Today, the Metaverse moved closer to death as the company cut 30% of its budget and laid off people. When the company pivoted and changed its name to Meta, I thought it was a mistake. Consumers never fell in love with the Metaverse, although apparently, some people got married!
The most dangerous phase of a company’s lifecycle is when CEO conviction begins to override consumer behavior. Strategic blindness sets in not suddenly, but gradually — during periods of stability, success, and momentum.
Meta — The Metaverse: “People Want To Work in VR Headsets.”
$40 billion later, Meta discovered what every gamer already knew:
VR is fun for 10 minutes — not for 10 hours.
Below is a look at the CEOs and companies that earned their place in the Strategic Blindness Hall of Fame — along with one addition investors are suddenly debating with growing discomfort: Tesla.
Blockbuster – “People love coming into the store.”
In 2000, Blockbuster’s CEO rejected Netflix’s $50 million sale proposal. Customers were already telling them that late fees, DVDs-by-mail, and eventually streaming were the future. Netflix’s current market cap is $430 billion.
Kodak literally invented the digital camera in 1975.
Management suppressed it because they feared hurting the film business. They were correct but wrong in the long run.
Three-way tie for underestimating the iPhone’s success
Nokia – “People want keyboards, not app ecosystems.” Blackberry – “People don’t want touchscreen phones.” Microsoft- “Nobody is going to pay $500 for a phone.”
Nokia executives openly mocked the iPhone, calling it a toy. They were right — for six months. Then the App Store launched, and the consumer vote was instantaneous. Blackberry said people don’t want touchscreen phones. Nokia stopped making phones in 2014, and Blackberry and Microsoft stopped making phones in 2016. People are paying well over $1000 for iPhones
Yahoo – “People want portals, not search.”
Yahoo had two chances to buy Google. They declined and, ultimately, years later, outsourced their search to Google. Yahoo is worthless today, and Alphabet has a market cap of $3.8 trillion.
Tesla – The newest inductee: A case study in growing blind spots:
Tesla revolutionized the auto industry. That’s not in dispute. But strategic blindness can emerge after a company dominates — when leadership comes to believe that engineering brilliance alone dictates consumer behavior.
Add Tesla to the list?
Cybertruck:
A design experiment marketed as mass-market transportation, with Elon touting 2 million deposits, yet they have only sold about 60,000 since 2023. Truck buyers want towing reliability, affordable insurance, and usability — not stainless-steel sculpture. Secondary-market pricing already reflects the gap between hype and demand.
FSD / Camera-Only:
No autonomy company, regulator, or OEM is betting on vision-only. Every proven system uses LiDAR + RADAR + high-precision mapping. Tesla has been trying to solve a 3-D physics problem with 2-D sensory inputs, touting continuously that it will be “feature complete next year” each year since 2016. In less than a month, it will be 2026, making it 10 years of promises.
The Cybercab problem:
A two-door robotaxi misunderstands both consumer behavior (nobody wants 2-door cars) and transportation economics, let alone the above-mentioned FSD/Camera-only system, which isn’t safe or qualifies for Level 4 autonomy. Elon has promised an April 2026 production launch. Take the under.
The future of what could be sounds better than the present reality with AI and Optimus
AI initiatives require continuity, deep research culture, and stable leadership. Tesla has experienced the opposite:
The Dojo head departed after Tesla quietly downgraded internal expectations and ultimately shut down the program that an MS analyst had assigned a $500 billion market cap alone. No publicly coherent AI strategy has replaced these departures. The result: declining investor confidence in Tesla’s claim of being an AI-first company.
Optimus was introduced as a universal humanoid for factories, households, and commercial sale.
In the last six months:
The Optimus program leader left. Another senior robotics figure departed. No clear commercialization plan has been published. Demos remain highly curated and non-autonomous. Robotics without continuity is a research experiment (or a stock pump), not a product pipeline.
Markets give visionary CEOs extra time — until financials run into physical reality, which could hit the company with declining sales of the core auto business since 2023, and possibly lead to losses in 2026. Stale old current lineup, brand damage from Elon Musk politics, competition taking significant global market share, Cybertruck margins, FSD delays, insurance issues, and autonomous scaling constraints all point toward narrative risk rising faster than demand.
Every failure on this list shares the same anatomy:
- The CEO falls in love with a story.
- The company builds for itself rather than its customers.
- Consumer behavior shifts quietly.
- The market delivers the verdict loudly.
Success creates blind spots. Dominance breeds overconfidence. And consumers — not CEOs — always get the last word.
Quick Market Views
Stocks: The number of DeMark exhaustion signals is increasing. Notably, the main indexes S&P and Nasdaq 100 have new DeMark Sequential sell Countdowns 13’s in play, and the number of DeMark Sell Setups 9’s within the S&P is elevated at 72 just today, and I expect more 9’s tomorrow. With equity sentiment near the extreme zone >80% again, there is a probability of another attempt to pull back. Breadth was moderately up with the NYSE with now down 160 net issues and the Nasdaq up 450 net issues. The S&P has 262 up and 240 down. Index action has the S&P flat and Nasdaq 100 down 0.2% and that’s despite META is up 3.7% and NVDA up 2%. The small-cap IWM is up 0.75% and I expect to hear there is broadening out and strategists saying they like small caps for the coming year – this is something they tend to say every year at this time.
Bonds: Rates are higher. 2’s up 4bps, 10’s up 4bps, and 30’s up 3bps. The 2/10 yield curve spread is at +57bps
Commodities: Energy is mixed with Crude up 1.5% just under 60. Natural Gas is little changed. Grains up. Copper down 0.5%, Gold up 0.25%, and Silver down 2%.
Currencies: US Dollar index is up 0.15% and could get the DeMark buy Setup 9 tomorrow. Bitcoin is down 2.3% – with some people saying the equity market is fading with Bitcoin.
Current Portfolio Ideas: +15.3% vs SPX +16.5% YTD
Changes: I will cover AMD short with a 5.6% gain. I will add to PCT long 1% to bring to 3% weight. Adding 1% to APP short to bring to 3% weight. The short term SPY and QQQ momentum indicators confirmed sell signals today.
US INDEXES
S&P futures 60-minute tactical time frame sideways drift
S&P 500 cash index 60-minute with new Sequential and Combo 13’s
S&P 500 Index daily should get the sell Setup 9 tomorrow
Nasdaq 100 futures 60-minute tactical time frame sidewaaaaaays
Nasdaq 100 Index daily should get the Sell Setup 9 tomorrow
gs most shorted basket update
The GS most shorted basket is really pretty good to watch for inflection points. Back in April, I saw the GS and other prime broker data that showed hedge fund were overstaying the downside move as they were pressing the lows with more short exposure. There were DeMark buy Countdown 13’s at the lows that added to the confidence to add long exposure. The recent upside move with the 13’s was a reflection of not just shorts getting squeezed but the willingness of speculative long buyers running them up. The move lower held the TDST Setup Trend green dotted line which I use for support levels. The bounce at this point is a corrective lower high wave 2 of 5 bounce that willl likely stall out and fade again.
Current Portfolio
Pre changes
Tesla has a new Sequential sell Countdown 13 today. It is the most insane stock ever especially with fundamentals continuing to weaken and the stock pumps geting more desperate. There are two negative catalysts in the next month (ex earnings) with the CA DMV FSD false advertising decision – if Tesla loses they could be faced with a 30 day closure of the CA factory and banned from selling cars in CA for 30 days. They might also face monetary damages as well it would open up the legal floodgates across the US. Second, I expect a large drop in Q4 deliveries to be announced in the first few days of January.
URA Uranium ETF is up 5.5% as the CEO was on Joe Rogan and he touted nuclear energy. I recently added to the long position I started back in March and still think this can move higher ~55ish in the near term. It’s up already a lot so don’t buy short term calls.
AAPL has a cluster of DeMark sell Countdown 13’s and a sell Setup 9. The head of their AI program just quit and went to META. GS was also out saying checks suggested the App store has slowed. It’s trading at a high multiple and is crowded. I think I might add back some short if this is down tomorrow.
PCT Pure Cycle was a huge winner in the first half of the year and I sold 90% of my long for a 125% gain in July with the sell Countdown 13’s. I recently started to add back and will add another 1% to bring to 3% weight. It’s a longer term idea but the turn looks ok despite it possibly being in a wave 4 downside pattern but this pullback also has a higher low wave 4 of 5 with a wave 5 price objective in the 20’s. The company needs to show some customer orders.
APP Applovin will get the sell Setup 9 tomorrow. I have traded around this one on the short side and have a 2% weight. I have taken 3 wins on partial positions this year of 31%, 9%, and 20%. I will add back 1% today to bring back to 3% short
The short term SPY and QQQ momentum model confirmed to sell today
Hedge Fund Telemetry ETF Percentage Price Oscillator Monitor
The PPO monitor (percentage price oscillator) force ranks ETFs by percentage above/below the 50-day moving average. This monitor and others are offered to Hedge Fund Telemetry subscribers on Bloomberg. VWAP breaks midday
Index ETF and select factor performance
ETF with today’s performance with 5-day, 1-month, and 1-year rolling performance YTD. Seeing some fading happening
Goldman Sachs Most Shorted baskets vs. S&P Indexes
This monitor has the S&P indexes and the Goldman Sachs most shorted baskets. Another day with some short baskets getting squeezed higher. The most shorted basket dropped 1% off highs in the last hour
DeMark Observations
Within the S&P 500, the DeMark Sequential and Combo Countdown 13s and 12/13s on daily and weekly periods. Green = buy Setups/Countdowns, Red = sell Setups/Countdowns. Price flips are helpful to see reversals up (green) and down (red) for idea generation. The extra letters at the end of the symbols are just a Bloomberg thing. Worth noting: A few sell Countdown 13’s worth watching with Sequential and Combo’s with daily and weekly. But this is a very high number of sell Setup 9’s and I expect more tomorrow too.
Major ETFs among a 160+ ETF universe. Also with a high number of sell Setup 9’s
If you have any questions or comments, please email us. Data sources: Bloomberg, DeMark Analytics, Goldman Sachs, Street Account, Vital Knowledge, Daily Sentiment Index, and Erlanger Research