Elon Musk’s Tesla (the world’s most successful EV maker) is closing 2022 as one among the S&P 500’s worst performers.

Welcoming you back from Christmas weekend. Phil Rosen reports from Los Angeles.

Christmas is a time when everyone is happy and upbeat. White Elephant exchanges and holiday music are the norm.

Tesla, the world’s most popular electric vehicle manufacturer, usually joins in the cheer.

Elon Musk’s company is the most sought-after stock of all time. However, it has seen years of growth.

However, this is not the case in 2022.

Tesla is one of the biggest losers in the S&P 500 this year. Most of its meteoric gains from the pandemic have been wiped out.

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Tesla CEO Elon Musk. Fabian Sommer/picture Alliance via Getty Images

1. Elon Musk blamed the Fed for Tesla’s declines. The company’s market capital fell $600 billion last year.

Musk stated that it is now a buy opportunity because of macro headwinds.

He tweeted last week, “I keep saying the Fed rate is insane because data that I see says we are already in deflation.” If true, the real rate of return for T-bills would be roughly equal to that of S&P500. A very smart investor I spoke with today stated that he is shorting S&P …”

Inflation reached a record high of 9.1% in June which was a 40-year-high. The most recent data shows that it is still well above the Fed’s goal of 2%.

The central bank attempted to cool the market with a series of aggressive interest rate increases.

This is because higher rates will translate into higher returns on savings accounts and government bonds. Stocks are less attractive than stocks, which have higher risks.

Musk believes that prices have already begun to fall, so the Fed doesn’t need to keep interest rates high. He wrote another tweet last week:

“In simple words: As bank savings account interest rate, which is guaranteed, starts to approach stock market return, which is not guaranteed, people will more often move their money from stocks to cash, causing stocks to fall.”

Musk may be right that stocks demand has declined, but Gary Black, a Tesla investor and Future Fund manager, believes there is still a flaw to his argument.

“Elon – it’s impossible to compare a short-term bank with a long-term $TSLA stock. TSLA is down -38% since you closed on TWTR vs NDX (Nasdaq100] -1%. Black tweeted at Musk that NDX would drop the same amount if it were all interest rates.

Also, although higher interest rates are undoubtedly a drag on stocks it doesn’t explain why Tesla has suffered huge losses since Musk bought Twitter.

Black is still a Tesla believer, and continues to own the dip, as well as Cathie Wood of ARK Invest, who has been buying it all quarter.

In the end, Tesla investors should not feel isolated in their grief over downtrodden stock market prices this year. The tech sector has lost $3.65 trillion this year, with the loss of giants like Apple, Microsoft, Alphabet and Amazon.

What has changed in your opinion of Tesla stock since October? To let me know, tweet me (@philrosenn), or email me (prosen@insider.com).

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3. Wall Street experts recommend 20 books to add to your reading list. These books will help you to understand how to beat bear markets and where to invest, as stocks have been falling this year. You can check out their selections here.

4. These funds are the best performing in 2022. We heard from their managers how they overcome a difficult year in the stock market and we shared the best stock picks.

5. According to the DEA, a global drug cartel used Binance in order to launder as much as $40 million worth of illicit profits. Forbes reports that the crypto exchange cooperated with investigators in tracking down criminal suspects. Here’s how.

6. A 20% drop in home prices will be accelerated by rising housing inventories. Pantheon Macro said this because the scale of the recent demand collapse is still enough to cause home prices to drop. However, a significant recovery is still “miles away.”

7. As historical inflation falls, the stock market’s fear gauge is set to plummet in 2023. Fundstrat believes that this will cause a 20% increase in the S&P 500. The firm believes equity worries among investors will start to ease once the Fed makes a policy pivot.

8. Rob Arnott is an advisor to some of the world’s most prestigious investment firms. He discussed two trades that could yield 15% annualized returns over ten years, and explained why inflation may remain higher than investors expect.

9. The rapid rise of this Wall Street headhunter was fueled by allegations of harassment and abuse. Durlston Partners lured employees with promises of fast cash and epic parties as well as an unbeatable culture. Ex-staffers tell quite a different story.

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10. Warren Buffett’s Berkshire Hathaway continues to produce steady returns, despite the turmoil in markets this year. The Oracle of Omaha advised against trading stocks for gold or cash during wars. Buffett believes that productive businesses are better investments than safe-haven assets.

Phil Rosen, Los Angeles. Do you have any tips or feedback? Tweet @philrosenn, or email prosen@insider.com

Edited in New York by Max Adams (@maxradams), and London by Hallam Bullock, (@hallam_bullock).

Business Insider has the original article.
—————————————————————————————————————————————
By: prosen@insider.com (Phil Rosen)
Title: Elon Musk’s Tesla, the world’s leading EV maker, is capping off 2022 as one of the S&P 500’s worst-performing stocks.
Sourced From: www.businessinsider.com/elon-musk-tesla-sp500-ev-car-stock-market-outlook-investing-2022-12
Published Date: Tue, 27 Dec 2022 06:10:00 +0000