Friday, May 17, 2013

Musk Stocks

Yesterday it was TSLA.  Today it is SCTY.  The Musk stocks, TSLA and SCTY, are the neo-version of the internet stocks in the late 90s.  You have a freak in Elon Musk, a guy who is willing to double down on TSLA by buying shares in a secondary instead of trying to dump as much stock as possible like a Peter Thiel, his partner at Paypal.  Elon Musk is looking to hit it big, not just cash in.  He's looking to make the #1 carmaker, a guy who obviously is very adept at the stock market PR game, knowing that he can cash out a lot more later when the buzz is even greater, rather than when the buzz just gets started. 

It is a 1998 market, where you have to look to get long positions in these stocks despite the nosebleed valuations, because the potential is there for something great, a potential 5 bagger.  You can't say that about an AAPL or a CSCO.  You have to pay a premium in order to get into these stocks, because of the growth and the potential.  Stocks that can go parabolic are about potential, not current earnings.  TSLA went nowhere for years.  Even though it looks like one is chasing here, just realize that before this month, most people weren't even paying attention to TSLA.  Now its the center of the stock market universe.

Over the next several months, I will be aggressively look to enter long positions in TSLA and SCTY on any pullbacks.  Hedging with a short AAPL position.  We should enter a short basing period before the next explosion higher, which I expect to happen within 3 months.  That next explosion could take TSLA to 150 and SCTY to 75. 

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