Some Thoughts on Recent DiscussionFirst of all great discussion with the exception of some who would rather diss others than contribute.
I have talked many times about being a pragmatic investor
. Sooo....What does that mean?
Well a lot of things but most importantly it means not being emotionally involved in the ownership of a particular company and listening to all points of view to make the best investment decisions.
So let's look at the current discussion regarding SU and TSLA.....Right now I don't own either.....
SU.....
1.....there are lots of untapped proven reserves world-wide in SA, Russia, the US, Canada, Venezuela , Guyana etc. So supply destruction is not something that one should plan on.
2.....on the demand side, like it or not, Governments are determined to reduce oil demand growth. For this to change Government policy has to change in a significant way. So this is clearly a headwind.
3....From Point 1 and 2, the direction arrow for year over year growth in energy prices faces challenges
4....on the production side, SU faces challenges to increase production every year
Points 4 and 5 are the drivers for further increases in the SP for SU. So when you look at it, a lot of things have to go right for a growth in the SP of SU going forward. Yes it has done well recently as the oil price has moved up to the SA social cost of oil and some impact from the war in Ukraine but that is essentially done.
From a market valuation perspective, SU is not priced relative to its valuation metrics and this has been the case for quite a while. This is a clue that the Pros think Points 4 and 5 are important.
TSLA
In terms of valuation, TSLA isn't valued as a car company. If it was then it's P/E ratio would be a fraction of what it is now. Obscure has listed many things outlining the potential for TSLA. Just like what I said above for SU, a lot of things need to go right so it is not a slam dunk. Just like SU, the question for me as a pragmatic investor is what is the catalyst for future price increases. To me given TSLA's current metrics, it is a stretch to see it outperforming the market just as I have the same opinion for SU from its current price.
So what I doing?
Investing elsewhere....
Constructive opinions and discussion welcome....