Cult Capitalism

Cult members will refer to cult capitalism as revolutionary capitalism. Cult members have their cult leader, who is viewed as charismatic revolutionary genius. This prophet like figure will most definitely have a stage where he will share his revelations. In the past it would be some elevated rock or a hill, or maybe even a cave, today it is Twitter. With his revelations (tweets) this shepherd guides his flock of sheep into unequivocally accepting his instructions. Cults have been around for as long as a cognitive homo sapiens, but mostly present in religions and politics. Today however, we have cult capitalism that is responsible for the largest asset bubbles in modern times. Cult capitalism does not stop with Tesla and Bitcoin. Today, it's witnessed in all asset-classes. For cult members to be fully indoctrinated, they don't necessarily need a cult leader, a logo or a brand name is enough for them to start herding. Some cults have been around few millennia, while most cults end tragically. I think cult capitalism is here to say, humans, just like sheep, are of gregarious nature. However, a very large storm is heading their way, and we will soon see how strong their beliefs are. 

The Mother of all Bubbles

We are witnessing the largest market bubble ever. Larger than 1929, 2000 dot com and 2008 financial crisis. Right now, Tesla and Zoom are the largest short opportunities. Even though short sellers lost 40 billion betting against Tesla, there are hundreds of billions to be made on shorting Tesla right now. 

 

Tesla & Elon Musk

On May 1st 2020, when Tesla's market cap was $133 billion Elon Musk posted on Twitter "Tesla stock price is too high imo"

Today, market cap is $820 billion, more than 6 times higher, making him the richest person in the world, just on the paper of course. What does he think now?

PE ratio is 1700. Since fundamentals no longer apply, why is PE ratio not 3400? Market cap is 40 times revenue. Where is this leading to? Just when I thought I saw it all, this happens. Tesla is the largest asset bubble we have ever witnessed. 

Bitcoin vs Berkshire Hathaway

Bitcoin's market cap has surpassed Warren Buffett's Berkshire Hathaway. Tesla is at 670 billion market cap. Tesla's PE ration is now 1,400. There is zero fundamental analysis in these valuations. When fundamentals no longer apply one has to question the purpose and/or the future of capitalism. Because if this is capitalism, it has every symptom of terminal illness.