Elon Musk.Getty Images
Elon Musk spoke out about the uncertain outlook for Tesla and the US stock markets and the American economy.
Elon Musk warned that stocks could plummet in the event of a recession and attacked the Federal Reserve’s aggressive interest rate hikes this year. He made these comments in a Twitter Spaces conversation on Thursday with Whole Mars Catalog.
Tesla CEO, who also dismissed concerns that Twitter was distracting, promised not to sell his shares in the automaker after 2023. He also noted that a stock buyback would be dependent on the severity and impact of the economic downturn.
These are Musk’s best 14 quotes, edited lightly for clarity and length.
The stock market
1. Extreme panic can cause chaos in markets. Avoid purchasing stocks on margin, and avoid borrowing margin money. You never know when panic will strike the stock market.
2. “I believe Warren Buffett will be buying lots of stock next year. If a company’s fundamentals are strong, but the market is in a panic situation, it’s a good time to invest in stock.
Recession
3. Stock prices will drop if we have another 2009 situation. Items that are purchased with debt, such as housing and cars, will be disproportionately affected.”
4. “Long-term, there is a natural economic cycle, and frankly, we are due for a recession. It is shocking that since 2009, we have not experienced a serious recession in any meaningful sense.
5. “If you are a ship in a storm, even if your ship is a great one, you will still get bashed by that storm.”
Twitter
6. Twitter is like mega catnip. Twitter is catnip crack if you combine catnip and crack. Twitter makes every little thing news. It will get a lot of attention.”
7. “I needed to spend a month getting Twitter’s insane costs under control or Twitter would go bankrupt.” It’s nearly done.
8. “The actual cognitive load Twitter represents is very low.” It’s a far simpler problem than Tesla and SpaceX by a country mile.
Buybacks and stock sales
9. “I had to sell stock to ensure there was enough powder to cover for the worst case scenario.” After two very severe recessions, I am somewhat paranoid.
10. “I won’t sell stock until probably 2 years from now.” Absolutely not next year, under any circumstance, and most likely not the year after.
11. It wouldn’t be wise to buyback shares and then find that the recession is worse than 2009. It is up to us to determine the nature of the recession. If we are doing well from a cash perspective, but the stock price seems absurdly low, my vote on board would be to buy back.
Fed interest rate hikes
12. “It blows my mind that Fed raised rates so high. The economy is currently like a car driving along a cliffside road. The Fed is driving it by watching a three-month old video of its rearview mirror. This is not the best way to drive a car along windy cliff roads. We’re likely to have a difficult landing.
13. The double-whammy effect of interest rate increases is something to be aware of. Any company that sells something dependent on interest rates will see a decrease in profitability. Leasing and borrowing money are used to buy cars. If you look at the monthly payments, it is clear that there is a demand issue. Higher interest rates will reduce profitability. In general, this means that the real interest rate increases and the value of all equity assets falls.
14. A high real interest rate would be like raising the price of a car because the majority of cars are purchased on credit. To maintain constant demand, you’d have to lower the price of your car. If you want to increase the demand for the car, you need to lower the price even further.
Business Insider has the original article.
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By: tmohamed@businessinsider.com (Theron Mohamed)
Title: Elon Musk warns stocks may plunge, vows to not sell Tesla stock next year, and hammers the Fed in a new interview. Here are the 14 best quotes.
Sourced From: markets.businessinsider.com/news/stocks/elon-musk-stock-market-tesla-sales-buybacks-twitter-fed-recession-2022-12
Published Date: Fri, 23 Dec 2022 12:24:16 +0000
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