One of the best ways to maintain a well-balanced stock portfolio is to diversify. Many consider themselves diversified by deploying capital in multiple sectors (Healthcare, Retail, Tech, Energy, etc…). Spreading investment dollars across various sectors will likely minimize variance, but at the end of the day, it is not real diversification in that all your positions are “Long.” To be truly diversified, a stock portfolio requires some “Short” positions to balance the “Long” positions properly. With that in mind, Bag thought he would make a case for 5 of his favorite stock “Shorts” in today’s blog. In the interest of full disclosure, Bag does have his money where his mouth is, as he is short all of these names - believing they are all headed much lower. He also recommends buying some out-of-the-money calls as insurance on Short positions to avoid getting
Harley, Doordash and Tesla … can’t say anything about the other but for these three here are my 5cent.
Harley is in a tight spot. As you described it’s customer base (wealthy older men) is dying out or figuring out they look ridiculous after 1-2decades enjoying their harley. Harley is extremely fearful of loosing its identity and thus can’t really innovate. A solution would be to go back to the roots and build lighter smaller more nimble bikes like they did post WW2 but I doubt they are able to pull off the balancing act. To do this huge investments would be needed and the risk would be still there. Harley biggest danger is the sentence - it’s not a real harley.
Doordash is interesting because here in SEA all specialized food delivery services have been incorporated into ride sharing businesses … either by M&A or from the start. But transportation is also still mostly on 2 wheels and transportation costs very low. There is extremely fierce fighting between the different competitors. With enough funding it was allways possible to join the market and not go bankrupt. As a consumer imwould say the winner takes it all is not applying to this market. Maybe it’s a decade long evolution but it seems that single market dominance is not achievable and not required either. Drone delivery will soon become a reality in the us so I totally agree that Amazon is just airing for the right moment.
Tesla - not sure with this one bag. VW ist currently discussing to stop all its IT development and just give up and handing the keys to the kingdom to apple/Google. Reality is they burn funds and still can’t even get anything done. Maybe Elon is overrated but then everybody else needs to be downgraded. Tesla has a realistic chance of being a real dominant power in automotive in the future. Sure the sharks will take the first opportunity to take Tesla down - think political enemies/all other car makers - but I don’t see them achieving it. The future is electric (if we like it or not) and Tesla DNA is electric. Soon luxury car brands will be nothing else than tech versions of Gucci bags or Calvin Klein glasses. Not even produced in-house, all coming out of the same factory with huge profit margins. I have no doubt these brands will still survive 100years longer but not as real tech companies. They will just be brands on a standardized technology plattform (something all carmakers are allready doing) but way more extreme. That’s the reason you won’t see a Google or apple car. Google and Apple is allready in every car and soon the brands and their shells will just be Gadgets and accessories to apples/googles ecosystem. Tesla is the only company with a clear vision to not let that happen to their cars and that what makes them a different beasts. Maybe your prognosis is becoming reality but I would not underestimate them - and be it for the incompetence of the others - many would argue they just can’t change and become a tech company (I mean all car manufacturers) but in reality it’s just money and a will. Herber Dies for example to last CEO of VW was fired. He basically was a 10% Elon musk (and I don’t even mean that negative) he understood where things are going and believed VW could take the fight. Well they threw him under the bus. Hope that makes sense what I wrote
Hum, I think you make some very interesting points (and I enjoy your writing style).
My judgment, however, is completely useless : I have protected 10 of the last one recessions. I am temperamental a bear.
Harley, Doordash and Tesla … can’t say anything about the other but for these three here are my 5cent.
Harley is in a tight spot. As you described it’s customer base (wealthy older men) is dying out or figuring out they look ridiculous after 1-2decades enjoying their harley. Harley is extremely fearful of loosing its identity and thus can’t really innovate. A solution would be to go back to the roots and build lighter smaller more nimble bikes like they did post WW2 but I doubt they are able to pull off the balancing act. To do this huge investments would be needed and the risk would be still there. Harley biggest danger is the sentence - it’s not a real harley.
Doordash is interesting because here in SEA all specialized food delivery services have been incorporated into ride sharing businesses … either by M&A or from the start. But transportation is also still mostly on 2 wheels and transportation costs very low. There is extremely fierce fighting between the different competitors. With enough funding it was allways possible to join the market and not go bankrupt. As a consumer imwould say the winner takes it all is not applying to this market. Maybe it’s a decade long evolution but it seems that single market dominance is not achievable and not required either. Drone delivery will soon become a reality in the us so I totally agree that Amazon is just airing for the right moment.
Tesla - not sure with this one bag. VW ist currently discussing to stop all its IT development and just give up and handing the keys to the kingdom to apple/Google. Reality is they burn funds and still can’t even get anything done. Maybe Elon is overrated but then everybody else needs to be downgraded. Tesla has a realistic chance of being a real dominant power in automotive in the future. Sure the sharks will take the first opportunity to take Tesla down - think political enemies/all other car makers - but I don’t see them achieving it. The future is electric (if we like it or not) and Tesla DNA is electric. Soon luxury car brands will be nothing else than tech versions of Gucci bags or Calvin Klein glasses. Not even produced in-house, all coming out of the same factory with huge profit margins. I have no doubt these brands will still survive 100years longer but not as real tech companies. They will just be brands on a standardized technology plattform (something all carmakers are allready doing) but way more extreme. That’s the reason you won’t see a Google or apple car. Google and Apple is allready in every car and soon the brands and their shells will just be Gadgets and accessories to apples/googles ecosystem. Tesla is the only company with a clear vision to not let that happen to their cars and that what makes them a different beasts. Maybe your prognosis is becoming reality but I would not underestimate them - and be it for the incompetence of the others - many would argue they just can’t change and become a tech company (I mean all car manufacturers) but in reality it’s just money and a will. Herber Dies for example to last CEO of VW was fired. He basically was a 10% Elon musk (and I don’t even mean that negative) he understood where things are going and believed VW could take the fight. Well they threw him under the bus. Hope that makes sense what I wrote