 Good day fellow investors, in this video I'll discuss Tesla and its stock. Let me start with the disclaimer I'm nor a bull nor a beer so I'm nothing. The only thing I'm interested in is how to make profit from the situation and the only way to make profit from Tesla to see what's going on, to know whether to buy, sell, stay long, stay short is through analyzing the company by using the theory of reflexivity. The theory of reflexivity was developed by a great trader, George Soros, his book is very complicated so that's why it didn't explode. It's complicated, his vision is complicated, nevertheless I'll try to explain the theory by analyzing the company, Tesla, what's going on and then discuss whether you should stay long, stay short, what to do and how to go about making profit on Tesla. I love Elon Musk, I love what he's doing, I really hope Tesla succeeds but there are many factors to calculate for you and me to make profit on it. So let's start by discussing Tesla, the company, the stock and the fundamentals and how it all reflects each other. In the last eight years Tesla's stock price has gone nothing but up. That's clear to everybody with minor ups and downs but also what's clear to everybody the fundamentals measured in earnings have gone nothing but down. The free cash flows are terrible especially with the latest investments, the losses have been piling up and rising in the last years. So a value investor, a fundamental investor would immediately say that the price has diverged from fundamentals and that everything related to Tesla is irrational and I see also on Seeking Alpha or all around the web a lot of investors analysts taking that irrationality as a reason to short the stock. Theory of reflexivity would tell you you are wrong. So that's the start of the theory of reflexivity. What you think about the market and what's your view about the market whether you are a bull or beer is wrong. So the theory of reflexivity starts with our fallibility. Our view of the world is imperfect. Let me explain myself. Who knows what will Tesla be doing in the next three years? Nobody because knowing what will happen in the next three years implies knowing what will be the decision making in the next month, two months, three months, six months, how it will go and so and nobody can know that. We can estimate, we can be long or short. So we start by saying that we are all fallible both the bulls and both the beers. We all have an imperfect vision of the world. We are human so we cannot know what will happen in the future and therefore we start with the premise that we are all wrong. However going back to the theory of reflexivity the important thing is not who's right who is wrong but what's the predominant opinion. If the bulls are predominant then the stock price will go up. If the beers are predominant the stock price will go down and stock price reflects that's why it's called the reflexivity theory on the fundamentals. So if the stock price goes up fundamentals will follow and this is very interesting about Tesla earnings you have seen have been negative negative negative however the book value does the fundamentals have been constantly increasing. From below $5 per share the book value went up to more than $40 per share now. How come that negative earnings and increased book value that's because Tesla issues new stocks at a high price and that improves its fundamentals. Creditors those who lend money to Tesla look at Tesla high stock price and they think okay Tesla can always issue stocks to get the liquidity necessary to pay us off and therefore they lend to Tesla at a low interest rate. So the high stock price the predominant perception that increases the stock price gives faith to creditors to future investors to additional investors and strengthens also Tesla's fundamentals which make it a self-reinforcing cycle and you should never invest against a self-reinforcing cycle that's the first rule in the theory of reflexivity and the second rule is if you see a bubble forming jump right into it because as the cycle will save self-reinforce itself you will make profits. I recently was on LinkedIn and one of the feet was this from Vincent Hendrix a Tesla employee and he discussed not the production doesn't matter all that matters is the stock price even Tesla employees know that all that matters is the stock price not production not sales because the stock price reflects how much money Tesla will have how much it will be able to invest how much it will be able to grow and deliver or promise even more so it's not about the fundamentals here it's not about possibility it's just about market perception and for now the bulls are stronger than the beers so you should not be short Tesla now so we know we should not be short now because the trend the self-reinforcing growth trend the stock price is high recapitalization power that improves the book value is still strong we should not be short because the trend up's world is still strong now the question is should you stay long yes as long as the trend is there you should stay long if you are long should you invest in Tesla I'm not invested because maybe I'm late to the party I'm afraid let's say that's it but according to the theory of reflexivity if I would bet on Tesla I would be long now now for the shorts if you want to make money when the trend inflects because every trend according to the theory of reflexivity takes a longer time to build up self-reinforcing itself with minor ups and downs that tests the trend and if those trend tests are passed by the company by the stock then the stock price usually goes even higher and that's you can see after the drops in Tesla stock price the stock price goes even higher so when to short Tesla according to the theory of reflexivity the self-reinforcing trend starts slowing down and then enters into a twilight zone when doubts start mounting so we have to look at trends in order to see what's going on with Tesla if I look at Google trends research Tesla motors steady steady increase over time interest is slowly slowly increasing with peak time with peak interest over earnings or launches product launches giga factories so on we can see that the giga factory has reached this peak and now it's slowly declining during the last six seven months however the model three is slowly increasing so there is string still strength into the model three that will bring benefits to Tesla and strengthen the long-term trend what's also very important that now the trend is tested because Tesla short research is really strengthening especially in the last few months six months it was weak in the past now it's strengthening so it might be the case that the doubters are rising however that's not yet certain so again following the theory of reflexivity you should wait that the doubters are in a majority and that the self-reinforcing trend starts on the downside that Tesla cannot issue new stocks to gain the capital so then you really have a terrible situation so think about if you're short Tesla now it can go to 400 it can go to 500 as it can go to 200 the risk is even however if you wait that negative trend starts and you short Tesla below 300 there is a higher chance that it will go to below 200 than to rebound and that's all that's all the theory of reflexivity says follow the trends because the trends will impact the fundamentals and make a self-reinforcing cycle so to conclude I didn't say anything about whether the company will succeed as long as the stock price goes up the fundamentals are stronger and it increases the likelihood of success however at some point as the stock is diverging from the fundamentals there will be an inflection point and there will be doubts and that will negatively also affect Tesla's capacity to borrow money at a low interest rate Tesla's capacity to issue new shares at high prices thus it can be very very quickly when that happens so if you want to short Tesla don't do it now this trend is still strong wait for the trend to turn negative for the doubts to mount for all those people start to selling if Tesla falls to 100 there is still plenty of money to be made down to 50 25 so that's no risk short now it's too risky to short it looking forward to your comments I know I didn't piss anybody off usually comments are all full bulls beers discussing I'm telling you again you're all fallible my view is fallible I'm just looking at the trends and the predominant trend the predominant trend is still bullish looking forward to your comments what do you think about such a strategy related to Tesla thank you for watching consider subscribing to the channel we always look how to profit from investment opportunities with low risk and high returns I'll see you in the next video