[sgbuffett]

Elon Musk is wrong and investors should take advantage of his mistake to buy.





In recent earnings call Elon Musk projected Telsa will grow "only" 50% due to supply chain problems. This cause Tesla stock to plunge 11%.
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But the thing is supply chain problems started in middle of 2020 and dragged until end of last year.. if what Elkn Musk says is true then the global economy is in trouble not just Tesla.

Because the stock market is jittery and fragile this news managed to cause a sharp plung in Tesla stock as "sell first ask later" is the order of the day.

I did a fact check of what Elon Musk said. 

I eeally doubt what he says will pan out. If it does we are looking more trouble ahead than just Tesla.

Things might have turned temporarily acute due to Omicron wave but this wave once is over the longer term.supply chain reviver will take hold and we will see a production boom not an economy crippled by supply chain worries.

The 2 scenarios lead to 2 different investment strategy.

If what Elon Musk said is true we have to go defensive as all growth stocks dependent on production will be crippled. Software companies will be immune but a laptop maker will be facing problems. Auto makers will do badly.

But if what Elkn Musk say is untrue. Its the reverse as pent up demand lead to different scenario.

If one is familiar with the Stanford University game called Beer game, using the current state of supply chain to predict problems ahead is a business fallacy....and leads to wrong strategy.  Because the final.assembly and production is at the end of the supply chain they will not know...that is where Elon Musk is talking from

The supply shortages could be due to collective action of many players to stock up over-order and cause the producer to over produce. The under supply will flip to oversupply suddenly.

I did a more complete supply chain analysis using my own machine and data.

I believe Elon Musk is dead wrong or.said what he said to lower expectations to create positive surprises. 

References below for Beer Game. I learn about the beer game in one of my online courses 

https://en.m.wikipedia.org/wiki/Beer_distribution_game

Some analysis of supply chain done in Nov 2021.
https://www.schroders.com/en/insights/ec...g-to-ease/