 Good day fellow investors, I really hope you're doing great. Today we're going to discuss profitability by analyzing Uber and Tesla and what are they doing especially the new payment package for Elon Musk. We're gonna deepen a little bit on demographics and youth unemployment because it's crucial for long-term investors. We're gonna talk about what could Buffett be buying now, as he said that he is net buying stocks. Then we're going to discuss currencies and the weak dollar as the US Treasury Secretary likes the weak dollar. And we're gonna finish by discussing stock market news, the risk of a stock and what analysts do after the news have happened by discussing Qudion and Pre-Tune, two stocks that we have covered in the past and they have had very interesting developments lately. So stay tuned. Alright, in a recent interview the new Uber CEO discussed how maybe the core of their business will be profitable in the next three years but they won't be profitable for certain as a whole company because they are investing a lot in autonomous drive as they see that will be the core of their business in the future. However, what I'm very, very interested is for how long will those companies like SoftBank be willing to invest in unprofitable companies with very, very low probabilities of succeeding in the long term like Uber. Now, I know everybody looks at Uber but Uber has been existing only in an upside economical cycle. When there is a recession, when there will be huge competition, there isn't so much competition. Why? Because it isn't profitable. As soon as the business turns profitable, as there is some margins to make it profitable, there will be tons of sharks getting in the business, sharks with better technology, better management, better cars, better money. So that's something that few understand but there are so many investors that are chasing those returns. And that's my question. For how long will that be like this? That a company like Uber that's burning 1 billion in cash per year or per quarter can survive and keep getting new money. Their valuation was at 70 billion a while ago. Now it's already lower below 50 billion. Nevertheless, if we look at their revenues, okay, gross booking is one thing. Net revenue, according to accounting, really grew but is 3 billion and the loss was around 1 billion just for the fourth quarter. So they are losing 4 billion per year and they will continue to do that for the next three years and even more. This just shows how irrational this market is. And the second example that shows the same thing is Tesla. Now, Tesla announced that the CEO will get a bonus compensation of 55.8 billion if he reaches all his milestones. The main milestone is 650 billion in market capitalization. If he doesn't reach 100 billion, he doesn't get anything, no pay, no salary. Okay, you might say that's a big deal but the salary bonuses are not really a big deal because Tesla is a binary option. A binary option means that Tesla either succeeds or fails. There is no in between and Elon Musk knows that very well and that's why he has to push, he has to promote, he has to market his idea as long as it is possible because what's the key to Tesla's success? The key are capital rounds, financing, continuing, getting the capital to continue to work on his ideas. I hope they will succeed because I like what Elon Musk is doing and I like Tesla. However, from a profitability standpoint, as long as there is again so much money lying around, so much money going after the risk, this is all a consequence of monetary easing around the world. The Fed, Central Bank, ECB, Bank of Japan print money, put money into the system and that money comes out looking for risky assets like Uber, like Tesla. Let's dig deeper here. What are the milestones? So 650 billion market capitalization to get all the money in addition to revenue hitting 175 billion, which means 15 times more than 2017 levels and adjusted earnings before interest, taxes, depreciation and amortization to hit 14 billion, 21 times annualized 2017 levels. And here is my question now. If you sum up the adjusted EBITDA for this eight years and compare it to what Elon Musk will get, you will see that Elon Musk will get 58 millions and this is 59 millions is the total adjusted EBITDA before earnings, before taxes, before depreciation, before amortization. So practically they are saying for the next eight years Tesla will be unprofitable. If you want something, if you want the big promise of the 650 billion in market capitalization, you have to stick to Tesla for another 10 years. So that's the marketing. Unprofitability, we promise you unprofitability, there have been unicores like Amazon who have done that in the past and with that story they are catching in new investors more and more money. As long as money is free, it's practically riskless for those investors to invest in such companies. As soon as the cost of money increases, interest rates increase, there could be much contractions in looking for such risky assets. And Elon Musk knows that and therefore he has to promote now to get as big as it can in order to get easier financing to continue for the next 10 years of not profitability. Earnings before interest, taxes, depreciation and amortization is not profitability. And then there is something else and this is the focus on market capitalization. With this chart, Elon Musk is telling the world what should be the valuation for Tesla from the current perspective. Because if we take the EBITDA of 14 billion that is expected after eight years or whenever from Tesla and give it a normal automotive industry ratio valuation, Tesla's market capitalization doesn't go much higher than what it is now. 14 billion times five times seven we get to 50 to 100 billion. Like a normal automotive company. Okay, I know Tesla is much more than that. It will change the world. Yes, when it changes the world, when it becomes profitable, there will be so much competition. And then we are talking again about a normal company. That's how I see it. The risk is there. Play the trend if you want to play the trend. But understand that all what's going on is thanks to cheap, practically free money coming from the last eight years and monetary easing. Those companies have to take advantage of that as long as the party lasts. How long will the party last? We'll discuss that tomorrow when the Ray Dalio tells us exactly how long will the party last. We'll see if he will be right, but the ideas are very, very interesting. All right, demographics we discussed last week, some demographics. Now the IMF urges action on Europe generation gap. Europeans incomes have stagnated since the economic crisis, but those of the elderly rose by 10%. So in Europe, more and more older people, those people vote too. So if you want to get those votes, you have to increase the payments to the elderly. The youth are becoming a smaller, smaller part of the global of the European population and are less and less interesting to politicians. So there is a huge gap creating in Europe that will distort probably the whole continent if something doesn't change quick. And these are the risks that Ray Dalio is discussing inequality in the United States. The poorest for 50% didn't go anywhere in the last 10 years. The rich got richer in Europe. The young don't go anywhere. The older get more and more money. Just look at this. This is the youth unemployment rate in Europe from 16 to 24 if you are out of school. Greece 43%. Spain 38. Italy 35. Portugal 24. Belgium 21%. The whole Euro area 80, 19%. European Union 16%. And then we go down Bulgaria, Ireland, Malta, and then down we have Netherlands, Germany at 86%, which is something healthy in the late part of the economic cycle. However, my biggest worry here, the biggest destruction that happens is the lack of skill developing. Those 40% of youth or 20% of youth that are unemployed calculate that a lot of the youth are still studying so they don't come up in that statistics, but they are unemployed. They are not developing their skills and it will create a huge, huge gap, lack of human capital in the future. This is another reason why I see Europe as very, very weak. If we look at the unemployment rate in the United States, yes, it went up to 18%, youth unemployment rate to 18% in 2010, but it quickly went down. It means that there wasn't much time with lack of skills development. And the average, if we take the average of over the last 20 years, 40 years, we are at 10%, 11%, which is okay for youth. Also, if we go back to Europe, when I come from Croatia, I can tell you immediately, in the Netherlands, youth unemployment is 6%, 7%, because most of my students in the Netherlands are eager and happy to work for free in an internship. I get emails from Canada, from the Netherlands, can I work with your company for an internship for free during the summer, two, three months? That's something you won't see in Italy, perhaps in Croatia, no way. Nobody's going to work for free because they don't understand the skill development. It's a different culture and it's something that will have a huge impact in the long term. That's something that really long-term investors should look at, even if the euro is strengthening now. And that's what we are going to discuss now and those are currencies. All right, the US Treasury Secretary recently said that it's good that the dollar is weak, that it helps the economy. But what's important here is to understand the longer-term currency trends. He's really focused on the short term and that's not good from a politician forum, a US Secretary Treasury, or if the politicians in the US focus on that. We'll discuss that a little bit later but let's first see the long-term trends. In 2017, the Fed increased interest rates and everybody was expecting a stronger dollar. However, that didn't happen. If you look at this chart of the dollar trade weighted US index against the major global currencies, you can see that when the Fed announced monetary tightening, the dollar jumped in this case from 75% to 90%, 95%. Which shows that from 2014, half of 2014 till 2016, it gained almost 40%. And since then, it went sideways and it is a little bit lower now. This shows how currency markets anticipate what will happen. So it's all about expectations and you have to catch that big trend. If we look from 2014 till now, three and a half years, the dollar has appreciated thanks to tightening. If there will be more tightening in the long-term in comparison to Europe and all the other currencies, the dollar will appreciate even more. So now we can say that the dollar is weak. In the short-term anything can happen but it all depends on how the dollar will be perceived. If the US Treasury Secretary says we want the weak dollar, then this weak trend can continue. However, it makes, again, things difficult in Europe. So fundamentals will again shift and change. And you can see here that the euro is strengthening because Mario Draghi said something that they might stop with their monetary easing with their buying of bonds. Just stop with buying, not even increasing interest rates or something like that. So we'll see how that actually shifts. Now a stronger euro is not good for Europe in this case. So what to do? Europe dollar, you never know exactly what will happen in the short-term as it is mostly depending on sentiment. Who is saying something Draghi, Manchin or whoever. So you have to look at the long-term and I have been saying in the last year, year and a half, writing that the dollar is strong, take advantage to rebalance globally. Now the dollar is weaker. Now rebalancing globally isn't that attractive for US investors. European investors might look at dollar-denominated investments now because the dollar is weaker and the euro is stronger. So it's cheaper now for Europeans to buy in the States. And if you take a long-term rebalancing perspective between long-term trends, that's the only way you can play currencies. Short-term bets, you never know what will happen. The trend can be longer. You never know when there will be a reversal. Let's see what Delio has to say about the currencies. So Delio is not happy about the weak dollar because the weak currency reduces the currency's holder buying power. So the US can buy less from abroad, which means higher input costs, higher commodities and that leads to inflation. The values of debt denominated in the weakening currency, which hurts the foreign holder of that debt. The US needs a lot of debt. If there is inflation, if the Fed is forced to increase interest rates and there are no foreign buyers for that debt because they know that the dollar will weaken, another big hurt for the US economy. It's looking a little bit longer than the US Treasury Secretary. Then supports prices of assets denominated in that currency. And this is again, okay, Trump is focusing on making the richer richer. But even if that is an illusion, the stock prices, home prices are all high because of low interest rates. If that changes, those will too change. So it is an illusion of wealth. And if we look at what is the consumer confidence, the household wealth in the US, it's all just made from a number. It's paper money. Then raises a country's inflation rate, of course, and then higher interest rates, and then you're in trouble if you can't refinance and stimulates domestic activity. That's not what the US needs now because the actual GDP is already at the potential GDP. There cannot be more production in the US, especially at such a low, low unemployment rate. There is nobody too high. So I wish I could tell you what will happen with currencies, but whoever is telling you that is lying or is trying to get some money from you, from a course or something, because nobody can know what will happen to currencies. And those who know, they don't need your money. That's as simple as that. Now, what is Buffett buying? Every quarter, Buffett needs to file a 14F document to the Security Exchange Commission where he tells us his US positions. And that's very nice to look at because then you see, okay, what is Buffett buying? And he has said in a recent CNBC interview that they are net buyers of stocks, which means that they buy more than they sell. So we are going to see 15th of February, we are going to cover that. I'm very interested to see what is Buffett buying at the moment. Let's see what he has been doing in the past last year, and let's see what he's doing now. So the last form shows that he was buying Apple, Monsanto, Arbitrar Play, he wants to buy it at 1.15, 1.20 and sell it to buyer at 1.28 and Synchrony Financials. The stocks that he was selling was IBM and Charter Communications. Now, why is he selling IBM if it has a low price earnings ratio, a strong dividend? He says that the company isn't what he was thinking it was, because he wants growth, high return on invested capital and IBM seen not to have delivered that. Okay, so Buffett made the mistake that now IBM is still a good company and will do well, but it's not what Buffett wants. He wanted more and he sees more of that in Apple than in IBM. That's why he's buying Apple and selling IBM. Will he be buying more Apple at these valuations? We will see in the next quarter. However, that's possible. Apple is the biggest company. It still has a relatively good price to earnings ratio and a lot of cash coming in, and you know how Buffett loves cash. Further, other two companies I have went through all the stock holdings of Berkshire Hathaway. Other two companies that look interesting that Buffett could be buying now are US Bank Corp. and General Motors. Low price earnings ratio, good stable businesses, domestic businesses from the US. So, Buffett already holds that has been buying General Motors for the past seven years. So, that's something that he could be buying more. I don't think he's buying airlines because he has been selling them. He's been buying them a year and a half ago when the price earnings ratio was seven or even below 10, all the four big airlines. So, we'll see what will happen. There are two companies from the list that look attractive to him. He might be buying more of them or there will be a completely new company that will surprise us all. We'll see. Just to look at Synchrony Financial, what he was buying, where it was very low. And now, of course, you can see how he's a good stock picker because the stock is much, much higher than when he was buying around 27.30. All right. And now I want to discuss first, Kudian, a Chinese online financing platform that recently IPOed. The stock started at 20-something, went to 35, went down to 11. And now it has recovered a little bit to 14. And I want to discuss how analysts work because it's very, very interesting how that works. So, this was published yesterday when Stiffel downgraded Kudian from buy to hold with a price target of 15 from 19. Analyst John Davis elects to step to the sidelines until the dust settles in the Chinese loan industry. So, that's typical for analysts. You cannot sell uncertainty to investors. Everybody wants certainty. Let's sell them the S&P 500. Let's sell them Apple. If you come with Kudian, with stocks like Amira, investors don't like that because they don't understand. And then analysts say step on the sidelines until the dust settles. That's my most hated sentence in investing. If the dust settles, if the uncertainty is low, then the stock price will be much, much higher. And when the stock price hits, if in this case Kudian's stock price hits 19.20, then he will put a new target to 25.30 because the dust has settled. But the risk will be higher then and the return slower. Now, okay, the stock price is lower. We don't know what will happen. Will it be low profitability or high profitability? So, the uncertainty is high. I would prefer Kudian to be at eight to really say it's low risk. It's also a little bit higher risk now. Nevertheless, just the message is here. What analysts are doing? It is uncertainty, risk. Oh, let's step on the sidelines, put it on hold, lower the target and see you later when everything is perfect. That's how the investing world works. We have to take advantage of this. Whenever there is something uncertain, people are scared and run away. If you dig into, as an analyst should dig into the market, the sentiment, look how many new loans are made on Alibaba, what comes out in the searches in Chinese and so then you know what's going on with Kudian and what will happen in the next earnings. From an analyst, I would expect that. Not someone that says, okay, I'm not going to talk about it anymore because I don't know and then lower the target or so. The risk is a function of price and that's something that a lot of people don't understand. Now, another company that I want to discuss is Pritium Resources. We already covered here on the channel and I made a discussion how it's very, very risky and the grade's mind will be volatile and that's exactly what happened. Previous quarter was good, this quarter was terrible and it showed that the management, let's say, has been lying about the grades and about what they will be doing. They need a grade of 15 grams per ton to make it profitable. They came close last quarter, this quarter they came far, far away so high costs. It's not what the management has been saying. I wrote an article, made a video here first on YouTube, of course, in September discussing the risks and I got 220 comments on this article on Seeking Alpha telling me how I am wrong, how I am short, attacking me from always, from everywhere and I'm really sorry that the risk came out. I'm sorry about those who have been long, Pritium and lost money. The problem is that really investors have always to look at from the fear side. Born and Buffett says, I start investing, I start looking at an investment from a position of fear and from then I build on. So first risk, risk, risk, risk, risk. If you look first at risk, you avoid investing in companies like this. So it's difficult, it's boring, it's not exciting but it's how people make money. If not, things like this happen and when you make the average, again over a cycle, here we haven't seen a beer market for eight years so let's see what happens in the next beer market with all those profitable companies with all the profitable trades that people are making. And with this, I thank you all for watching, looking forward to your comments and I'll see you in the next video.