The absence of anything that sounds like logic can be a challenge for old school traders like me. To play in the hottest racing sectors, you just need to rule out the basic logic. Unfortunately, it’s not always that simple, especially for those who traded thanks to a bubble or a bad fix that didn’t bounce back in a V-shape.
Of course, there are fundamental paradigm shifts and sweeping reassessments happening in stocks and sectors. We are seeing that with electronic vehicles, although a little overheated, but with many government agencies moving away from gasoline engines in the next 5 to 15 years, we must remember that the market is turned towards the future and try to understand. where are those prices and ultimate demand. In short, it’s still a guessing game, but loaded with momentum and aggressive traders.
A good way to think about entering this market here is by using a poker analogy. Texas Hold ‘Em is still a favorite of mine and a well known game. Let’s say you engage in a friendly game of No-Limit Hold’em. While players can have the maximum amount of money they have in front of them, it’s usually not too common. Maybe you are playing a casual game with $ 50. The small blind is 50 cents and the large blind is a dollar. Like I said, a friendly and relaxed game. This is the type of game where a bet of $ 5 before seeing the flop will raise a few eyebrows.
Now imagine the same game but you don’t know anyone else sitting at the table. Let’s say there are eight players including yourself. Let’s also assume that you are used to your friendly game. The first hand and two players bet $ 10 pre-flop. The next hand and three players bet $ 20 pre-flop. Hand after that, the first player to bet goes all-in. Each pre-flop bet is $ 10, $ 20 or all-in. Whenever one player loses their entire stack, another takes their place and follows the same aggressive betting protocol.
If you’re patient you can play your strongest hands and probably come out in great shape. Unfortunately, you could also be blinded to death or knocked out on an unlucky flop. In other words, it changes from a friendly, casual game to a high risk, high reward game.
This is where we are now, particularly in the electronic vehicle market.
Look, there’s no logical reason why Electrameccanica Vehicles (SOLO) should approach a billion dollar market cap. The company has no sales. The deliveries he has planned are directed towards promotional activities to hopefully generate more interest and real sales in the future. But the fundamentals don’t matter here. Traders push their chips all-in pre-flop.
This is just one example. Now you can go through a whole list of names at $ 500 million to $ 1 billion + market caps that are expected to hammer this market with offers to shore up balance sheets that only bleed money and fight for the few scraps. of sales that can be made or hope to be the hand once a product is actually developed.
For now, I’m going to fold and wait for better holding cards.
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