😨 The problem with this scary financial advice...

What’s on the Menu 🍴

Everywhere you look there seems to be legal battles and bad financial advice.

Let’s get right into it:

• Tesla Earnings Recap: A Brighter Future Ahead? 🚗

• The Problem With This Financial Advice 🚨

• Blockchain Groups Challenge SEC's Authority

• Here's Why The Stock Market Is "Crashing" 📺

Today’s newsletter is a 5 minute read.

Tesla Earnings Recap:
A Brighter Future Ahead? 🚗

After reporting Q1 earnings, Tesla (ticker: TSLA) stock gapped up 13% in after hours trading on Tuesday.

One might assume the numbers must have been strong and above expectations.

The reality? Not so much actually…

The numbers were pretty ugly, especially for a company carrying Tesla’s sky high growth expectations and valuation:

Revenues, operating profit, and earnings were down significantly, and Tesla also burned $2.5 Billion of cash in the quarter.

The head of investor relations also announced that he would be leaving the company after seven years in the role.

So why did the stock enjoy a huge pop in the after hours trading session?

For starters, Tesla CEO Elon Musk promised progress on numerous initiatives in the next few years including:

• A new ridesharing service

• A new autonomous car design (”Cybercab”) & manufacturing process

• A cheaper EV model

• Humanoid robots

• Huge accumulation of GPU capacity for AI training

• Energy storage growth

• Semi-truck manufacturing ramp up

This was one of the most aggressive promotions of “future bets” by the Tesla team.

Elon Musk continues to assert that Tesla is much more than a car company.

Tesla even put this slide in its Q1 deck:

And for now at least, investors ate it up.

One could also argue that TSLA stock, which was down 40% year-to-date heading into the Q1 report, had already priced in quite a lot of negative news.

It’s a perfect example of how stocks can move in counterintuitive ways after an earnings report based on expectations, sentiment, guidance, and other factors.

Last month we wrote about the push & pull on TSLA stock between current results and future growth opportunities.

Frankly, we don’t see an end to these dueling TSLA narratives anytime soon.

This will remain a battleground stock with devoted bulls and skeptical bears.

Tesla the company still has a challenging year ahead.

After a fresh round of layoffs it still must deal with weaker EV demand, price cuts, high inventory, executive departures, regulatory issues, and a shrinking solar business.

So while the stock had an encouraging move up after the Q1 report, the rollercoaster ride may not be over just yet.

The Problem With This Financial Advice 🚨

Be careful out there… there’s some scary financial advice.

It’s easy to get sucked into “matter of fact” statements about money and finance.

We all want a sure thing when it comes to our money. However, as someone who works with real clients in financial planning, I know the truth.

The answer to most major financial decisions and investments is: “it depends.”

Let’s start with some financial offenders:

1. “Renting is always going to be cheaper than buying your home”.

Not only is this advice lacking an incredible amount of context, but this is a chart crime.

Stopping at year 30 doesn’t give you a full picture of monthly payments once a home is owned outright.

The renting vs. buying decision depends on many factors:

• Interest rates

• Home price appreciation

• Location of home

• Inflation over time (high inflation may favor buying and locking in your payment)

• Maintenance costs

• Property taxes

• Market rents in your area

• Years of being in the home

To say buying will never be cheaper than renting is simply an incorrect claim that requires an “it depends” analysis.

2. “Leverage up on a ton of real estate… get rich!”

Real estate investing can help you build a lot of wealth but it’s certainly no guarantee that your returns will be positive.

Not only are you taking on a lot of leverage risk by following this advice, but there are many markets right now in the U.S. where landlords are struggling to generate positive cash flow (wrong market wrong time).

Success in real estate means a lot of things have to come together for you.

• Buying in the right market at the right time (appreciation)

• Low interest costs

• Low vacancy rates (carrying costs can eat into cash flow)

• Low/reasonable maintenance costs (big repairs can really hurt)

• Favorable market rents for you to cash flow

• Good renters who pay on time and don’t trash your house

• Your liquidity as an investor to handle hard times (2008 financial crisis, 2020 pandemic when people couldn’t pay rent)

So back to reality…

The truths here lie somewhere in the middle and come with a big old “it depends”.

You can get wealthy both renting your home AND investing in real estate, but beware of chasing “matter of fact” promises and always consider that everyone’s situation is different.

Blockchain Groups Challenge SEC's Authority ⛓️‍

Two major industry groups are standing off against the U.S. Securities and Exchange Commission (SEC).

The bone of contention? A sweeping new rule that's expanding the SEC’s reach into who's considered a “dealer” of securities.

The Blockchain Association and the Crypto Freedom Alliance of Texas aren't just rolling over. They've taken their grievances to a Texas federal court, claiming the SEC's latest move isn't just overreaching—it's downright arbitrary.

What’s got these crypto crusaders up in arms?

The rule’s vagueness and its broad brush, which, they argue, could sweep in everyone from DeFi enthusiasts to developers of automated trading software, piling on potentially crippling costs and regulatory burdens.

The plot thickens as the crypto world has been at odds with the SEC over the definition of securities.

SEC Chair Gary Gensler suggests nearly all crypto products should wear the securities label.

A courtroom showdown looms as the crypto coalitions seek a legal KO to scrap the rule and shield DeFi players from the SEC’s regulatory gloves.

Video of the Day:
Here's Why The Stock Market Is "Crashing" 📺 

Why are interest rates still high?

Why is the stock market selling off?

Should you be worried about the economy?

I answer all of these questions and more in my latest stock market update.

Food For Thought 🧠

"Power concedes nothing without a demand. It never did and it never will.”
- Frederick Douglass

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.