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From [1]: > A higher RG value indicates a larger gap between market valuation and the estimated fundamental base — meaning the market is pricing the company at

From [1]: > A higher RG value indicates a larger gap between market valuation and the estimated fundamental base — meaning the market is pricing the company at a significant multiple of what the fundamentals alone would support. A lower RG value suggests that the market price is closer to being covered by the fundamental base. This is dumb. They’ve decided that their estimate of the true value is the correct one, and then calculate the difference from that. But of course, the fundamental issue is everyone has a different estimate. There’s no reason to believe their estimate is better than anyone else’s [1] https://hstre.github.io/Reality-Gap/methodology/ https://hstre.github.io/Reality-Gap/methodology/

lazide 5mo ago
They’re just using the typical historic valuation based on fundamentals yes?
- pinkmuffinere 5mo ago
  They define a new metric that they call the “fundamental base”. It includes value of assets, trailing revenue, goodwill, and likely more. They claim in a couple places that it is not intended as a valuation, although I think the main way it would be useful is it if is a valuation. It also claims to be an “estimate” — but an estimate of what? Somebody who seriously works in finance will have a more enlightened view than me, but it seems to me that they defined a heuristic by combining existing heuristics. I don’t think that’s necessarily wrong, but there’s also no reason I can see that it should be right. And because it’s complicated, i think it obscures some of the confusing bits that you’d directly face if you used traditional metrics
jnaina 5mo ago
How large is your Tesla position?
- hstrex 5mo ago
  None. The point is not Tesla specifically. Tesla is just a convenient stress case because expectations, narrative, and fundamentals are unusually far apart.
- pinkmuffinere 5mo ago
  Funny enough, about 10% of my net worth is in an inverse position on Tesla [1]! [1] https://bagelpour.wordpress.com/2025/11/30/taking-an-inverse-position-on-tesla/ https://bagelpour.wordpress.com/2025/11/30/taking-an-inverse...
  - jnaina 5mo ago
    Jokes aside, my previous role was with a Mag 7 company covering the Asian automotive sector, and the speed of innovation, manufacturing yield increase and cost optimization due to extreme competition across the Chinese EV ecosystem, including battery leaders like CATL, was genuinely eye-opening. Based on what I saw, and how visibly non-Chinese automakers are struggling to keep pace while looking over their rear view mirrors at the Chinese EV industry, my view is that the broader auto industry is heading for a major structural reset. Protectionism will slow it somewhat, but the broader unit economics will no longer support the current number of auto companies. My prediction is that over the next 5 to 10 years, Mobility-as-a-Service, whether on-demand or subscription-based, will become the default model in dense urban markets. Private EV ownership will persist, but increasingly in suburban, rural, or less densely populated areas where shared mobility is less practical. I have exited all my auto positions. And yes, Tesla should probably trade closer to a 30x P/E at most. A 300x-plus multiple is indeed disconnected from reality. On the other hand, I'm keenly watching Waymo (and to a lesser extent Uber and Zoox), as potential future MaaS players perfect their autonomous vehicles/driver-less tech.
hstrex 5mo ago
[flagged]

lazide 5mo ago

They’re just using the typical historic valuation based on fundamentals yes?

pinkmuffinere 5mo ago
They define a new metric that they call the “fundamental base”. It includes value of assets, trailing revenue, goodwill, and likely more. They claim in a couple places that it is not intended as a valuation, although I think the main way it would be useful is it if is a valuation. It also claims to be an “estimate” — but an estimate of what? Somebody who seriously works in finance will have a more enlightened view than me, but it seems to me that they defined a heuristic by combining existing heuristics. I don’t think that’s necessarily wrong, but there’s also no reason I can see that it should be right. And because it’s complicated, i think it obscures some of the confusing bits that you’d directly face if you used traditional metrics

jnaina 5mo ago

How large is your Tesla position?

hstrex 5mo ago
None. The point is not Tesla specifically. Tesla is just a convenient stress case because expectations, narrative, and fundamentals are unusually far apart.
pinkmuffinere 5mo ago
Funny enough, about 10% of my net worth is in an inverse position on Tesla [1]! [1] https://bagelpour.wordpress.com/2025/11/30/taking-an-inverse-position-on-tesla/ https://bagelpour.wordpress.com/2025/11/30/taking-an-inverse...
- jnaina 5mo ago
  Jokes aside, my previous role was with a Mag 7 company covering the Asian automotive sector, and the speed of innovation, manufacturing yield increase and cost optimization due to extreme competition across the Chinese EV ecosystem, including battery leaders like CATL, was genuinely eye-opening. Based on what I saw, and how visibly non-Chinese automakers are struggling to keep pace while looking over their rear view mirrors at the Chinese EV industry, my view is that the broader auto industry is heading for a major structural reset. Protectionism will slow it somewhat, but the broader unit economics will no longer support the current number of auto companies. My prediction is that over the next 5 to 10 years, Mobility-as-a-Service, whether on-demand or subscription-based, will become the default model in dense urban markets. Private EV ownership will persist, but increasingly in suburban, rural, or less densely populated areas where shared mobility is less practical. I have exited all my auto positions. And yes, Tesla should probably trade closer to a 30x P/E at most. A 300x-plus multiple is indeed disconnected from reality. On the other hand, I'm keenly watching Waymo (and to a lesser extent Uber and Zoox), as potential future MaaS players perfect their autonomous vehicles/driver-less tech.

hstrex 5mo ago

[flagged]