bobalot

It’s terrible for the stock price which has a price to earnings ratio of almost 200.

If this were a normal company with a profit margin of ~6% and a normal stock price (in line with the market average), it would be fine.

The issue is the price to earnings ratio of the Tesla stock which is almost 200:1.

The level of profit is not bad for a normally price company but Telsa needs to have profits grow exponentially to justify their stock price.

The root problem they are trying to fix is real (systemic trade imbalances) but they way they are trying to fix it is terrible and won’t work.

1. Only a universally applied tariff would work in theory but would require other countries not to retaliate (there will 100% be retaliation).

2. It doesn’t really solve the root cause, capital inflows into the USA rather than purchasing US goods and services.

3. Trump wants to maintain being the reserve currency which is a big part of the problem (the strength of currency may not align with domestic conditions, i.e. high when it needs to be low).

Perhaps the stocks were massively overvalued and any negative news was going to start this sell off regardless of its actual impact?

That is my theory anyway.

It is also because the USA is the reserve currency of the world with open capital markets.

Savers of the world (including countries like Germany and China who have excess savings due to constrained consumer demand) dump their savings into US assets such as stocks.

This leads to asset bubbles and an uncompetitively high US dollar.

Does it still need people spending huge amounts of time to train models?

After doing neural networks, fuzzy logic, etc. in university, I really question the whole usability of what is called “AI” outside niche use cases.