Blog Posts by Henry Blodget

The only successful new American car company in more than half a century, Tesla (TSLA), reported its first quarterly profit yesterday.

It wasn't a big profit.

But the fact that it was any sort of profit blew away investors, who instantly bid the company's stock up 25% to a new high near $70.

Helping fuel this gigantic move was presumably collective panic on the part of the many investors who are short Tesla's stock, betting that the electric car company will falter and its stock will tank.

When short-sellers are forced to "cover" their bets on unexpected good news, their panic buying often creates demand that drives stock prices through the roof. And Tesla's stock presumably benefitted from that.

Related: The Next Big U.S. IPO? It May Be Chrysler

But Tesla has defied critics and short-sellers from the beginning.

When entrepreneur Elon Musk and others founded the company a decade ago, most people assumed that Tesla's ride would be short-lived. After all, the fate of new American car

During the financial crisis, JP Morgan Chairman and CEO Jamie Dimon was the golden boy of Wall Street.

Dimon's bank, JP Morgan, was one of the only big Wall Street's banks that didn't obviously need a bailout during the crisis, and Dimon himself made a strong, likable, and articulate spokesperson for the industry in a period when everyone hated it.

After the financial crisis, however, Dimon was quick to criticize the Obama administration and others for bashing fat-cat bankers and quick to resist new Wall Street regulations, arguing that the industry didn't need any new rules and that firms could police themselves.

Then JP Morgan had a massive trading bet go awry, costing the firm $6 billion. And Dimon's critics pounced.

A $6 billion loss on a trade didn't put JP Morgan in jeopardy, but Dimon was forced to admit that the firm hadn't been aware how much risk it was taking. And that blew a big hole in Dimon's argument that Wall Street didn't need rules and baby-sitters.

And now, JP

It's May again, so that means you can't turn on financial TV without being bombarded with advice to dump all your stocks until the end of the summer when it's safe to buy them again.

This advice, "Sell in May and go away," is based on analyses of average market performance by month over the past 50 years.

Related: Dow 15,000: 'Sometimes a Bullish Market Is Just a Bullish Market'

As you would expect (based on the aphorism), and as you can see in this chart, May has tended to be a weak month for stock performance, though stocks have still delivered a positive return in the month. June has been negative. July and August, meanwhile, have been good. September has been the real disaster. All other months, with the exception of February, have been strongly positive.

So if, on average, June has seen negative returns and September has seen very negative returns, should you sell your stocks now and go away?

Absolutely not.

Unless you don't care about the tax and transaction costs you will incur

One of the most common numbers you hear if you listen to stock forecasts is the "P/E ratio"--the price of the stock or market relative to the company's earnings.

Sometimes, the P/E ratio can be very useful for getting a sense of whether a stock or market is cheap or expensive.

At other times, however, the number can be highly misleading.

One of the most common ways the P/E ratio can be misused, for example, is when investors cite the P/E of a small, rapidly growing company that currently has a low (or no) profit margin. In these cases, the company will often have an astronomically high P/E on its historical earnings, which can lead some investors to conclude that it is "ridiculously priced."

What these investors often don't realize, however, is that stocks trade based on future earnings expectations, not past earnings, and the company's earnings might be expected to grow extremely rapidly in the future. Investors who are looking at the stock's price relative to possible future

One of the big problems in the U.S. economy right now is that big corporations are generating record profits not by growing revenues but by cutting costs.

"Costs," as everyone who works for a big corporation knows, are a synonym for employees, employee wages, employee perks, capital investment, and research and development.

As a result, we have reached a point where corporate profit margins are at all-time highs and corporate wages are at all-time lows as a percent of the economy. (See charts here.)

That's not sustainable, says economist Gary Shilling of A. Gary Shilling & Co.

The employees whose collective wages are stagnant or dropping account for most of the spending that drives the economy. So if employees aren't getting paid well, and corporations aren't spending, the economy can't grow quickly.

Shilling observes that, from a philosophical perspective, what is happening is that "capital" (the owners of corporations) are dominating "labor" (the rank and file employees who make and

The United States government has had two years to head off automatic "sequester" spending cuts that most people agreed were unnecessary and almost everyone hated.

But these days, the government doesn't do anything unless public anger hits such a state of fervor that Congress -- people actually begin to fear for their jobs.

Most of the sequester cuts have so far gone unnoticed, except insofar as they have contributed to the latest "spring swoon" in the economy.

But one of the cuts--a 10% hack to the budget of the Federal Aviation Administration (FAA) --has already infuriated almost everyone.

This week's flight delays due to the "furloughing" of FAA air traffic controllers, in other words, has done what two years of lead time has not:

Congress was actually forced do something.

Today the House of Representatives passed the Senate plan designed to allow the FAA to recall the air-traffic controllers by a 361-41 vote. White House spokesman Jay Carney said President Obama plans to sign the

For the past five years, a fierce war of words and policies has been fought in America and other economically challenged countries around the world.

On one side were economists and politicians who wanted to increase government spending to offset weakness in the private sector. This "stimulus" spending, economists like Paul Krugman argued, would help reduce unemployment and prop up economic growth until the private sector healed itself and began to spend again.

On the other side were economists and politicians who wanted to cut spending to reduce deficits and "restore confidence." Government stimulus, these folks argued, would only increase debt loads, which were already alarmingly high. If governments did not cut spending, countries would soon cross a deadly debt-to-GDP threshold, after which growth would be permanently impaired. The countries would also be beset by hyper-inflation, as bond investors suddenly freaked out and demanded higher interest rates. Once government spending was

Over the past six months, Wall Street has gone from thinking that Apple can do no wrong to thinking that there's no way Apple will ever again do anything right.  And, that said, Tim Cook's role as CEO has been brought into question.

As a result, the stock has collapsed from a high of $702 to a recent low of $390 last week.

And Wall Street is now bracing for what most people expect will be a terrible quarterly earnings report and outlook on Tuesday.

Apple's results in the December quarter disappointed many analysts, and the company's outlook for the first quarter was also meh. But now, after a steady flow of news reports suggesting that first-quarter sales have not gone well, as well as Apple's failure to release any new products so far this year, many on Wall Street think that Apple will miss even its low guidance for the quarter. Worse, many expect that Apple will provide an outlook for the June quarter that is far below what Wall Street is currently expecting.

In other words,