Discussion

Chart of the Day: The Hateful Eight is 85% of S&P 500 Decline

cramsession: It's totally crazy that Tesla gets included with real companies. It's a meme stock with a 323.88 price to earnings ratio. It has no business being in the S&P 500 and should quite frankly be delisted.

jordanb: Elon is working on a scam to get SpaceX into the S&P after its IPO in violation of current rules:https://www.ft.com/content/59adbe42-ca30-47f3-9cda-5415945e9...

amazingamazing: Short it if you think it’s overvalued

zhengyi13: ... and the standard reply to this standard reply is "The market can remain irrational longer than you can remain solvent."

bombcar: The problem is it's very easy to make a long-term bet the stock will go up (buy the stock) but it is very hard to make a long-term bet the stock will go down (you have to pick a date by which it occurs).

cramsession: I do hold TSLQ (and it's been doing great). That being said, Musk has engaged openly in fraud on a regular basis and the SEC has done nothing. At this point I have zero faith in the markets to adhere to the law.

ceejayoz: Shorting requires both being right and good timing on when everyone else figures out you're right.Famously: https://en.wikipedia.org/wiki/Michael_Burry> During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct: He made a personal profit of $100 million and a profit for his remaining investors of more than $700 million.

loeg: It is a crazy meme stock, but in terms of the S&P500, it's 2000x the size of the smallest S&P500 component.

kingleopold: I like how they keep making BS names to create their financial engineering BS marketing and narrative going. so it's The Hateful Eight now what for this year and next? It used to be, FAANG, MAG7,ZIRP this, ZIRP that, Gamestop reaching to their FT stories and every news reporting at same week and so many made up BS from finance engineers.Media is ready to lie to you and feed you BS, just waiting order(s) from finance dep.

arcanemachiner: Unlike Mag 7, Hateful 8 doesn't really strike me as a term of endearment...

esseph: [delayed]

zhengyi13: It's been interesting to review my portfolio, such as it is, against this situation, and see that I'm down relatively little. Not because I've bet against anything per se, but I made a conscious decision years ago to diversify out of the SP500 ("VTSAX and chill!") into broader and exUS indices.

jackconsidine: Point taken but I think it's a bit of a fallacy to frame this way. The market can go up and down as can individual stocks; "85% of the decline" doesn't make sense because some stocks are going up.A book I read a few years ago put this more eloquently. Some governor said that 20,000 jobs were created last month and his state contributed half of them. Well, many states lost jobs and the state next door actually gained MORE jobs, so the "more than half" framing makes no sense

cramsession: Is that market cap or earnings? The market cap is the meme part. If TSLA had the P/E ratio of MSFT, shares would be worth $24.

loeg: Market cap. If it had the P/E of MSFT, it would still be 140x bigger than the smallest S&P500 component.

paxys: Tesla also doesn't have the margins or growth rates of software companies. Top automakers in the world all have a p/e around 5-9. Microsoft is 26. Tesla is 307.

SirMaster: Do people really care that much about short term decline? The SP500 was around 5000 a year ago, and it's currently well over 6000.

Uvix: Yes. Nobody looks at the long term anymore.

hypeatei: If you're going to gamble on $TSLA, shorting is probably the worst way to do so. It has unlimited downside (well, at least as much your broker allows before margin calling)If you want to gamble, buy put options and size according to how much money you're okay with losing (the premium is all you pay)

darth_avocado: TSLQ has been doing barely okay. The problem with investment vehicles like TSLQ which are daily shorts, is that over a period of time, it will suffer the same drawbacks as holding a short position and therefore making the timing of the position very important.

cramsession: Correct, but it's up 5% this month while most things are down. It's not a good idea to hold it long term for the reasons you say.

aworks: FYI: Larry Ellison's net worth is down $200 billion since September. (Hateful Eight = Mag 7 + Oracle).https://www.thebignewsletter.com/p/monopoly-round-up-the-ira...

paxys: Wonder how he'll survive on a mere $188 billion now.

instalabsai: I like to believe that this was the actual reason to acquire Twitter: it’s the meme engine that keeps Tesla/SpaceX valuation high.

rtkwe: True short positions are out of reach for basically any normal investor except those with completely broken risk tolerances (selling unbacked call options), eg the degen gamblers of r/wallstreetbets.

loeg: I don't disagree with any of that.

darth_avocado: Markets can stay irrational longer than you can stay solvent. There are still plenty of people who still take everything Elon says as the truth in 2026. I know people who are otherwise very reasonable, immediately get defensive when presented with the mildest of the criticisms of Elon.

tombert: Yeah, I don't understand Elon's plot armor, especially after the calling a cave diver a pedo. That's when I definitively stopped liking him, though I always thought that the Hyperloop seemed pretty dumb.I am not the first person to say this, but I guess I took a lot of what he said at face value because I don't really know anything about physics or rockets beyond a high school level. Then he started saying stuff about computers that were "slightly off" at best, and since I know a lot more about computers it made me realize he was kind of full of shit.

ramesh31: >It has no business being in the S&P 500 and should quite frankly be delistedS&P500 inclusion is a simple math calculation based on market cap. By definition, Tesla must be included until its value drops far enough to exclude it. That will probably never happen short of an apocalyptic event.

keeganpoppen: just look how s&p 500 is defined. your answer is right there. there is no “does cramsession approve” proviso in there.

keeganpoppen: give him a month or two and we’ll see how it’s going for him

johnnyanmac: Sinclair's quote rings especially true here. Threatens a person's money, no matter how irrational, and you'll get the most disciplined thinkers devolve into 4chan level tirades.

SirMaster: Weird, I look at my investments in timescales measured in years.

solatic: You're correct, but your assertion needs a qualifier: it's hard for small investors to make a long-term bet that a stock will go down.Large investors do not need to purchase index funds, instead they can direct index and purchase the underlying stocks directly. If you're a small investor, the index funds offer diversification but without the ability to divest from individual stocks covered by the index; large investors that are direct indexing can just decide to exclude meme stocks and not buy them, and in so doing make a long-term bet that those stocks will underperform the rest of the index (and without needing to pick a specific date by which that underperformance will happen, unlike a short).There's an argument to be made that there should be a maximum share price (stocks that reach the maximum trigger an automatic stock split), and that stocks should be allowed to trade for fractions of a penny (after all, what really prevents this in a day and age where all trades are electronically settled? Nobody needs to cash out for literal copper pennies...). Much smaller individual share prices would make it more feasible for smaller investors to build direct indexing strategies.

zeroCalories: It's actually easy. Just sell and invest somewhere else.

chiph: I think the point was that those stocks are causing the S&P to be overweight towards those firms that are highly invested in AI. It's like comparing personal wealth when Warren Buffet and Bill Gates are included in the list - the average ends up far above the median.

johnnyanmac: If society could think past next quarter, we arguably wouldn't be in this mess to begin with.

seydor: Unless you re a shortseller

seydor: Shorting requires a timeframe. When?

seydor: space datacenters will need tesla powerwalls. also, flying saucers are using tesla superchargers onow

loeg: The broader US market is only about 25% bigger than the S&P500, FWIW. (Or put another way, S&P500 is about 80% of all US equity.) They also trade in almost lockstep:https://totalrealreturns.com/n/VFIAX,VEXAX?start=2025-01-01

IAmBroom: "Almost".This is specifically one of those points in stock history where it isn't true; the heavyweights of the S&P 500 are dragging it down while the smaller companies are less affected.

IAmBroom: Not the same thing at all.

bombcar: True, though there are some ways of even relatively small investors doing direct indexing.But when you start modifying the index you're not really indexing anymore ...And this is not really a bet against the stock, just a value tilt away from it betting that there are better performance elsewhere. You don't make money because TSLA tanked, you make money (or don't lose money) because your money was elsewhere.