TESLA & ExO

Tesla, on NASDAQ, market cap of USD25b, will be bigger than Apple (now USD720b) in 10 years time with exponential growth of about CAGR of 50%.  It is doing at PE of 222x today.  So, who is Tesla? Tesla is a electric car manufacturer, who will replace the current gasoline gushing SUVs in 10 years time.  It is like Apple replaced Nokia, and Waze replaced Naqtac (Nokia bought for USD8bil) and ultimately Microsoft bought Nokia for USD7b.

This is just a illustration of some organization trying to monopolize the world with technology.  I also have worked with a organisation who project exponential growth, very ambitious indeed. Figures like 2, 35, 90, 200, 420.  Quite a challenge indeed.  Mathematically, it is achieveable, but, one problem remain, they don't even bother to study the demand and supply of the products and the assumptions are always linear, almost disregard the market condition.  A bit of wishful thinking, but can they make it, history will tell. Perhaps, like Steve Jobs, I built it, they will buy it.

OVERSUPPLY

I think both Tesla and the organisation I worked with will have a hard time achieving their ambitious goal.  They have no regards of their competitors, market conditions, and linear assumptions (everything will grow without stop).  It is definitely very motivational to have an exponential growth organization.  

The point I am driving at is like Japan before collapse in 1989, China before Olympic 2008, USA before 2007, very convicing resources, but EXECUTION is always an issue, because they are subject to various variables which they choose to ignore.  

At the moment, there are many commodities that are oversupply, from crude oil to all type of metals, like copper, iron ores, and non metals like rubber and others.  Take a look at Commodities Index and you will understand.

What about OVERSUPPLY of drybulks, containers and tankers in 2008/9.  Until today some of them has not recovered.  Just take a look at DRY BULK INDEX and our Maybulk.

OVERGEARED

The world is is overgeard, world debt is 200% of world GDP.  I believe, Japan, Europe and USA is more than that figure.  Don't forget every dollar of debt created must be paid back.  There is implications to all the QEs or zero interest.  I have read from somewhere, every dollar of debt can only produce a fraction of GDP growth.  This is definitely not productive.  

However, it did keep the financial (paper) markets reaching new highs all over the world.  Look at Japan, Europe and USA stock markets., however, this make the world perceive everything is in a goldilock situations.  That bring us to the next problem.

OVEROPTIMISTIC

This cannot be measured other than the confidence index of consumer and corporate.  However, with strong figures in the stock markets and some GDP growth, it gives the impression that everything doing well.  On a contrary, what is underlying the surface is far from calm, it is slowing brewing.  They forget to measure how much debt they use to create the type of growth.

SO WHAT?

So, everything has to come to an end.  The end is UGLY.  My own experience is DRY BULK INDEX, almost six years the index went up from 100 to 1,000 and back to below 100 for six years.  SHIPPING INDUSTRY is still consolidating after 6 years.  Not sure about Commodities and precious metals, it is almost 3 years after gold and silver peak at 2011.

So who is next? Take  your number.  Btw, it is thankless to predict a crash, because, most of the time we are wrong, statistically.  A research shown that market isup 70% of the time.  Look at USA, over the last 90 years, only about less than 5 times there is a major corrections (>30%).  So, what is the chances of predicting there will be a CRASH? less than 30% actually.

However, this does not mean the end of the world.  As far as VALUE INVESTOR is concern, continue to accumulate value stocks.  Don't worry what the market direction it is going, just make sure that the stock you buy is defensive and able to get through the bad time.  Like DIGI, NESTLE, GAMUDA, or PBB.