2020 Stock Picking Contest: 2Q Results

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A truly outstanding quarter is in the books. The fact that it comes after a nuclear meltdown does diminish it a bit, but let’s focus on the positives.

This quarter is a tale of Tesla. Our top four players have ridden its rise to dominate the leader board.

And your favorite blogger’s short of Tesla has worked out as you’d expect. However, I’ve decided at long last to stop fighting them. I still think Tesla is overvalued, but I’m not going to fight the market, even with play money. I reversed my position in early June, netting an impressive $300K loss. The fact that I’m still in the contest at all is noteworthy.

I think Tesla still has a profitability problem, and I don’t know how they can grow into the extremely rosy projections baked into their price without the competition having a say. Folks say Tesla isn’t a car company at all, in fact – it’s a technology company. But I’m old enough to have heard that argument before – “sure our valuation looks insane, but that’s just because you’re valuing us based on our market and products.” Maybe Tesla will dominate car manufacturing, battery production, energy generation, self-driving technology, and whatever else Musk fancies for decades to come. Maybe the brilliant, well-funded, singularly-focused companies battling each of Tesla’s declared areas of expertise will falter forever. Maybe. 

You’d think I’d learn my lesson to stop shorting stocks, but you’d be wrong. Especially when some chuckleheads bid up the stock of a company that is literally bankrupt. I shorted Hertz the same day I covered my Tesla punt, and that’s helped me claw back into the game. While there is a chance that equity doesn’t get wiped out in a bankruptcy, it’s quite rare.

I won’t go into everyone’s individual positions; please feel free to comment about your brilliance or bad luck below. Except for PK, ‘cause that one is easy: he still has yet to make a single trade. After leading the field at the end of first quarter, it’s looking like he missed the boat to buy on the dip. Or maybe he’s just doing some really thorough research.

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Thanks to everyone for playing, and good luck!


For the Tesla longs – are you long-term bulls or are you just capitalizing on a Malkiel “castle-in-the-air”?


6 thoughts on “2020 Stock Picking Contest: 2Q Results”

  1. RE: TSLA – the markets can stay irrational longer than we can stay solvent (quote should be attributed someone, but not sure who). At this point, I don’t think any fund managers want to report their performance w/out having TSLA stock. It’s been too hot this year. That being said, its market cap exceeds Toyota yet it produces a fraction of the cars Toyota is able to spit out??? Pretty clear that its valuation is ahead of its skis…

    Separately, I have no idea what to do moving forward. Very little conviction on any place to invest money through H2

    1. Yeah, TSLA is a wild one. I am of course a TSLA bear, but I’d never bet against it with real money. One thing of note, too, is that the people I know with one gush about it with the same zealousness of early iPhone folks – there’s definitely something aspirational there beyond just a vehicle (which also explains why I don’t get it…).

      Good luck with the back half. Maybe you need to liquidate TSLA to bet against the leaders? If it falters you’ll be left standing at the top!

        1. It’s more than a little crazy. I shorted them again this morning as my Hail Mary attempt to catch you and the rest of the leaders 🙂

  2. Hi Paul!

    Thank you for the post. Unfortunately I was not so luck as last year on the picking. SOme dividend cuts, stocks underperorming.

    Will be difficult to catch the Tesla holders.

    Anyways, It is always good to see how peers are doing.

    All the best.

    Cheers!

    1. Yes, this will be a tough year to catch the Tesla crowd.

      But I have a plan: I’ve decided to reverse course (again) and short Tesla this morning 🙂 At some point the momentum will run out!!! Or perhaps everyone on the planet will be driving a Tesla, and I will turn in the worst performance in stock picking history…

      Good luck with the second half of the contest.

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