Two Possible Star Industries in the nest 10 years

As the world faces the threat of inflation, countries around the world are rinsing rates. Energy prices are expected to stay high for a little longer. And the Fed keeps mentioning rising wages. 

Two industries may be propped in economic environment like this, green energy and automotive production.

Clean Energy

Clean energy seems cheaper when oil is expensive. Even whey oil was cheap, many developed countries are talking about developing clean energy.

US is dedicated

Furthermore, it seems the US currently dedicated in transitioning into relying more on clean energy, here is a list of current announcements from the White House:

• "June 28, 2022, the Biden-Harris Administration is highlighting how President Biden’s leadership on electric vehicles is catalyzing more than $700 million in investments from the private sector that will increase our domestic capacity to manufacture more than 250,000 new electric vehicle (EV) chargers each year, add at least 2,000 good-paying jobs, and make EV charging more affordable, accessible, and equitable."

Keep an eye on the demand of oil

One thing I am watching is when the demand of oil, which would be a sign of clean energy is playing a more important role in the energy sector. Although, most developed countries are taking actions or at least talking about some combating climate change goals by years, say 2030, and if fossil fuel is more affordable for developing countries, I don't think the demand of oil would drop on average in the near future. 

The drop of the demand for oil in 2020 was likely due to the Covid crisis which disrupted economic activities.

Automatic Production

The Fed keeps mentioning rising wages, according to the Fed's meeting minuts in June, 

Nominal wage growth remained elevated, with average hourly earnings having risen 5.2 percent over the 12 months ending in May, and the increases were widespread across industries.... (and) tight labor markets would spur investment in automation by firms, boosting labor productivity. (page 4 and 8)

What the Fed keeps mentioning also include the supply bottleneck or disruption in supply chain. I think developed countries have the money to build a more resilient supply structure in the future, which would likely boost the investment in automation production, including the use of 5G for low-latency connectivity between either machines, gauges, managers and the use of AI for auto adjusting machine parameters.

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Source: 

The White House. https://www.whitehouse.gov/briefing-room/.2022/7/10

Minutes of the Federal Open Market Committee, June 14-15, 2022. Board of Governors of the Federal Reserve System. https://www.federalreserve.gov/newsevents/pressreleases/monetary20220706a.htm. 2022/7/6

Supply and demand of Oil.IEA.https://www.iea.org/reports/oil-information-overview/supply-and-demand.2022/7/10

Sign of Bottom for the Stock Market

On Friday, 2020/7/8, the S&P 500 closed down -0.083% while the US 10-year treasury rose 3.09%. This means the S&P 500 stood strong against the rise of treasury yield.

Why So?

Based on pretty much all valuation techniques for almost every asset class, the risk free rate is what valuation is based upon. The higher the risk free rate the higher the future value of money is, which also mean the higher the risk free rate the lower the current the value of money. 

Or, when the risk free rate is high, I would expect my stock to earn more money than bonds which is assumed to earn at a risk free rate. If my stock is not going to make more money than bonds, the current stock price should drop to match the earning expectation of future earnings.

This is one reason why it is common seeing stock falls as yields rise.

Good Sign?

On Friday, 2020/7/8, the S&P 500 dropped while the US 10-year yield rose, this means the stock market would have risen more if the yield had stayed the same. This is one sign that the stock market would have already been adjucted to the 3% 10 year yield and is ready to face some more rate hikes.

When Will the Stock Market (S&P500) Bottom?

The US stock market has dropped sharply in the first half of the year. According to CNBC "The S&P 500 posted its worst first half of the year since 1970, hurt by worries about surging inflation and Federal Reserve rate hikes" (Macheel and Stevens, Jun 29 2022)

Well, it does not feel the stock has done so badly, maybe because I always set my mind on the long run.

How bad has the S&P 500 been hurt?

• The index closed at 3825.33 which was at the level close to what it was in Jan 22, 2021, which is one and half year ago. Dropping 971.23 points, 20.25% , from the current high of 4,796.56 on Jan 03, 2022.
• The bottom point was 2304.92 om March 20, 2020 during the Covid crisis, which is another year back. This means the index has been dropping more longer than rising since it bottomed for the Covid crisis.
• Also, the index has risen 2491.64 points since the recent bottom of 2304.92 points which is a 108.1% rise. The half point is 3644.1 points.
• In conclusion, the S&P 500 index has dropped half of the time span and almost half of the earing since the Covid bottom.

What about PE ratio?

On July 21, 2021, I wrote an article about whether the S&P 500 index was too high and found that the its PE ratio was 46.31% which was very high comparing to the average of 15.95%.

Now the PE ratio is 19.33. 3825.33/19.33= 197.896. If the index is to get to the average point, it has to be 197.896x15.96=3158.42.

https://www.multpl.com/s-p-500-pe-ratio

What about the effects of Interest Rates?

The higher the interest rates the lower almost all other financial assets, because of pretty much all valuation depends highly on them. So if inflation stays high, US empployment data stay strong, the Fed is almost going to raise rates. 

Then, the target PE ratio of historical average may be too optimistic.

Conclusion

• Time-wise. the S&P 500 index has dropped to the previous half point during its climb and the index values almost dropped to the half point, too.
• PE ratio almost reaches the historiacal mean.
• Next immediate thing to watch is companies' earnings. If they are not too bad, I think now is the bottom, given signs of contained inflation.

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Sources: 

S&P 500 posts worst first half since 1970, Nasdaq falls more than 1% to end the quarter. CNBC.https://www.cnbc.com/2022/06/29/stock-market-futures-open-to-close-news.html.2022/6/29.

S&P 500 PE ratio. https://www.multpl.com/s-p-500-pe-ratio. 2022/7/3.

Hawkish Statements from a Fed Governor

Fed Official, Governor Michelle W. Bowman, gave a speech at Executive Officers Conference, Massachusetts Bankers Association, Harwich, Massachusetts on June 23. 

Key Points

• Inflation is the highest we have seen in the United States in 40 years and so far it shows little sign of moderating. At the same time, the economy is growing at a moderate pace, and the labor market is extremely tight.
• That tightness is contributing to inflation, because labor is the largest input cost for producing goods and providing services.
• Today, most people who want to work can find a job, and wages and salaries have risen faster than they have in decades. Even with these gains, wages have not kept pace with inflation, which has made it much more difficult for many workers to make ends meet in the face of soaring housing, energy, and food costs.
• The tightness of the labor market is exacerbated by a labor force participation rate that remains far below the pre-pandemic benchmark, representing millions of workers sitting on the sidelines.
• I expect that an additional rate increase of 75 basis points will be appropriate at our next meeting as well as increases of at least 50 basis points in the next few subsequent meetings, as long as the incoming data support them.
• The case for further rate hikes is made stronger by the current level of the "real" federal funds rate, which is the difference between the nominal rate and near-term inflation expectations.
• Since inflation is unacceptably high, it doesn't make sense to have the nominal federal funds rate below near-term inflation expectations. I am therefore committed to a policy that will bring the real federal funds rate back into positive territory.

Views

• The labor market is really tight. How tight? the 2 jobs are waiting for 1 worker kind of tight.
• The force participation rate is lower than the pre-[andemic level? Why don't people jusg get back to work?
• If inflactoin does not come down and the labor force keeps tight, Governor Bowman supports a 75 basis points hike and 50 basis points hikes in subsequent meetings. So a 75 basis points plus another 50 basis points is 125 basis points. Then the Fed funds rate would reach 2.75%-3%. The current 10 year treasury yield is 3.138%, which is close to the possible future Fed funds rate and bond prices have a lot to drop.
• The 10 year treasury rate remain relatively low with respect to the possible 3% Fed funds rates may be the resuts of 2 reasons. One, investors are betting not so many rate hikes described by Governor Bowman. Two, investors are fearful of recession so then people rather lock in with a 3.138 10 year yield even if the bond price would drop.

Immidiate to watch

• Oil Price Stabilization for signs of stablized inflation.
• Food Price Stabilization for signs of stablized inflation.
• Job creation and unemployment rate chane for signs of recession.

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Source: The Outlook for Inflation and Monetary Policy. Board of Governors of the Federal Reserve System. https://www.federalreserve.gov/newsevents/speech/bowman20220623a.htm. 2022/6/25

What was “Monetary Policy at a Crossroads” About?

On June 18, 2022, the Federal Reserve Bank of Dallas hosted a policy panel talking about monetary policy for both the Federal Reserve and the European Central Bank.

Key Points

Governor Christopher J. Waller

• That the Fed cut rate to 0% has only happened 2 times in histrory and there is good reason to think such a response may not be extraordinary anymore. Structural changes in the economy have tended to lower interest rates and limit the room that the Federal Reserve will have to cut rates during a slowdown.
• Financial markets stabilized relatively quickly. Over the course of 2020, the Fed's liquidity and credit facilities saw reduced demand and most of the emergency programs were decommissioned around year end.
• In September and December of 2020, the FOMC provided criteria or conditions in the meeting statement that would need to be met before the FOMC would consider raising interest rates and begin to reduce asset purchases.
• In November and December 2020, the unemployment rate was 6.7 percent.
• the Committee did not expect the economy to recover quickly.
• In 2019, unemployment was very low and inflation was near 2 percent, but the policy rate was well above zero and close to its neutral value. It should not have been a surprise that the policy rate would rise fast in 2022.
• 2% for inflation is not a ceiling but a target.
• Market can price in Fed's forward guidance immidiately.
• There are 2 jobs for every unemployeed worker. The labor market is tight. The fear of recession is overblown,

Olli Rehn, Bank of Finland Governor and ECB Governing Council

• Europe's economy revoered from the COVID cries faster than expected.
• Energy inflation is the main driver for eurozone inflation.
• Europe's umemployment is at 40 year low of 6.8%.
• ECB is targeting at 2% inflation rate in the medium term.

Donald Kohn, Robert V. Roosa Chair in International Economics; Senior Fellow - Economic Studies, Brookings Institution

• Prices rose becasue of supply did not keep up with srtong demand.
• Stresstests on Fed's policys against unusual outcomes could be helpful.
• On the supply side, we could increase ligal immigration and lower tarrifs.

Views

• The economy recovered faster than expected. The unemployment rate improved faster than expected. Both have mad Fed hike rate faster.
• The demand for labor is high, so steep rate hikes may not induce too much unemployment or recession.
• Energy prices play a big role in inflation. If enertgy prices stable, inflation could be, too.
• Europe's unployment is at 6.8% and their raising rates? Does this mean it is more likely that Europe would go into recession?
• It is a good thing that Fed gives their forwad guidance and the market can price it in quickly. Because this mean the current stock and bonds' prices are alreafy relfected to the target Fed funds rates.
• The market can price in Fed's forward guidance, and the recent maket drop, I thnkg ,was spooked by the dramatic increase of forward guiadnce. Therefore, although forward guidance helps investors prepare for future market conditions, the forward guidace can change.
• The stock market can bottom if inflation is gradually controlled while the labor market did not get hurt too much. Waiting for FOMC meeting is too late to price in maket. For indivisual investors, even the inflation and labor market data is too late. The market would just pirce them in immediatiely. By the way, we would see some rebounds if the next CPI data is not so bad or otherwise could happen. 
• Jul. 13, 2022 is the date for releasing the next CPI data.
• Let's see if old prices can stablize. If it does, will inflation do, too?

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Surece: Panel Discussion: Monetary Policy at a Crossroads. Board of Governors of the Federal Reserve System. https://www.dallasfed.org/research/events/2022/22panel. 2022/6/18

Fed Rate Projections Analysis June 15, 2022

This article is about analysis of market conditions from Fed's data.

2022/6/15

• The projected medium rate for 2022 is 3.4% which is 1.5% higher than the March projection. This is a big increase. One thing to keeping watch is whether the projection grows at the next meeting.
• The projected medium rate for 2022 is 3.4%, but the Fed funds rate now is just about 0.75%, which is 2.65%. 2022 is hafl way over. If inflation does not come down, we migh see bigger increase in rates in the coming meetings.
• 3-year bond yield is at 3.33%, 10 year is at 32.5% and the 30 year is at 3.35. The yield curve is realy flat, which is dangerous. We should continue to watch is yeild cuve is inverted.
• Projections for GDPs drop from the March meeting. 
• Umemployment rates increase from the March meeting.
• We should pay close attention to demands, because umemployemnt is set to increase. I expect demands will hurt during the course of combating inflation. It is just how much demand will drop so that recession is not triggered.
• Overall, it is still a good thing that Fed can raise rates to combat inflation, because US economy is resilient. 

Bond Downside Risks

The 10-year yield is at 3.25%, If rate rise instantly 2.65%, US 10-year treasury price will drop 20.06%.

The 30-year yield is at 3.35%, If rate rise instantly 2.65%, US 30-year treasury price will drop 37.67%.

The Stock Market Spooked by High CPI Data

Today the US stock market suffered. I am not here to restate how much the Dow, S&P 500 or NASDAQ dropped. But I would like to share one point.

Why Stock market dropped?

My theory is that the stock market suffered today, because people think the Fed would hikes rates faster and they want to wait for better bond yields. Also, according to many for the stock valuation techniques, while profits stay the same, stock prices should drop. Some of the stock valuation techniques includr dividend discount model or simply by comparing the company's inverse PE ratio to 10-year treasury yield.

So, it's fine

If the whole stock market retesting 3,900 points for S&P 500 is just a stock price valuation problem. The long term return of stock market should still be OK, especially US Dollar index today grew almost 1% and reached 104.19, which is another sign the stock market priced in strong Dollar.

We need to worry if Dollar drops with the stock market.

Yield Curve

Finally, the protagonist today is yield, which is affected by the Fed's rate hikes decision, which is affected by today's CPI data. 

But, wait a minute, if the Fed is going to raise the Fed funds rate, which is overnight, really short, greatly, would the short-term yield rises passed the long-term ones? Especially when investors are worried about huge maket downturns, when they would rather buy long-term bonds to lock in returns and push bond prices higher, long-term rates lower.

The above did not happen today. I guess investors are keeping their cash and just waiting for another stock or bond buy in opportunities. 

By the way, not only can you wait for stocks to drop more and buy, you can also wait for yields to get higher and buy bonds.

Continue to watch

• Does yield curve invert?
• Fed's rate hikes decision
• US Dollar index

Why Follow the Fed?

The Fed has 2 goals set by Congress. They are maximum employment and stable prices.

If achieved, US economy should be in good conditions where Dollar could remain strong and buying power of average American should continue to grow. 

Why Inflation is Good?

When economy grows, more money needs to be supplied into the market so prices make sense.

Imagine a world where are only 2 one-dollar bills and there are only 2 people living in this wolrd. Each has a dollar.  One person grows wheat, the other raises pigs. 

One day they want to trade. The farmer wants to trade the one dollar for a pig with the other person who in the other hand wants to trade for a bag of wheat. The deal is done. Each still has 1 dollar.

But, both the wheat farmer and the pig farmer continues to grow produce wheat and pigs respectively.

With more products in the market, the original prices of pigs and bags of wheat start to make no sense. How do you price a pig when there are only 2 one-dollar bills in the world while there are a lot of products due to economic growth?

More money is needed so that a pic can remain 1 dollar, so does a bag of wheat.

Back to inflation

Now, there comes the third person so makes smart phones. Both farmers would like to trade for 1 smart phone many of their products, either wheat or pigs.

The smart phone producers think it iOS so easy to make money that he could pay 2 dollars for a pig. 

Inflation happens due to economic growth, when both farmers' product have not changed but their prices have.

Why is it good again?

Inflation triggered by economic growth is normal. Then we should be happy watching one of the Fed's goals, long term inflation of 2%, achieved.

Maximum Employment

When unemployment rates are low, prices should grow, because almost everyone has a job and contribute to the economic growth.

The maximum employment here is the same as both farmers in the previous example have wheat to grow and pigs to raise. If most people work to produce products or provide services. Economic should grow.

Stable prices

When most people are working, what we want to watch next is whether if they are spending. This is the demand side of the force that pushes economy to grow.

Back to the famers' example. When the smart phone maker comes into the world, what would happen of the farmers do not demand any smart phone? They don't buy any.

The smart phones would worth nothing and the smart phone maker would starve to death.

On the other hand, if the farmers would like to buy new phones, they would trade their wheat or pigs for one. In modern day language, they would spend money on smart phones.

What about stable prices?

When people are creating products or services and willing to spend their money, both economic driven forced of supply and demand would bring in the world of better or more products or services. Then more money is needed so that the better products can be priced higher.

If inflation is too high, which is triggered strong economic growth, the Fed could raise interest rates or sell bonds to reduce money supply. 

Consider the previous example of farmers, if the world continued to have only 2 one-dollar bills, the 2 one-dollat can be used to buy more wheat or pigs, right? Because products increase while money supply does not.

Therefore, when the economy is healthy and money supply is reduced, currency value would increase, in other word, US Dollar will grow.

The Fed's Dual Mandates Achieved

This is why watching the Fed's decision on rates or other related things is one important way to assess the health of US economy.

If both maximum employment and stable prices are achieved, this could mean strong Dollar and strong stock market.

How could SpaceX be a Good Investment?

Founded in 2002 by Elon Musk, SpaceX is famous for its reusable rockets that result in the reduction of rocket launch costs. SpaceX is also building one of the biggest space vehicle, Starship, which is designed with a utilmate goal in mind, that is to colonize Mars.

If colonization of Mars isn't lucrative in the short term, there is one SpaceX project that can be, Starlink.

Starlink consists of satellites that provide high-speed, low latency broadband internet. The service is priced at $99 a month, which might not be attractive for urban residents, but may be reasonable for rural or remote ones.

Starlink

According to Ying Lin, about 35% of the population in the world have no access to internet.

With more and more satellites in the orbit, it is possible Starlink can reach more people who have currently no access to internet.

Cheaper to Build

Starlink's internet can be cheaper for remote or rural places where setting up landlines or fiber-optic cables to cover small numbers of people may cost more than just installing few satellite signal receivers.

Security

Starlink's internet can also be more secure than its cabled counterpart.

Landline or cable internet can be hacked and can be damaged by some natural disaster or by humans. Internet cables also need to go through other countries if internet is connected to or through them.

Starlink's internet infrastructure is owned and controlled by SpaceX which can be monitored and supervised by the US government.

Join Team with Big Tech

The more people are using the internet, the more lucrative every online business is. It is possible that big internet platforms such as Google, Facebook, Netflix want more users,

With more people get access to internet, they may be able to grow their revenue and may be willing to work with SpaceX to provide cheaper broadband internet. It's mutually beneficial for SpaceX and Big Tech.

Support Automated Driving Systems

Self-driving cars based on their way of being able to "self-drive" may need to connect to the internet to work. For example, cars may need to talk to traffic lights to decide when to stop or to go. By the way, this is one of many reasons why 5G is important. super-low latency. We don't want to see cars crashed at intersections because of high internet latency, right?

Self-driving cars in the city don't need satellite broadband internet because they already have 5G connectivity. But, in rural or remote places where there is no access to internet, cars may need to connect to satellite internet in order to drive by themselves.

Starlink's Advantages

One big advantage of Starlink is its relatively low cost of launching satellites into orbit thanks to SpaceX reusable rockets. According to Rich Smith, "there could be no one on Earth capable of launching payloads to orbit cheaper than SpaceX".

Space X IPO?

According to Elon Musk, people may be able to invest in Starlink in the future.

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Ying Lin. 10 INTERNET STATISTICS EVERY MARKETER SHOULD KNOW IN 2021. 2021. OBERLO. www.oberlo.com/blog/internet-statistics. Accessed July 21 2021.

Rich Smith . How Much Cheaper Are SpaceX Reusable Rockets? Now We Know. 2020. The Mottey Fool. www.fool.com/investing/2020/10/05/how-much-cheaper-are-spacex-reusable-rockets-now-w/#:~:text=But%20in%20return%20for%20being,BreakingDefense.com%20reported%20last%20week. Accessed July 21 2021.

Is the S&P 500 Index Too High?

As the S&P 500 index continues to break its record highs intermittently, I worry whether it is time to sell some of my IVVs and wait for another buying opportunity or to reduce downturn risks.

Based on its PE ratio, the S&P 500 may be too expensive. According to multpl.com's data, the current PE ratio of the S&P 500 index is 46.31, where its historical mean is just 15.95%.

But according to the S&P 500 90-year historical data, the index might still be going up for a little longer.

The S&P 500 PE Ratio Analysis with Respect to Bond Yields

As of July 19, 2021, the 30-year Treasury yield is 1.88%. The S&P 500 index closed at 4258.19 and its PE ratio for 2021 is estimated to be 46.31 the same day.

If we take the inverse of the PE ratio of 46.31, we get 2.16% which is fairly close to the 30-year Treasury yield, 1.88%. This means it is worth to buy 30-year Treasury bonds because they guarantee at least of a 1.88% return while the S&P 500 index only has an earnings per 1 index point ratio of 2.16%.

However, if the S&P 500 companies continue to grow their earnings, this high PE ratio should not be a problem.

How Much Will the S&P 500 Index Drop If its PE Ratio Returns to the Historical Mean of 15.95% ?

The S&P 500 index will drop to 1466.60 in order to reach a PE ratio of 15.95% if its earnings stay unchanged.

It's a -65.6% drop.

Formula:

1. 4258.19/46.31 = 91.94969 earnings per 1 point of index.
2. 91.94969*15.95 = 1466.60

Other Times When the S&P 500 Had Such a High PE Ratio

In 2002, the S&P 500 index PE ratio was 46.17 and in 2009, it was 70.9.

Source: multpl

In 2002 and 2009, the 30-year Treasury yields were above the inverses of the S&P 500 index PE ratios, which could mean the current S&P 500 index is not as expensive as it was in 2002 and 2009, because the higher the inverse of the PE ratio, the higher the earning is. In 2021, the estimated PE ratio's inverse is still greater than the 30-year Treasury yield.

Year	PE Ratio	PE Ratio Inverse	30-Year Treasury Yield
2021	46.31	2.16%	About 1.88%
2009	70.9	1.41%	About 4.5%
2002	46.17	2.17%	About 5.37%

Source: macrotrends

Why might the S&P 500 Index Keep Rising?

If we look at the 90-year historical data of the S&P 500 index, we can see a rising pattern, perhaps, toward 2022.

This result is based on technical analysis of the S&P 500 index recovery cycles after 1929,1968 and 2000 financial crises.

After the S&P 500 index made its previous highs after an above mentioned financial crisis. it could keep rising for some more years from a technical analysis point of view.

Source: macrotrends

Conclusion

The S&P 500 is too high, taking into account the inverse of its PE ratio being close to the 30-year Treasury yield. However, it is not as expensive as it was in 2002 and 2009.

The S&P 500 might still keep rising for a little while based on the technical analysis of the recovery cycles after previous major financial crises.

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multpl. S&P 500 PE Ratio. www.multpl.com/s-p-500-pe-ratio. Accessed July 22 2021.

macrotrends. www.macrotrends.net. Accessed July 22 2021.

3 Industries that may Keep Growing for the Next Decades

Industries can grow or shrink, and different times had different industries being the main driving force for economic growth.

Industries Driving Economic Growth Change Over Time

Before the Industrial Revolution,

the economy was food-centric. For example, whoever had more cattle or more strength to till the land could produce more food comparatively. Therefore, cattle and manpower were the economy drivers.

After the Industrial Revolution,

it had become that who had the skills to build machines or the access to energy such as fuel had economic advantages. Even farmers could produce more food with the access to machines.

In the Information Age,

televisions, cell phones, computers are not just for entertainment, but are also for productivity. For example, Google, Netflix and Amazon use data analytics for marketing. As opposed to using traditional marketing strategy of "product first, then marketing", they are able to target audience first and decide what products to make, which greatly reduce marketing and production expenses. They can even sell their data analytics results, which could not be imagined possible without the help of internet, computer programming and mathematics.

What are the Next Big Industries?

The Renewable Energy Industry

With limited amount of fossil fuel, we will have to find some other sustainable ways to produce electricity, otherwise, our lives will go back to the pre-industrialization age. Renewable energy such as wind or solar power can be the best candidates for it.

Companies that produce products that use renewable energy will just become more and more important to humanity. Car companies begin to research how to produce electric cars. Factories begin to put up solar panels to generate electricity.

The Recycling and Reuse Industry 

Just like fossil fuels, materials such as gold, copper and iron only have limited amount. It is crucial to develop and improve the recycling and reuse industry.

Companies that hold key recycling or reuse technology will play a key role in the future.

The Space Industry 

The space industry is pretty young, considering not when space shuttles were invented, but how asteroid mining or space tourism can be possible.

It is quite surprising that space industry can even be a "private" driven industry, taking into account the resources it takes to fire a rocket into space and how much to make one.

I guess there are two reasons why space industry can become reality:

1. New technology can reduce costs of rocket launches.
2. The overall economy has grown to a level where more and more people can afford more expensive things.

Signs of Growing Renewable Energy Industry

There are more and more electric cars on the roads, which could be a sign of the growing renewable energy industry.

In theory, electric cars are not as efficient as their gas counterpart with respect to using the same source of fuel, gas. Electric cars can use electricity produce by a gas power plant and during the electricity transferring process into the cars, some electricity energy was lost.

However, car makers have started putting a lot of time and money into researching and developing electric cars.

Tesla, for example, has become one of the largest electric car makers in the world and was even accepted as an S&P 500 company by the end of 2020.

Tesla Earnings Per Share History ¹

year	EPS
2020	$0.64
2019	$ -0.98
2018	$ -1.14
2017	$ -2.37
2016	$ -0.94
2015	$ -1.39
2014	$ -0.47
2013	$ -0.12
2012	$ -0.74
2011	$ -0.51
2010	$ -0.61
2009	$ -1.59
2008	$ -2.49

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1 macrotrends. www.macrotrends.net/stocks/charts/TSLA/tesla/eps-earnings-per-share-diluted. Accessed 21 July 2021.