Macro Tourist Markets

Macro Tourist: I’m Shorting Tesla On The Index Inclusion News

"Well, it finally happened."

[Editor’s note: The following excerpts are from a much longer piece by Kevin Muir, formerly head of equity derivatives at RBC Dominion and better known for his exploits as “The Macro Tourist.” The full piece is available exclusively to his subscribers. Those interested can check out the new MacroTourist here.] Well, it finally happened. I guess it’s fitting that in one of the most polarizing years in recent history, the most polarizing stock was finally added to the S&P 500. Tesla bulls are coming out in full force. They are foaming at the mouth with “I told you so” optimism. Well folks, I hate to break it to them, but the meat of the move is done. Yup. You read that correctly. Any opportunities from here on out are probably on the dark side. Don’t believe me? I dug up this article about index inclusion, and although it’s a little dated, it’s been my experience that the market has only gotten more efficient since it was written: The largest portion of the extra alpha from a stock index inclusion is quickly built into the price. There is little edge buying after announcement. My favorite chart? This one of the aggregate performance of the stocks bei
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10 comments on “Macro Tourist: I’m Shorting Tesla On The Index Inclusion News

  1. babeinwoods says:

    Hmm, interesting. Some Tesla investors think of Tesla not as an EV or clean energy production and storage company, but as the only thing standing between us and the end of the world ie. climate change. Yes we recognize that we’ve put Tesla on a pedestal. But Tesla represents what we wish all companies were focused on doing. So even if it sells off a bit I have a feeling it’s devotees will scoop it right back up onto that pedestal. After all, we all need our gods.

  2. uptownguy says:

    Mr. Muir should watch the CNBC interview with that trader noting that betting against TSLA is like fighting the Fed. Appeals to reason and data (or delta selling) are logical enough but, sadly, do not seem to be relevant in the TSLA parallel universe. There, it’s a Star Trek thing — Q said “Change the gravitational constant!” and this time, it worked. The dang thing just won’t go back down.

    • Mr. Lucky says:

      Here’s another thing that’s like “fighting the Fed,” believing that we can stop or reverse climate change. Remember, only CA is trying to force zero carbon footprints and even that isn’t enough. If everything that uses energy were to manage a zero carbon footprint going forward, starting tomorrow, we’d still have the mess that isn’t going away and that mess has essentially reached the point of no return. Zero growth doesn’t reverse anything, it just stops the buildup (and zero won’t be possible anyway). Tesla will not save anyone’s world. It’s essentially a personal publicity stunt. In Germany the planned new plant will be damaging the area water supply so much the firm can’t yet get a permit to continue building.

  3. Emptynester says:

    Tsla profits are largely derived from selling regulatory credits to other car manufacturers who are not currently selling EV’s in certain states( eg- California).
    As these other car manufacturers start selling EV, they will no longer need to purchase the regulatory credits from TSLA. I expect that TSLA’s profitability will decline when this happens.

  4. guacamo1e says:

    Heisenberg giving explicit trading advice?! Unheard of, albeit via proxy.

  5. derek says:

    Missed that upswing. Annoyed because, in retrospect, TSLA is a “must have” in every ESG portfolio. So the wave of money flowing into ESG funds over the last two years has been of tsunami proportions.

    It’s not just Robin Hood millennials buying it.

  6. Anonymous says:

    It’s not about stopping climate change. Climate change is happening now. However, what we do from now on will determine just how bad it will get. Tesla will not stop climate change but a 100 or a 1000 Tesla like companies in various industries might start to make a difference. There is a reason clean energy is going exponential, and it is not a passing fad. It’s life or death for human civilization. Just go to MIT’s Climate Podcast portal and listen to few podcasts. Also, you all don’t know anything about Tesla. Try Wait But Why’s series on Elon, SpaceX and Tesla.

  7. babeinwoods says:

    H does not allow links. Otherwise I would send you to MIT’s podcasts about climate change. Or NPR’s TED radio hours podcasts about climate change. Educated yourselves about it. Climate change is here. We can not stop it. However, if we make radical changes within the next decade we might be able to keep the planet habitable. Doesn’t matter to you old farts who won’t live long enough but matters a great deal to the young folk just starting to live. Give a damn. Yes the changes necessary are near impossible but the alternative is accepting the death.

    About Tesla, we need 100’s of Teslas in all sectors to get us where we need to go. Tesla is just all we’ve got. Holding on to a twig when we need a fleet of ships. Tesla is hope. Read about Tesla/SpaceX/Musk at Wait But Why. Understand the background. You are throwing rocks at a company you don’t understand. Did you know Tesla opened all their patents so other companies could build EV’s? Their whole goal is to get us to EV’s faster.

    • I allow links. Just not to questionable sites. MIT and NPR are more than welcome. By all means post the links

    • Catfoodgeneration says:

      Just want to point out that Mercedes, BMW, Jaguar, Fisker and others have high-end electric cars on the market or coming to market right now. Plus there are many more economical electric models from other manufacturers — companies that have successful production and delivery streams. We don’t actually need Tesla to save the world.

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