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We Don’t Talk About Collapse To Revel In It, We Talk About Collapse To Prevent It

We Don’t Talk About Collapse To Revel In It, We Talk About Collapse To Prevent It

Authored by Charles Hugh Smith via OfTwoMinds blog,

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This article was originally published by Zero Hedge

We Don’t Talk About Collapse To Revel In It, We Talk About Collapse To Prevent It

Authored by Charles Hugh Smith via OfTwoMinds blog,

If one possible result of the current system is collapse, realizing the system itself must be changed isn’t doom-and-gloom, it’s problem-solving.

Those of us who discuss collapse are generally dismissed as doom-and-gloomers, the equivalent of people who watch dash-cam videos of vehicle crashes all day, reveling in disaster. Why would we spend so much effort discussing collapse if we didn’t long for it?

Those dismissing us all as doom-and-gloomers hoping for collapse have it backward: yes, some long for collapse as a real-life disaster movie, but those discussing collapse in systems terms are trying to avoid it, not revel in it.

If the system is vulnerable beneath a surface stability, then the only way to avoid negative consequences is to understand those vulnerabilities / fragilities and work out systemic changes that reduce those risks.

It’s not the analysis of vulnerabilities that causes collapse, it’s refusing to look at vulnerabilities because to do so is considered negative. Why not be optimistic and just go with the consensus that the status quo is impervious to serious disruption? Can-do optimism is all that’s needed to overcome any spot of bother.

The problem is humanity’s propensity to confuse optimism with magical thinking. This confusion is particularly visible in any discussion of energy. The status quo holds that every problem has a technological solution, and doubting this optimism is dismissed as naysaying: “why can’t you be positive?”

I consider myself an optimist in the sense that I see solutions that are within reach if we change our definition of the problem so we can enable new solutions. I consider myself a practical, pragmatic optimist because I understand from life experience that systemic solutions generally require arduous transformations that will demand great effort and sacrifice. In many cases, this process is mostly a series of failures and disappointments that are the essential parts of a steep learning curve.

But little of this basic awareness is visible in media descriptions of “solutions.”

Thus every advance in a lab somewhere is immediately touted as the globally scalable solution: algae-based fuel, modular nuclear reactors, new battery designs, etc., in an endless profusion of technologies which are 1) not even to the prototype stage 2) cannot be scaled 3) limited to specific uses 4) require the construction of new infrastructure 5) consume vast resources to be built, including hydrocarbons 6) are not renewable as they must be replaced every 10-15 years 7) are not cost-effective once externalities are included 8) are intrinsically impractical due to complexity, dependency on rare minerals, etc.

All this “optimism” is actually 95% magical thinking, as the practical, real-world realities are dismissed or glossed over: “oh, they’ll figure all that out.”

In other words, throw enough money and talent at a problem (“we went to the moon, so anything is possible!”) and it will always be solved in a way that’s bigger and better. This is not optimism, this is magical thinking being passed off as optimism. Real optimism is cautious and contingent, hyper-aware that solutions are a dependency chain that only reach cost-effective scalability if an entire chain of circumstances and advances line up just right.

There’s another source of confusing optimism and magical thinking: being too successful for too long. Former Intel CEO Andy Grove discussed this in his book Only the Paranoid Survive: once an organization reckons it has succeeded and has everything necessary to continue achieving success without making any systemic changes, then it’s doomed to decay and eventual collapse.

When success becomes the default then all the hard parts of success–sacrifices made, failures mopped up, gambles that didn’t pay off and gambles that did–melt away and all that’s left is a sunny confidence that somebody somewhere will work out a solution that scales up to solve the problem for all of us: “we have top people working on it–top people!”

Meanwhile, back in the real world, it takes 20 years to get a new bridge approved and built in the U.S., 20 years for a new subway line approved and built and 20 years to get a new landfill approved.

We’re supposed to make the leap to a renewable zero-net-carbon future in 20 years and we can’t even build one new-design nuclear reactor prototype in 20 years, even as we’d need hundreds of new reactors to replace a significant slice of hydrocarbon consumption.

But if you dare to point out this painfully visible discrepancy between the real-world difficulties in getting a single prototype built in less than 20 years and the claim that we’re going to transition away from hydrocarbons in 20 years, then you’re a doom-and-gloomer, a naysayer who derives some bitter pleasure from shooting down optimists working on painless, sacrifice-free techno-solutions.

The essence of magical thinking is the belief that the long dependency chain between the idea/lab experiment and a solution that’s cost-effective and scales up to serve everyone will always fall into place because it’s always fallen into place in the past, and so there’s no reason to doubt that all the pieces will fall into place going forward.

This is magical thinking because it has zero interest in the real-world constraints embedded in each link in the long chain. If you bring up any of these constraints, the magical thinking “optimist” is immediately annoyed and accuses you of being a bitter naysayer. The idea that there might be real-world constraints that “top people” can’t overcome is rejected as naysaying.

The possibility that there might be systemic constraints is rejected out of hand because “anything’s possible if we throw enough money and talent at it.” There will always be a solution / substitute which will be affordable and sacrifice-free.

That all the previous examples of this were enabled by our exploitation of the easiest-to-extract hydrocarbon wealth is overlooked as a footnote.

This leaves us all frustrated. Those of us grounded in the real world are frustrated that if we bring up any real-world constraints–for example, those wondrous untapped ore deposits that are going to make all these new techno-wonders cheap and quick and easy are far from paved highways, far from major river or bluewater ports, far from processing plants, and far from sources of the millions of liters of diesel fuel that will be needed onsite to extract the ores–then we’re bitter naysayers who can’t bear optimism and easy success, while the magical thinking “optimists” are frustrated that we’re not accepting the technocratic religion that “top people” and a tsunami of money will solve any problem.

One thing I’ve noticed is “top people” (actual experts with long experience) are never the ones hyping some new technology as the pain-free affordable solution unless they’re paid shills of special interests. Then they hype nuclear reactors as the solution without mentioning the problem of what to do with the waste, to name one constraint “optimists” inevitably ignore.

In the real world, the hard part is getting every link of the long dependency chain to work reliably and at a cost that’s sustainable/affordable. Success comes not from blithely dismissing constraints as naysaying but from accepting most potential solutions will fail due to issues for which there is no cost-effective, practical, scalable fix.

On a systemic level, this requires questioning whether the system itself has to change if we want a different result. If one possible result of the current system is collapse, realizing the system itself must be changed isn’t doom-and-gloom, it’s problem-solving.

*  *  *

Thank you, everyone who dropped a hard-earned coin in my begging bowl this week–you bolster my hope and refuel my spirits. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

My recent books:

A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

Tyler Durden
Sat, 11/27/2021 – 11:52

Author: Tyler Durden

Energy & Critical Metals

Nio Has Big Plans for 2022, But the Nio Stock Recovery Might Take Longer

Investors in the Chinese electric vehicle (EV) group Nio (NYSE:NIO) stock have been scratching their heads amidst the year-long decline. On Feb. 10, 2021,…

Investors in the Chinese electric vehicle (EV) group Nio (NYSE:NIO) stock have been scratching their heads amidst the year-long decline. On Feb. 10, 2021, NIO stock hit a peak of $64.60 — a price that is now in the rearview mirror.

Source: Robert Way / Shutterstock.com

Then, Nio shares saw a 52-week low of $27.52 in late December and closed at $29.12 on Jan. 20, down 48% in the last 12 months and 4.5% year-to-date (YTD). By comparison, the S&P Kensho Electric Vehicles Index has dropped 21.6% in the past 52 weeks and 6.8% YTD.

Despite the decline in shares of many EV names, the industry is growing. For instance, new-energy vehicles (NEV) sales in China, the largest EV market in the world, is expected to exceed 5 million units in 2022. And EV sales should comprise over 30% of the nation’s auto market, reaching at least 7 million units, by 2025.

Meanwhile, Chinese authorities are reducing EV subsidies for 2022 and will withdraw them completely in 2023. Moreover, the government has recently removed a long-standing mandate and now allows for “full foreign ownership of passenger car manufacturing” in China.

Puzzled by the extended downtrend, investors of NIO stock wonder what could be in store for the company in 2022. Despite the positive industry outlook, fierce competition and stringent regulations could create further headwinds for NIO. Thus, investors might want to wait on the sidelines for the short-term.

Nio’s Q3 Performance

Founded in 2014, the China-based EV group Nio aims to differentiate itself through its battery swapping solutions, Battery as a Service (BaaS) and Autonomous Driving as a Service (ADaaS).

Management issued Q3 financial results in early November. Revenue soared 116.6% year-over-year (YoY) to 9,805.3 million RMB, or $1.5 billion. Total EV deliveries reached 24,439 vehicles, up 100.2% compared to year-ago quarter.

Net loss attributable to NIO’s ordinary shareholders came in at 2.86 billion RMB (or $443.7 million). It went up by over 140%, mainly due to the increase in operating expenses. Cash and equivalents were 47 billion RMB, or $7.3 billion at quarter end.

On these metrics, CEO William Bin Li said, “Despite the continued supply chain volatilities, our teams and partners are working closely together to secure the supply and production for the fourth quarter of 2021.”

Meanwhile, recent delivery figures point to a record delivery of 25,034 vehicles in Q4, up 44.3% YOY. Total deliveries ended 2021 with 91,429 vehicles, up 109.1% YOY. Nio is expected to report Q4 earnings in late February.

Adding NIO Stock to Portfolios

Among 26 analysts polled, NIO stock has a consensus buy rating. Also, the consensus of 25 analysts for a 12-month median price target stands around $58.43, implying an upside potential of 95% from current levels. The 12-month price estimates for the stock range between $37.74 and $87.64.

Its trailing price-to-book (P/B) and price-to-sales (P/S) ratios stand at 11.9 and 8.5, respectively. By comparison, these metrics for Tesla (NASDAQ:TSLA) are a P/B of 37.8 and a P/S of 24.7.

Put another way, despite the recent decline, NIO shares still look frothy by traditional valuation metrics. The same holds true for TSLA stock as well.

Yet the company gets significant attention due to its growth potential. Thus, despite the ongoing negative market sentiment, investors might want to keep the stock on their radars with a view to buy around $29, or even below.

Meanwhile, interested readers could also consider investing in an exchange-traded fund (ETF) that also holds NIO stock. Examples include the First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN), the Invesco PureBeta FTSE Emerging Markets ETF (BATS:PBEE), the KraneShares MSCI China Clean Technology ETF (NYSEARCA:KGRN) or the VanEck Vectors Low Carbon Energy ETF (NYSEARCA:SMOG).

Bottom Line on NIO Stock

Currently, NIO is one of the top-selling EV manufacturers in China. It sells a number of car models including a coupe sports car and three SUV models. Since last September, Nio has been selling its ES8 model in Norway as well. The company plans to expand into five more countries in Europe in 2022 and more than 25 countries worldwide by 2025.

Also, this year management is launching two new models. The luxury sedan ET7, will be available for orders as of Jan. 20. Deliveries are expected to start by late-March. The other new model, the ET5, is a midsize premium smart electric sedan. Deliveries are anticipated to commence in September 2022.

As part of these expansion plans, a second manufacturing plant is being built at NeoPark in Hefei. The facility, which will help meet the growing demand, is expected to become operational around September 2022.

In summary, Nio has a solid product line and offers tangible growth strategies. However, NIO shares could continue to come under pressure in 2022, in part due to tougher competition, higher operational costs and regulatory risks. Given the upcoming tightening moves by the Federal Reserve, investors are also taking money off the table. Therefore, NIO stock could easily continue to slip further below $30. Long-term investors might still need to be patient.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

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Energy & Critical Metals

DATS Stock Alert: The Latest Acquisition News Sending DatChat Soaring Today

It’s been a busy week for DatChat (NASDAQ:DATS), and it isn’t even over. Yesterday, the alternative social media platform announced it was venturing…

It’s been a busy week for DatChat (NASDAQ:DATS), and it isn’t even over. Yesterday, the alternative social media platform announced it was venturing into the non-fungible token (NFT) security space. Today, it took this mission a step further. DatChat has signed a letter of intent to acquire Avila Security Corporation. This move will mean significantly expanding its holdings in the blockchain and user data security spaces. DATS stock didn’t react well to the news yesterday, but the tides have shifted. Both companies have cause to celebrate today.

Source: Shutterstock

What’s Happening With DATS Stock

Yesterday began with the news of DatChat’s Web 3.0 platform initiative. While this sounded like good news, DATS stock did not initially react to it, slipping into the red. Today’s news has clued Wall Street into the fact that DatChat is making big plans to gain share of a rapidly expanding market. As of this writing, DATS stock is up 23% on the day. It shot up early and hasn’t slipped.

This morning’s gains have pushed DATS into the green by more than 40% for the week and 23% for the month. Investors saw the stock spend the final month of 2021 in decline, falling by as much as 22%. This type of growth should be reassuring.

While the deal is not yet finalized, it includes “$1 million in cash and the greater of 739,650 shares of restricted common stock.”

Why It Matters

These back-to-back announcements make one thing undeniably clear — DatChat is serious about blockchain security. The company made a name for itself by offering secure social media and messaging options. Now it has recognized that its technology can be applied to a new market, one that is ripe with potential. According to a statement released two days ago, the company is focused on building a “decentralized advertising network for Web 3.0 and Metaverse applications.”

The successful acquisition of Avila will expand DatChat’s intellectual property assets to include both blockchain-based digital rights management and object-sharing technology. The move also makes sense for the company’s communications aspect. Avila’s assets also include encrypted WebRTC real-time video and audio-streaming communications. In acquiring this little-known company, DatChat is strengthening both the old and new components of its business.

The markets for enhanced digital security in both communications and digital asset storage is booming. NFT sales are rising, but as they do, so do theft and fraud within the space. Additionally, Web 3.0 and metaverse applications are only going to help drive stock prices up as both markets heat up in 2022. InvestorPlace’s Luke Lango predicts that in 2022, metaverse stocks will see the type of growth that the electric vehicle (EV) sector did in 2021. If DatChat continues this type of progress, it could be among the metaverse stocks that are destined for growth in the year ahead.

What It Means

When a company announces two major deals in the same space within the same week, investors should pay attention. The second deal isn’t finalized, but DatChat has proven it means business when it comes to these digital expansions. It sees multiple red-hot markets, and it is strategically planning ways to secure shares of both.

NFT security, encrypted social media and metaverse technology are going to be three of the hottest sectors in 2022. If you’re bullish on any, or all three, DATS stock should be on your radar.

On the publication date, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Energy & Critical Metals

Rivian Stock Price Predictions: Where Will RIVN Go After Hitting New Lows?

So far, 2022 continues to be a difficult year for Rivian (NASDAQ:RIVN). The electric vehicle (EV) producer recently hit an all-time low of $67.40, with…

So far, 2022 continues to be a difficult year for Rivian (NASDAQ:RIVN). The electric vehicle (EV) producer recently hit an all-time low of $67.40, with prices currently hovering slightly above that level. It seems like reasonable valuations are finally catching up to RIVN stock. As a result, investors are seeking out Rivian price predictions for 2022.

A Rivian (RIVN) sign out front of an Illinois manufacturing plant.Source: James Yarbrough / Shutterstock.com

After debuting on the Nasdaq exchange last year as the largest initial public offering (IPO) of 2021, shares of RIVN stock climbed to as high as $179. Ford (NYSE:F) was an early backer of Rivian, investing $500 million into the EV maker in 2019. In addition, Ford invested an additional $902 million during Q1 of last year. Now, these investments are paying off. The legacy automaker reported that it had earned a staggering $8.2 billion from its Rivian stake during Q4 alone.

Ford’s investment in Rivian is interesting because the two companies compete on the truck front. Ford’s flagship EV truck is the F-150 Lightning, while Rivian boasts the R1T. The competition was heightened after Ford announced last year that it would not be moving forward with plans to build an EV on Rivian’s Skateboard platform. This announcement came shortly after Ford revealed that it would be doubling its planned EV production to 600,000 vehicles per year by 2024.

Is Ford coming after Rivian’s market share after helping fund the EV startup? It certainly seems like it. With the heightened competition in mind, let’s take a look at Rivian price predictions.

RIVN Price Predictions: What’s Next for This EV Producer?

  • Bank of America has a price target of $170. Analyst John Murphy believes that Rivian is one of the most legitimate EV competitors with a business model that addresses all stages of the vehicle lifecycle. Murphy also noted that Rivian ranks “fairly well” in his AutoTech entrant analysis, meeting six of the 10 criteria.
  • Tigress Financial Partners has a price target of $147. Analyst Ivan Feinseth believes that Rivian is well-positioned to take advantage of the $9 trillion global automotive market. Furthermore, Feinseth noted that Rivian’s modular design platform provides an opportunity for the company to expand its product line and create reoccurring revenue streams.
  • Deutsche Bank has a price target of $130. Analyst Emmanuel Rosner is impressed with both Rivian’s hardware and software. On software, Rosner views “Rivian’s plan to generate lifetime recurring high-margin revenue from selling services to its installed base of vehicles as one of the most credible among automakers.” On hardware, Rosner believes that Rivian’s “flexible EV architecture supports a rapid cadence of vehicle launches” that will allow the EV maker to achieve economies of scale.
  • Finally, Rivian has an average price target of $134.36 among 14 firms with coverage of stock.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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