Elon Musk warned stocks could plummet if a recession takes hold, and slammed the Federal Reserve's aggressive interest-rate hikes this year, in a Twitter Spaces conversation with Whole Mars Catalog on Thursday.The Tesla CEO also brushed off concerns that running Twitter is distracting for him, pledged not to sell any more of his shares in the automaker in 2023, and noted a stock buyback would depend on the severity of the coming economic downturn.Here are Musk's 14 best quotes, lightly edited for length and clarity:The stock market1. "When there's extreme panic in the markets, things can go to ridiculous levels. Avoid buying stocks on margin and just avoid margin debt, because you just don't know if there's going to be some panicky situation in the stock market."2.
"I suspect Warren Buffett is going to be buying a lot of stock next year. If a company has very strong fundamentals, but then the market is in some short-term panic situation, obviously that's the right time to buy stock." Recession3. "If we do have another 2009 situation, the stock prices of everything are going to be lower.
Things that are bought with debt — basically housing and cars are going to be the two biggest — are really going to get disproportionately impacted."4. "From a long-term standpoint, there's a natural economic cycle that happens, and frankly we're overdue for a recession. It's shocking that we haven't had a serious recession, in any meaningful sense of the word, since 2009."5.
"If you're a ship in the storm, even if you have a really great ship, you're still going to get bashed by the storm."Twitter6. "Twitter is like mega catnip. If you cross catnip with crack, that's what Twitter is — catnip crack.
Any tiny little thing at Twitter is front-page news. It's going to get outsized attention." 7. "I had to have a month or so of getting the insane Twitter costs under control, or Twitter would just go flat bankrupt.
That's almost entirely done."8. "The amount of actual cognitive load that Twitter represents is low. It is a much simpler problem than Tesla or SpaceX, by a country mile."Stock sales and buybacks9.
"I needed to sell some stock just to make sure there's powder dry to account for a worst-case scenario. I'm somewhat paranoid having gone through two really intense recessions."10. "I won't sell stock until probably two years from now.
Definitely not next year under any circumstances, and probably not the year after." 11. "It wouldn't be smart to do a buyback and then discover the recession is worse than 2009. We just need to see what is the nature of the recession.
If it's looking like we're doing okay from a cash standpoint, and the stock price is absurdly low, then at least my vote on the board would be to do a buyback."The Fed's interest-rate hikes12. "It's blowing my mind that the Fed has raised rates so high. The economy right now is like a car driving around on a cliffside road, and the Fed is driving it by looking at a video taken of the rearview mirror that's three months old.
This is not a good way to drive a car on a windy cliff road. I think we're in for a hard landing."13. "The thing to appreciate about interest-rate increases is the double-whammy effect.
Higher interest rates will reduce the profitability of any company selling something that is dependent on the price of debt. Cars are bought with leases and loans, so people look at their monthly payment, and you have basically a demand issue with higher interest rates which then reduces profitability. Then in general, the valuation of all equities drops with the increase in the real interest rate."14.
"Since the vast majority of cars are bought on credit, a high real interest rate is like increasing the price of the car. In order to keep demand constant, you would have to therefore decrease the price of the car, and if you want to increase demand, you have to decrease the price of the car further."