What were they smoking - Twitter & stock market

Investment Analysis Clubs Macro Economic Trends and Risks
1

Very well written article about this crazy deal
https://www.washingtonpost.com/business/2022/05/02/elon-musk…

"A cocky, publicity-seeking libertarian billionaire bets virtually all of his stock in his overvalued electric car company to finance a highly leveraged, $44 billion hostile takeover of an overvalued, money-losing social media platform, on which he boasts 84 million followers.

…

I’m going to go out on a limb here and predict that we will come to see this deal as a market top, when sky-high valuations and over-indebtedness reach a convulsive crescendo in a megadeal driven by hype, overconfidence and ego. In many respects, it is reminiscent of AOL’s disastrous takeover of Time Warner two months before the massive tech and telecom bubble burst in the spring of 2000.

At some point in the not-too-distant future — once the hype has finally drained from the tech-crazy stock market and defaults start to roil the overleveraged credit markets, once housing prices fall back to earth and the crypto fantasy is dispelled, once we’ve settled into an extended period of stagflation — people will look back at this moment and say, “What were they smoking.”"

13 Likes
2

gerrard87:

(cut intensively to the key words)
At some point in the not-too-distant future once the hype drained from
stock market
overleveraged credit markets
housing
crypto fantasy dispelled,
once we’ve settled into stagflation —
people will look back at this moment and say,
“What were they smoking.”"

A rec and I share a similar view, mostly. But I do expect some stunning positive escapees somewhere in the bleak landscape.

When I was “smoking” the other day I thought more about my probably irrational conviction that with

global climate change ever more raucously proclaiming
“I am REAL and HERE NOW!”,
oil wealth protecting itself causing
severe and ever more ugly distortions of politics and policies,
various long time solid democratic states in legitimacy convulsions,
Putin Ukraine war destroying lives & wealth and the post WWII order,
these all seem to be causally linked,
bringing an end of many old normals of the world order we take for granted.

Kansas is vanishing below us as the tornado accelerates;
Oz or Prospero’s Island is ahead with “real” witches and sorcerers but also
“all powerful” humbug “wizards” and dangerous armies of muddled Calibans***.

Then I went for a nice long walk.
Pretty flowers in gorgeous Springtime and
the saplings I planted over the last four years growing with ever greater rapidity as they transform their underlying impoverished soils and earthworms have become normal!
Of the three poor country kids I have mentored these last five years
the 19 year old is packing for a summer internship doing AI at Faeebook in Menlo Park, the 23 year old is transforming small impoverished shops with his cheap custom designed mobile phone based internet inventory and ordering systems, and
the 24 year old has been put in charge of the programming at a German auto part supplier’s experimental custom CAD/CAM design shop. Their grandparents were all impoverished farmers.

How much longer will I live, and what will I be doing, and how radically should I be changing my absurdly fortunate investments and charitable commitments to fit what is coming both for me and for this staggering glorious horrifying world?

My ancient (chronologicaly ten years older than me but you’d would guess she is 100) neighbor who farms corn, chickens, pigs, and goats assures me that everything always changes more than anyone imagines, nothing really changes at all, and to enjoy my tortillas, mezcal, sunshine and bed.

david fb

***https://www.poetryfoundation.org/poems/43748/caliban-upon-se…

13 Likes
3

gerrard87:

(cut intensively to the key words)
At some point in the not-too-distant future once the hype drained from
stock market
overleveraged credit markets
housing
crypto fantasy dispelled,
once we’ve settled into stagflation —
people will look back at this moment and say,
“What were they smoking.”"


The market will continue to tank. Sure.

Crypto will do pretty well over the long run.

Stagflation wont happen for several years. But we will see at the very minimum a shallow recession. The FED is wasting its breath.

As far as Musk buying Twitter it makes a lot of sense. He has 400 EV competitors in China and major car companies now starting to compete in the west. This puts his marketing into high gear. The price $44 billion gives him more of a marketing megaphone than buying say the NYT where he'd just hand off to a new or old management. Like Bezos did with the WaPo. Bezos never used the WaPo to profit.

Musk is aiming Tesla to climb higher.
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4

people will look back at this moment and say, “What were they smoking.”"

Almost.

people will look back at this moment and say, “What weren’t they smoking.”"

5

And the answer will be,
Cash.

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6

https://finance.yahoo.com/news/elon-musk-told-investors-hed-…
Elon Musk told investors he'd probably double or triple their money if they backed his Twitter buyout, report says

If Pearlstein’s math is right, and I trust it more than anything coming from Musk, it looks like he is still billions short.