Hey guys, it's sasha in the last few days, gray stocks have been decimated, tesla stock has dropped down to around 950 dollars and that's almost 200 down from just two weeks ago and 23 down from the roughly 1230 peak in november. Many other grey stocks are also bleeding very badly. 30 to 40. Discounts are all over the shop, and a lot of people are panicking.

Naturally, as is tesla stock in free fall, is the stock market about to collapse? Should you sell what is happening but sasha? You said that a lot of catalysts are coming. How come? I haven't, doubled my money already well, there are a few big problems here that might help you understand the answers to those questions, so let me explain a few of them. The first problem might just get a whole lot worse. A little later today, when jerome powell makes an announcement about federal reserve policy, and that might make things get worse before they get better, because only one month ago, the fed announced that they plan to continue their bond buying program of buying treasuries and mortgage-backed securities into At least late spring, and probably even summer of 2022.

and yeah, that's right just one a month ago, that was their policy. The official projection one month ago was that there would only be one interest rate rise towards the end of next year and with inflation already running riot. It was pretty obvious that this was a total ruse, but now that jerome powell has got his nomination from joe biden, we suddenly don't have to pretend anymore and people who run the fed. Might you know finally stop playing games and actually take action, because that is kind of their job and various reports are suggesting that action may now come a lot sooner than anyone expected.

We may see rate rises brought forward from q4 next year. According to these reports, all the way to q1, so in the next three months, because inflation doesn't have a habit of disappearing all by itself, who could have possibly thought - and some of this has already been priced in by the stock market. The inflation fears are a very big driver of growth, stocks being completely smashed over the last two weeks, but the confirmation from the fed that they are joining the panic club is not going to help and we may well see the stock market reacting very badly. When that happens, because the stock market hates inflation with a passion, inflation affects companies, profitability because cost rises are typically front running any increases in prices and inflation also means that future profits get much bigger discounts and therefore, companies that are future weighted in their valuations suffer Disproportionately, but here is something you should know: historically, the impact of inflation by itself on actual performance of companies and their stock is nowhere near as strongly correlated as some people think now sure there are other factors that sometimes overlap with inflation are caused by inflation or Cause inflation themselves that are much more pertinent and do have a bigger effect, but we're talking about inflation, specifically here at some point early on in their journey, most companies that are big today wear a gray stock.

Many companies that are mature, big and established and successful one day, a small little gravestock with future weighted earnings and we've had periods of sustained inflation. We've had periods where inflation went off the charts and they managed to survive and do quite well. But the market's reaction to these fluctuations is often far more pronounced and far more extreme than the real terms impact on company performance. Let's say you have a company today that is worth one trillion dollars and let's say it has one billion shares in circulation and you own one one thousand dollar share and then let's say a massive inflation event happens and effectively devalues your dollar by a factor of Two: let's assume that nothing else happens because it's a separate conversation, let's assume just inflation, happens so earnings from that company in 10 years time are now only worth half what they were before the devaluation event right and also the earnings in those future years are not Going to have to be devalued by a much bigger discount factor if you were to price in that deflation event before it happens, the money the company will earn in the future is now only worth 50 cents on the dollar in old money.

But that is not how the world actually works. Sure there will be some short-term pressures costs may spiral in a company without a robust balance sheet could struggle for a bit, but people are an amazing type of creature for how good we are at adapting. Let's say that company that we just talked about sells cars, for let's say fifty thousand dollars the dollar devalues, and now the effective buying power of customers has shifted by a factor of two. Fifty thousand dollars in old money is now worth a hundred thousand dollars in new money.

So you would think that the company is going to be affected right. Do you think the company will continue selling cars at 50 000? Will there be market pressure for the company to keep selling those cars at 50 000 when the real price and the price that it costs the company to manufacture cars warrants a price that is more like a hundred thousand dollars? Well, the answer is no. The market will adapt and so will revenues, and so were profits, and just because you didn't model in the exact rise of inflation into calculations doesn't actually even really mean your model is wrong. Just the basis for the numbers has shifted just because all numbers go up by a factor of two doesn't really change anything.

When you talk about ratios, you still own one billionth of a company after the devaluation, just like you did before, and the product the company sells continues to sell. Let's say in this example, and if the company continues to grow then so will the real terms value of the shares in whatever measurement and whatever currency or whatever version of the currency that you happen to measure it. In now sure a sharp rise in inflation can have other unintended consequences, and these are the ones that maybe you should be concerned about. I certainly am to some degree, and a sharp government reaction is also a thing for concern, because it can push things in a bad direction as well fast rises in interest rates can push debt costs very quickly and cause a fast slowdown in economy.

As a result, we could have a market crash, we could have economic troubles, people losing their jobs. All of that, none of that is going to be pretty and an intentional devaluation where rates do not rise and inflation is allowed to run, can have a whole host of other bad outcomes. An inflation coming down all by itself with no action from the government can very easily lead to a very negative deflationary trend too, and all of these different outcomes can affect the fortune of a company that you were invested in, but inflation all by itself is not Really a scary monster that some people portray it to be. When i was growing up in russia, it was not uncommon for the ruble to be worth a few percent less in the afternoon than it was worth in the morning, and there were days when it would be worth a lot less in the afternoon.

You know like over 10 percent, so people generally kept their money in other formats in other currencies. You would typically keep dollars at home and you would literally exchange those dollars for rubles just before buying something we had a little booth outside every shop where you could go and exchange your money and there were a dozen around every single metro station. You would literally go to the supermarket and exchange enough dollars to buy whatever groceries you're buying just before going in, so that you can then spend those rubles in the shop and the obvious problem that the dollar has. Is that americans don't have the same luxury they're? Not going to go around with rubles or euros or yen or pounds or whatever and exchange them, and yes, there is crypto and other things.

I don't i am aware, but the secret is that your grandma is not going to go shopping with dogecoin. So the problem is going to be exacerbated to one degree, on the one hand, because people's real purchasing power would drop if inflation is left unchecked and that drop might be quite severe in a short period of time. But the us dollar also has a few major factors that mean it is considerably less likely to spiral out of control aside from being used by a grammar to go shopping dollars are also the dominant reserve currency of the world, the dominant currency of global trade, the Currency in which oil and many other big markets operate, dollar is predominantly used in instruments and various other types of future contracts, and these factors mean that inflation will not typically hit the dollar in the same way that it can go and hit the russian ruble or The venezuelan bolivar or the yugoslav dinner - and the fact is that if inflation continues looking ugly action will be taken. Eventually, politics will be parked to one side and now we'll put control measures that eventually push inflation down, but the beautiful thing about owning assets is this.

The way the value of your asset is measured, might change the currency in which its measure might change. The version of the currency, to whatever understanding it is, might change, but the dollar of tomorrow may not be the same as the daughter of today. But if you own that one billionth of a company before you still happen to own one billionth of that company, after whatever happens, happens and that's magic and the game might change, prices might have to go up. There might be some short-term perturbations, but investing is a long-term game.

Ups and downs are part of that game. The problem is that, over the last two years, the world seems to have forgotten what down even looks like stunks. Only ever go up right and investors suffer from this problem of only paying attention when things turn sour. Nobody goes and begins discussing things when tesla's up 20, but tesla stock is down 20 and everyone is throwing their toys out of the pram.

A lot of people are seriously considering selling some of them have already sold their stock, but selling just after a big price drop is almost always a really bad idea. One of the worst things you can do as an investor will the stock stock keep falling sure it could well do. Maybe it will in just a few hours when you're in power does his address, but a lot of investors often don't see the forest for the trees. Tesla stock is up 50 percent in the last 12 months, even after this drop and tesla stock is up over twelve hundred percent.

That's one thousand two hundred percent in the last twenty four months and a top tip is that stocks that go up by over a thousand percent in two years. Usually don't do this in a straight line. They go up and down up and down up and down and yeah the swings on a stock that goes up. Twelve hundred percent are going to be far bigger than a stock.

That has pretty much stayed constant, but my latest updated model for tesla. Has it priced at three thousand dollars, so i continue to see a significant upside in the stock, and the recent price drop just means that the upside just got a whole lot bigger than it was for any money invested in right during this period. At the moment, by the way, all patreons and channel members get, my latest target prices in the discord and team members can check out the models as well. So if you're interested in a bit more discussion and a bit more detail, feel free to join and i'll, see you in the discord now do i care that tesla stock is down 20, no, not really not in any way whatsoever.

For me, as a shareholder, that just means i get more return on my money that i'm investing now and with the number of catalysts over the next six weeks that i've already talked about and through the rest of 2022. I am feeling very excited. Am i also concerned about what is happening with the fed? What is happening with the stock market? What is happening with the prospects of inflation, causing other issues sure, but inflation by itself is a very different beast to some of these other factors, and i think it's really important to understand that. If you found this video useful, please don't forget to smash the like button for the youtube algorithm.

Thank you. So much for watching and i'll see you guys later. You.