What to Expect When Market Valuations Reset
I have been consistently warning about the growing bubble in the US equity markets, and the extreme overvaluation of the Magnificent Seven.
As my regular readers know, I have been a long-term bear on Tesla stock. On August 8th of 2023, for example, I said that I had gone short Tesla when it was trading around $251.50. My bearishness, however, goes back way before then. Towards the end of 2020, when Tesla had a market cap of $639 billion, I wrote about the insane overvaluation of this stock. Its revenues for the prior year only totaled $28 billion, while at the same time, Volkswagen, General Motors, Ford, BMW, Daimler, and Toyota had a combined market cap of approximately $530 billion!! The combined revenues of these six companies in the prior year totaled $869 billion. The numbers just didn’t make any sense.