The Current State Of EV’s

Certain shareholders of certain companies should be thinking very carefully about how this affects certain assumptions of certain financial reporting and analyses.

By Mike Ramsey

Consumers aren’t buying electric cars. They’re leasing them.

Experian Automotive, a data research arm of the credit company, reports that 93% of people who obtained an electric car in the fourth quarter of 2012 leased it rather than financed it.

There are good reasons for this trend. Most of the companies that sell electric cars are offering much lower monthly payments to customers who lease Nissan Motor Co. 7201.TO -0.18%has been offering a $199-a-month lease on its Leaf electric car. Mass market rivals are offering similar deals on their electrics General Motors Co. GM +0.86%is offering a $269 a month, three-year lease on its plug-in hybrid Chevrolet Volt.

The sticker price for most of the electric cars is north of $30,000 and even with a hefty $7,500 federal tax credit, the monthly payment is hundreds of dollars a month higher than for a lease. Tesla Motors Inc. earlier this year began offering a lease-like financing deal aimed at dropping the monthly payments for its $70,000 and up Model S sedans.

Leasing an electric car also insulates the customer from long-term costs associated with replacing tired batteries. A lease represents a bet that in three years, electric car batteries may offer longer driving range at a lower price.

I’m talking about TSLA

Let’s remark, for a minute, that today was a solid green day for us. I personally made 1.5% invested halfheartedly. These sorts of things are just not allowed by the laws of the universe.

I will get a drubbing. It’s ordained; once a year I need to get my clock cleaned. It was supposed to come from the SCO short, but I cut it loose after 15% downside, which took barely ~1.5% off my account. I won’t be let off the hook that easy.

The only other way to crush me now is lower equity prices.

Now, we’re pushing back to level with the old highs, pretending like nothing matters. Meanwhile, European sovereigns are being downgraded left and right, Greece is a laughing stock, Italy, Spain and Portugal can’t get into a growing stride, former star-child Ireland is being swept under the rug, the Middle East is literally on fire, and China is going into a hard stall.

US housing is good and we seem to be keeping head above water – that buys you a little leeway. Does it counter Planet Earth reverting to tribalism?

Take a look at the euro; just awful.

Here are some fun bullets from the European Trade Commission:

Total US investment in the EU is three times higher than in all of Asia.

EU investment in the US is around eight times the amount of EU investment in India and China together.

EU and US investments are the real driver of the transatlantic relationship, contributing to growth and jobs on both sides of the Atlantic. It is estimated that a third of the trade across the Atlantic actually consists of intra-company transfers.

The transatlantic relationship also defines the shape of the global economy as a whole. Either the EU or the US is the largest trade and investment partner for almost all other countries in the global economy.

The EU and the US economies account together for about half the entire world GDP and for nearly a third of world trade flows.

I know the good Forex Kong disagrees with me, having glanced over his work. However, we have different angles, as he is clearly a trader whereas I am looking for big distortions and moves that quake an ANOVA test.

The long term moves in the euro are a malediction on trade and investment between Europe and foreign nations. If the currency pushes into the mid 1.2 range, when coupled with persistent announcements coming from the Eurozone that remind us their leadership has no handle on the problem, and fear of a push to record lows will ripple across our markets.

Welcome, and I hope I find you well.

I’m coming into the afternoon with strong rallying across my portfolio. AEC and CLP are both up over 100 points. CCJ, RGR, and BAS are all pushing 200. The euro cracked this morning, and EUO is now up 150. Silver is enjoying a relief rally, but it’s down so much inside of this year, it seems stupid to talk about.

The only place I’m losing money today are the TSLA puts. And since they’re puts at 2-3% of the account, I really don’t care.

I’m actually looking to add to the Tesla put position, this time targeting the 2015 expiries. A $70 strike price should do nice – maybe as low as $50.

I believe TSLA is the new NFLX; sans the recovery.

All in all, I’m still up over a percent so far, with a 30% cash position to boot. But if I were to be honest, I would say I still expect the summer to end dreadfully.

Have a great day.

Every now and again, I like to look back over where I’ve been to see what I should have done. Sometimes I find I was exactly right. Sometimes I see the errors (hopefully not relevant). And sometime, much to my frustration, I see I was exactly where I should have been but then decided to wander off just before the party got started.

Utilities more or less sum up those frustrations.

I called the utility move about 2 years ago. My reasoning was essentially that a utility is equivalent to a publicly insured bond (a company with a legal monopoly and appropriate guarantees), and that since these bonds have (had) a nice yield, they would become the de facto target if bonds held low prices. But even if bonds somehow fell, they were good enough value to warrant the buy at the time.

Then I picked through and found my favorite utility – AWK (water).

I bought AWK in the low $20’s, road it up to $30, and then…I just sort of wandered off.

So much money got left on the table. Did I leave the utility play because I thought the move was done? No, I mostly left because I thought we were going to sell off and wanted to trade both ways. So I raised cash.

I cannot tell you how many times I’ve overplayed my hand like this, trying to nail the inflection like an ace. And what I’ve witnessed, in hindsight, is that I’m a much better stock picker than I am a market timer.

Which brings us to oil.

I just sacrificed some more money on the alter of oil. But this time, instead of shorting more like a beast, obsessed with “being right”, I’m taking my drubbings and walking off. I’ve been almost perfectly hedged the past few months (excluding silver, which I treat as almost an off balance sheet position at times). And I refuse to let the SCO “hedge” (read, loser) sink my year, which has been very profitable. EUO is doing well, I have a healthy cash position, and BAS, CCJ, AEC, CLP, and RGR will all prove winners. Of this I am confident. The only other thing is the TSLA puts, which are low single digits of assets and will cause as much fluctuation in my portfolio as the month of June, should they burn out.

Or they make my year.

The message here is flexibility. Learn to have it – don’t waste away your hard labors on the rash emotions of the moment.

I will not suffer another disappointing year because of the intransigence of the oil market. If you fools want to fling your money at oil as manufacturing disappoints and demand falls, all because of a little Egyptian Suez’ concern, by all means, lose your shirts.

You’re not taking me down with you.

This is what I posted the last time Egypt collapsed. Just remember, ol’ uncle Cain is here to give it to you straight. The 9th floor was opened to the public for the explicit purpose of raining unpleasant truths on the heads of daydreamers.

When Mubarak was ousted, it was pretty obvious this wasn’t going to end rosily. You just had to be honest with yourself.

It’s like the same record stuck on loop.

People were fretting about the Suez Canal. Sound familiar?

It’s interesting, seeing the things I nailed versus the parts I got wrong. Through it all, even back then expecting the market to sell off, Ben was ever present. Will the beard save us again, or is his untimely retirement the first sign of the coming of the end of days?

Currently, as Egypt falls, I’m shorting oil and expecting markets to correct lower. This is like an exact repeat. Should I “learn” from my mistakes, or am I right this time?