the 200 day MA. It looks to be doing the same thing but in reverse so it could potentially go slightly higher.
Anyways I just wanted to say overall the economy doesn't look good at this rate with consumers being heavily in debt with little savings (While interest rates are high). Debt to Savings is at all time highs right now and if banks stop lending and reduce credit limits the game of musical chairs will be over and not everyone will be able to find a seat.
I wanted to make this update because Tesla's bubble might finish popping in this year. Ultimately months ago it was pretty much obvious that Tesla was overvalued and overhyped because of the technology aspect to it. At all time highs it was at or near 1 trillion dollars in market cap which was larger than all other car companies combined while ALL electric cars represent only 5% of all cars made at the time. This was all possible thanks to the Federal Reserves monetary policy.
If Jerome Powell does not get a grip on inflation which looks like it seems to be happening we will have to chase interest rates even higher and higher. I believe during the time Vulkor was in charge they made the same mistake of backing off early but this time the debt to GDP ratio isn't 34%. It's 120% now so we really don't have room to make this mistake again. Higher rates than 7% in this overleveraged economy will result in a lot more zombie companies that can barely service their debt. Vulkor had to go slightly above inflation to stop it which we aren't doing now. Companies in the stock market will most likely take any chance to dump shares because they understand the interest rate thing.
If Tesla went to around $20 per share it would basically be put in line with other car companies and it would do what most Cryptos had done in 2022. I'm not sure how long it will take but it looks very similar to what it did on the way up where it dumped during Covid-19 march crash to retest the 200 day MA. It looks to be doing the same thing but in reverse so it could potentially go slightly higher.
Anyways I just wanted to say overall the economy doesn't look good at this rate with consumers being heavily in debt with little savings (While interest rates are high). Debt to Savings is at all time highs right now and if banks stop lending and reduce credit limits the game of musical chairs will be over and not everyone will be able to find a seat.
