Some basic lessons for new investors to live by:
1/ Ignore the crowd. You make money by going against the consensus.
2/ Always pick stocks where you feel you have a research edge.
3/ You rarely go wrong investing in the company with the best product.
4/ Don’t listen to management. They are paid to be bullish.
5/ Study competitors, suppliers, and customer behavior. Be a product junkie.
6/ Have in your mind what you think a stock is worth, which is different from price.
7/ Be able to articulate in one sentence why you own a stock.
8/ Develop specific downside scenarios that would cause you to sell the stock.
9/ The highest quality of growth is unit growth, then pricing, then margin expansion, then cash reinvestment.
10/ Be wary of companies that grow by buying other companies.
11/ Sell discipline is selling a stock once it exceeds your price target, or if your investment thesis changes.
12/ Short stocks that have bad businesses, and not because they trade at high P/Es.
13/ Two big value creators are brand extension and TAM expansion stories.
14/ High P/Es are a function of high future growth rates, and not the industry.
15/ When investing in growth stocks always look for a controversy (“fight”).
16/ Buy stocks that can leverage key secular megatrends, and avoid those that will be hurt by them.
17/ Always consider cannibalization of existing products when sizing up new product opportunities.
18/ Be wary of “hockey stick” sales forecasts absent new products or expansion to new distribution channels.
19/ Stock buybacks are accretive if the E/P ratio exceeds the after tax cost of debt or return on cash.
20/ Price cuts rarely add value since they often create a race to the bottom.
21/ Stocks are cheap if price is less than the present value of future cash flows. A high P/E does not make a stock expensive.

lol. $TSLA has a communications problem. $AAPL vs $TSLA over the past 1,3,5 years:
1-year: AAPL +33% vs TSLA -17%
3-year: AAPL +100% vs TSLA +75%
5-year: AAPL +133% vs TSLA +9%

In the spirit of transparency, I’m only suggesting that $TSLA management share with investors the actual FSD attachment rate 3-6 months out rather than trumpet a clearly inflated 75% attachment rate that comes right after the free trial period. Despite clearly technically superior products, $TSLA stock has not moved in 5 years due to lack of credibility resulting from overpromise and hyped-up expectations. I’ve said for years that TSLA’s Achilles’ heel is poor communications. $AAPL does not have a credibility problem.

The best way to value high growth companies is using DCF (discounted cash flow) with multiple stages of growth rather than relative multiples or P/E relative to growth. With DCF, one can estimate the free cash flow assuming t1 years of super growth, t2 years of transition tual or steady state growth. Contrary to what many value investors will tell you, perpetual or steady state growth for a company can exceed the growth in nominal GDP if the company has permanent advantages (first movers’ technology, patents, distribution, brand) that aren’t likely to be arbitraged away as more competitors enter the market.

Most important is to come up with an appropriate cost of equity to discount the equity free cash flows that reflects the riskiness of the stock, which can be higher or lower than the S&P 500 cost of equity. The reason DCFs are better than relative multiples as measurement tools is the latter tend to be arbitrary especially in a market such as today where multiples are high relative to history.

Global Hedge Funds Suffered One of Their Largest Declines Since COVID on Thursday

Bloomberg
10/23/2026
Global hedge funds suffered one of their broadest declines since the Covid pandemic following the stock market selloff on Thursday, according to Goldman Sachs Group Inc.’s prime brokerage desk.

“For the first time since Covid, all three broad equity strategies fell more than 1% on the same day,” the firm said in a note to clients. 

Global fundamental long/short managers were down 1.4% at the market close on Thursday, their worst day since July 16, with telecommunications, media and technology-focused funds falling by an average of 2.7%, according to the note. Global systematic long/short managers were hit by their third-worst day since December 2023, dropping 1.3%. 
Even multistrategy platforms — the pod shops whose broad mix of portfolio managers are designed to protect against firm-wide drawdowns — slid 1.9% for their second-worst day since the April 2025 tariff selloff.

Tech stocks in the US were sold heavily on Thursday on mounting concerns over whether massive spending on artificial intelligence will bear fruit. The Nasdaq 100 Index slid 2.9%, the most since June, as fears over oil-induced inflation added to the woes. Even bearish positions aren’t necessarily paying off during a volatile earnings season. 

“Based on estimates from our prime book, more than two-thirds of hedge funds finished down on the day as concentrated shorts were squeezed further in the second half of the session,” the prime brokerage said.

Asia fundamental long/short managers also lost money, with month-to-date declines at 9.3%. Even so, their hedge fund returns remain broadly positive so far this year at 14.2%, according to the note.
The selloff was the latest chapter in a wild ride for AI stocks this year, as rallies in shares like SK Hynix Inc. and Micron Technology Inc.have been punctuated by painful declines. In July, a rout in technology shares pushed hedge fund Situational Awareness to the brink, raising fears that the AI bull run was losing steam.

U.S. stocks edged modestly higher pre-market Friday (SPX +0.1%, NDX +0.4%) as tech partially recovered from Thursday’s AI-spending rout, the Nasdaq’s worst day since June. Brent crude rose 0.9% to $114/bbl and the 10-year Treasury yield ticked up to 4.97%. S&P 2026 EPS estimates of $368 imply a 20.8x P/E and 4.8% earnings yield—below Treasuries, an inversion last sustained in the late-1990s. I expect treasury yields to retreat as the Iran war ends. I remain cautious on Tesla (220x 2026 P/E, PEG 5x) amid negative revisions, the continued commoditization of autonomy, and its stretched valuation.

$TSLA investors are accepting as gospel aspirational targets served up by Elon and his leadership team on the $TSLA earnings call to justify extreme valuation metrics (2027 P/E 175x, 2027 EV/EBITDA 73x).

I trust everyone realizes that management’s targets are just one element of doing 360 degree investment research. Equally important are competitors’ targets and actions, customer feedback, and supplier activity.

U.S. stocks fell Thursday pre-mkt (SPX -1.1%, NDX -1.9%) on worries that heavy data-center and AI spending will take longer to pay off, raising valuation and concerns about an AI bubble. Brent crude rose to $112/bbl; the 10-year yield dropped 5.4 bp to 5.06% on safe-haven demand. Bitcoin, gold, and silver also declined. Tech shares dropped despite solid $META and $META results, with Tesla -5.3% after a hype-heavy call and a routine year-end Capex guidance cut; stocks of tech peers followed suit. S&P 2026 EPS estimates of $367 imply a 20.9x P/E and 4.8% yield, inverted versus Treasuries—echoing late-1990s dot-com conditions. 10yr treasury yields are expected to ease by year-end as the Iran conflict ends, restoring a normal equity risk premium. We remain cautious on $TSLA given its extended 2026 P/E of 230x vs +45% long-term EPS growth, negative earnings revisions, and continuing commoditization of autonomy.

$TSLA now down -3% AH despite beating 3Q estimates on earnings, auto gross margin ex-reg credits, and free cash flow. CFO Taneja didn’t help matters on the call when the RBC analyst asked about the 75% North America attachment rate taking into account the first month is free on a subscription and whether the attachment rate was 75% or “according to [his] math, is like 30% to 40% in North America on a paid basis.” Taneja didn’t really answer what seemed like an easy question. Of course TSLA could be down AH after running up +7% over the past three days in front of earnings (i.e., sell the news).

The other way to provide a measure of true $TSLA FSD attachment post-free trial period would be to answer analyst Pierre Ferragu’s question about what attachment looked like 3-6 months after purchase. Again, the CFO’s answer was not clear.

$TSLA +1% AH after beating 3Q estimates for adj earnings, auto gross margins ex-reg credits, and free cash flow. TSLA also reported a North America FSD attach rate of 75% vs 55% in 2Q. FSD subscriptions rose to 1.74M +67% vs YA.
I expect the stock to rise by more than the current AH indication of +1% as a result of this report, assuming Elon reiterates on the TSLA earnings call what he said yesterday on the $SPCX call that a TSLA special committee is evaluating the merits of a TSLA-SPCX combination.

3Q:
- Adj EPS $.48 vs $.44 est
- Auto gross margin ex-reg credits 18.1% vs 16.7% est
- Revs $28.0B vs $28.1B est
- Free cash flow +$1.5B vs -$5.0B free cash burn est, due largely to lower CapEx.
- FSD attach rate in North America rose to 75% from 55% in 2Q.
- FSD subscribers 1.74M +67% YoY.
Conf call 530pm ET. Key questions will be on potential TSLA-SPCX combo, timing, next steps.

I’m surprised $TSLA is down AH, given 3Q auto gross margins beat easily (18.1% vs 16.7% est), TSLA’s return to free cash flow, and huge North American FSD attach rate (75% vs 55% in 2Q). Hopefully, Elon can make it clear to investors that the Board forming a special committee to evaluate the benefits and risks associated with a potential combo between SPCX and TSLA is a very positive development.

$META (+3% AH) after guiding to higher than expected 4Q Rev, and beating 3Q Rev and EPS ests. META bumped the low end of its FY2026 CapEx guidance but left high end CapEx guide unchanged.

3Q:
- Rev $64.6B vs $63.3B est
- Adv Rev $63.1B vs $61.8B est
- EPS $3.83 vs $3.57 est

4Q guide:
- Rev $73-$76B vs $73.6B est

FY’26 CapExp
- Guidance now $135-$145B, was $130-$145B.

I believe the report will be viewed favorably by investors. Conf call 430pm.

U.S. stocks edged higher (SPX +0.1%, NDX +0.5%) as SPCX’s strong 3Q results eased AI spending concerns, lifting tech ( $SPCX +9%, $NVDA +1.3%, $MU +1.9%, $SKHY +2.6%, $DELL +4.0%). $TSLA rose 1.8% to $380 on Musk’s comments on the SPCX earnings call that separate special committees at TSLA and SPCX were evaluating a potential TSLA-SPCX combination; $TSLA and $META report after the close. Brent hit $110/bbl, the 10-year yield rose to 5.12%, BTC reached $83.2K, while gold and silver dipped. $NFLX -6% pre-mkt after a fourth consecutive quarter of decelerating revenue guide. S&P 2026 EPS estimates stand at $367 (+32% YoY), implying a 21x P/E and 4.8% earnings yield — below Treasuries, echoing the late-1990s dot-com bubble — though treasury yields are likely to fall as the Iran war ends and oil prices retreat. We remain cautious on TSLA given negative long-term earnings revisions, continued commoditization of autonomy, and a stretched 2026 P/E of 230x vs +45% long term expected earnings growth.