What do I learn in the investing course WEEK 6?

What do I learn in The Investing Course WEEK 6?

Case Studies: Tying it all together

In the final week of The Investing Course we show how to apply the TIC tools and methods in practice, from idea generation to pitching and post-trade analysis.

Making the TIC lessons stick

By now you know in theory how to find interesting investment prospects, how to compare and rank their absolute and relative attractiveness, make forecasts for fundamentals and valuation levels, and time your investment based on TA and macro considerations. You also know the importance of keeping an investment diary and using it for refining your investment strategy (as well as your very note-taking skills).

In practice however it’s a little harder to remember all the necessary steps. To make the lessons stick and cement your new skills, we’ll go through several investment cases from start to finish this week.

ZERO surprises in Tesla over two years, despite all its success

The main case is (shorting) Tesla. It’s still just as valid now as it was about two years ago. In the London Business School video and the supporting documents I show how I got the idea, how I made my revenue and valuation forecasts, and my assessment of risk.

As a side note on forecasting, over the last 2+ years since I initiated the Tesla short case, Tesla has enjoyed enormous success with its new car models (Y and Cybertruck), as well as garnered attention for its Optimus robot. And still my sales forecast ($130B) for 2025 is exactly mirrored in the current (February 2024) consensus forecast.

So in practice, nothing has happened the last two years, zero surprise in terms of the sales outlook. We’ll see about Tesla’s final profitability once we get there, but competition in the EV space is heating up just as one should expect and is putting pressure on profit margins.

Tesla and other IRL instructive case studies

A typical valuation for a company growing about 20% per year with a 20% margin would be about 4x sales. That would amount to $520B, or $160 per share for Tesla some 1-2 years from now. The current (April 2024) stock price actually is about $160. The risk to that assessment, however, is on the downside, both for the growth rate and the profitability. Despite the company’s great performance over the last few years and the coming years, the sell recommendation is thus very much still valid.

In addition to the Tesla case study, in thee course I present five other real investments I made at Antiloop hedge: Meta Platforms, Spotify, Twitter, ConocoPhillips and Occidental Petroleum. Reviewing these real life investments, from screening, through forecasting, valuation, investing, concluding the trades, and post-investment analysis, should provide you with a useful template for performing your own analysis and pitch the case to others. I also go through a theoretical investment case in Canadian National Railway, demonstrating step-by-step how to use online resources to arrive at an investment conclusion.

The Ouroboros of investing

Repetition and cycling the Ouroboros of investing over and over is key to improving your investing skills. Hence, I recommend you download all the documents in the course (in case you didn’t subscribe to future access to the study material, coming additions and updates). Every lap around the Ouroboros will deepen your understanding of all the concepts that perhaps didn’t make sense the first time.

You don’t become a golf pro from six weeks of studying swing theory. It’s similar with investing, but now you at least have all the tools you need to avoid the worst pitfalls and improve as fast as is possible.

Always start with the P = F x V framework, and make plausible forecasts for F and V, based on historical and contemporary examples. Ask yourself what is likely to happen with fundamentals given all you know, and how other investors will view and value those fundamentals once we arrive there in a few years. Summarize your case in your investment diary, or in the form of a pitch to other investors. That makes it easier to evaluate the idea afterward and improve your skills and strategy.