Netflix, Tesla and Apple – Inefficient and Efficient Markets at Work

Markets can’t be placed in any one category because money is always moving. I would argue the same for individual stocks.

Take a look at Netflix $NFLX the last few years:

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Would you call this efficient? Netflix is the poster child for inefficient markets. The Company can’t be valued properly as it grows, shrinks and grows… so you have surprises. I like this type of stock.

Tesla is in the momentum sweetspot. It is very hard to predict when that will end, but analysts are completely confused. Analysts at banks have $15 billion in valuation gaps in their models. I like this type of stock.

Apple on the other hand has now slowed down once again to where it can be valued by more and more people which has created this downtrend and now sideways action the last two years. Now the bar is set pretty low for $AAPL. It took time for Apple to slow down enough and for the rest of the world to model well enough how Apple was really doing, and what it’s growth prospects look like. The market seems more efficient for the moment. When they are more efficient, the bulls and the bears on Stocktwits come out in droves as well. They are battlegrounds and it makes sense as both sides can make compelling cases. These are the stocks I like to avoid.

How can you not love stocks markets. Stop trying to pin them down…harness and embrace them.

One comment

  1. smugdoosh says:

    great ex-post analysis of three stocks. you should back test it and create a “20-20 hindsight” algo. after you sniff your own farts of course.

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