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Main Risks To Tesla & Other Stocks

Updated: Feb 15, 2023

We posted this to subscribers May 11, 2022.

I downgraded early in the day in chat AMD, Qualcomm, Synopsys, Cadence and Tesla to Neutral Rating. I want to chisel down some to reduce exposure from China. These companies all have big China exposure. I dont think it's safe.

If you think about the buys I went to neutral they have from 10% to 1/3 of revenues in China. Supply needs adds to that exposure. So the entire market would get hit if China did anything with Russia or Taiwan but tech with exposure to China would get absolutely creamed.

I think China war games around Taiwan should be taken seriously (here). Russia lining up on Ukraine's border wasn't seen as a big thing but it was. I think after the US exited Afghanistan, as I've said, the world turned to 'up for grabs.'

Did you see the Russian stock index or ETF when Russia entered Ukraine and then was sanctioned. China alone has already hurt their own stock market with a similar type stock move lower for their entire market. Imagine if they inflicted on themselves sticky sanctions. There have been rumors of them concerned about sanctions on China (here).

I disagree with deflationists. The global order of globalization would be officially over and everybody would need to figure out a new gameplan. I think the trend in the world right now is calling an end to globalization and all of its economic benefits. I think we're early in a reshuffle.

AMD NVDA QCOM etc and companies that use TSM and the like for manufacturing, poof, that would just disappear potentially in certain locations. It's a problem. Yes companies are scrambling to adjust locations but it would be a big risk. That's why INTC is destroying it's business model to open this business. The President probably told them headsup Taiwan foundries are at risk. And if we need to price in the probability of this risk it would mean these stocks would have some chance to lose 10-30% of their business and supply.

I dont think it helps the prices of things.

Moving generally to Neutral on companies with more exposure to China. There's enough 'cheap' stocks out there. I don't love cheap in tech. I like momentum. But even momentum has cheap now. So I don't need the added risk of China.

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. All model portfolio trades are hypothetical to show direction, conviction and timing. Model portfolio performance excludes all relevant transaction costs. Opinions given are at this moment and can change rapidly after this is published. If our calls are made public (outside the service) we may or may not update our opinions publicly. Elazar and its employees may take positions in the direction of the calls made in the service but also may add to or exit those positions at any time after this is published.

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