2017 Investor Roundtable:General Discussion

[adiggs]

Tesla is primed to have a stellar quarter for deliveries
It looks like Tesla is currently entering its usual end-of-quarter/end-of-year delivery rush and everything points to the automaker achieving a gangbusters quarter for deliveries due to several reasons and two specific markets.

The Oslo Port pic even made it to this article ...

Teslas as far as the eye can see. That might need to be wallpaper...

 

[Causalien]

Is anyone thinking like me, that this may a good time to sell all stocks? The market is at all time highs and leaving politics aside, except as it relates to stocks, it looks like something big from Mueller is about to drop. Flynn's and and Papadopoulos' plea deals make this clear to me, especially since Flynn said he has "a story to tell" when he was looking for immunity. Now he's a convicted felon so it seems Mueller knows his story, and still got a conviction, so it must be some story that goes beyond just obstruction. Then again, I could be reading it wrong but I don't think so and if something big drops, or if Trump fires Mueller before it drops, what happens to the markets? I guess we can get some guidance from the past...

During the Watergate scandal, when Cox was fired and then-Attorney General Elliot Richardson resigned in protest — the S&P 500 fell 14% from October 1st through November. But investors shouldn’t jump to conclusions. Nixon’s so-called Saturday Night Massacre took place while Wall Street was already mired in one of the worst bear markets in history. From January 1973 through August 1974 — a period that includes the conviction of the Watergate burglars, Nixon’s resignation, global oil shock, Middle East turmoil, and a dramatic spike in inflation — stocks lost 42% of their value.

The S&P 500 fell nearly 20% in the weeks leading up to special prosecutor Kenneth Starr’s report on President Clinton, which ultimately resulted in Clinton’s impeachment. And that was in the late 1990s, when the stock market and economy were booming.

The problem with selling, holding cash, then buying back in is, of course, capital gains. We can shelter that in RRSPs in Canada so I am leaning towards selling my wife and my RRSP stock holdings which are self-directed so I can go online now and sell them all. I also bought a lot when our dollar was near par so there's gains there to. I would sure hate to lose what it's worth now and I have to keep reminding myself we haven't made the stock price until we sell, since tomorrow it can crash. So I'm leaning towards selling the stocks inside our RRSPs. Anyone else have similar thoughts or advice?

I've been thinking like you since 2013.

Things don't make sense but after reading up on several economic theories and models, I came to the conclusion that this current environment is caused by money printing.

Only reason nobody is talking about it is because they don't call it printing anymore.

QE, NIRP etc.

Dig into M1, M2 and M3 supplies and you see they all increase by > 8% per year. Yet here we are, main stream media swamped by who Trump is going to grope next.

That's my guess on what is happening. Then you dig into how much China and European are printing...

So with that in mind, any assets that are not increasing by 8% per year is losing purchasing power. At the place where I live where housing represents > 40% of take home pay, inflation is much higher since jousing costs basically doubled. But oh no, we can't use that in our core inflation data.

Who are we trying to fool?

 

[dc_h]

Let’s not forget that Tesla said that they would build 10% less S/X in Q4 compared to Q3 due to reallocation of the work force to M3. I doubt that that 10% has been used up: not enough M3 built, and no signs of less S/X production.
That means that the last 1 to 2 weeks of q4 there should be a big push to produce a lot of M3, and maybe even a production stop of S/X to get to 10% less production, allocating the entire workforce to M3, since the battery bottleneck should be solved around this time.
Tesla said nothing about Q1, but as production of M3 ramps a lot of that workforce may remain allocated to M3 production.
A production stop of S/X would also ideal for retooling for an S/X refresh.
It would also totally be the usual Tesla style to do a big push of M3 production the last week of Q4, report relatively/unexpectedly high M3 production numbers, and deal with the quality issues later in the service centers.

I think the extended ramp allowed more focus on S&X production. We will see, but sales in Europe and Canada seem much higher than ever. If China and USA follow, it should be a good quarter, except model 3 at only 2000 or whatever.

 

[Canuck]

I think now is the perfect time to sell all stocks except TSLA and buy more TSLA.

I don't see the humour in my post, or what you are getting at with this reply, but I guess it's over my head, and you're some master stock investor, unlike me who is just looking for some advice. I know no one knows what will happen in the future. I was looking for the consensus, not the crystal ball, if that's why you found my post funny.

In any event, TSLA is the US stock that has me most concerned. SIRI, APPL, GOOG and my other US stocks are on much firmer ground than TSLA. This is make or break time for Tesla and I'm not convinced they don't have some very troubled times ahead, even regardless of the political climate. My gains in TSLA are significant but until I cash out they are only on paper.

Things don't make sense but after reading up on several economic theories and models, I came to the conclusion that this current environment is caused by money printing. Only reason nobody is talking about it is because they don't call it printing anymore. QE, NIRP etc. Dig into M1, M2 and M3 supplies and you see they all increase by > 8% per year. Yet here we are, main stream media swamped by who Trump is going to grope next.

That's so true. The world's economy is explained very well in this documentary:

 

[GreyHair]

The problem with selling, holding cash, then buying back in is, of course, capital gains. We can shelter that in RRSPs in Canada so I am leaning towards selling my wife and my RRSP stock holdings which are self-directed so I can go online now and sell them all

I wonder how much you will get for selling your wife, will it be more or less than your RRSP stock holdings? Grammar matters sometimes.

Great questions, I would think it better to sell some of your holdings over the next 1-4 months. The fed is going to be raising rates in 2018 again, and QE is supposed to start being reduced. Not a good combination. Getting defensive is probably a good strategy right now.

 

[Menifeer]

... I am leaning towards selling my wife and my RRSP stock holdings ...

I can understand selling the RRSP holdings, but does the wife have to go, too?

 

[Waiting4M3]

Btw, I’m not saying the potential isn’t there. I’m just saying in 2020, there won’t be much revenue at all from Tesla Semi and it will likely be a slow ramp.

Wouldn't the ROI on the logistic SW be dependent on the units of semi out in customers' hands?

I probably need to explain further. What drives iPhone sales? Is it the nice hardware or is it iOS and the app ecosystem that iOS brings together? I’d posit that more important than the hardware (ie, think Tesla Semi), the software is more important. It’s the combination of the software that Tesla brings, including autonomous driving and such. But probably more important is the app ecosystem that Tesla’s software will bring together, from the backend to the front end. What the Tesla Semi driver will see in the Semi will be the front-end software system (ie, think iOS), but there’s a lot that needs to take place to bring all the varying logistic systems and apps together to work seamlessly from the backend as well. Thus, in order to bring the perfect front end, Tesla needs to make a platform. And making and executing on this global logistics platform will probably be much harder than the hardware (ie, Semi).

Good point about the complexity in developing the SW, I suspect it might have some non-trivial overlap with the Tesla Network SW, or even the SW eventually routing traffic in/out of the Boring tunnels. I think the semi logistic SW may be the simplest of the 3, since most trucking routes are fixed, always going back between points A and B, with no branching in routes, no randomness in the availability of carriers.

 

[Skipdd]

Is anyone thinking like me, that this may a good time to sell all stocks? The market is at all time highs and leaving politics aside, except as it relates to stocks, it looks like something big from Mueller is about to drop. Flynn's and and Papadopoulos' plea deals make this clear to me, especially since Flynn said he has "a story to tell" when he was looking for immunity. Now he's a convicted felon so it seems Mueller knows his story, and still got a conviction, so it must be some story that goes beyond just obstruction. Then again, I could be reading it wrong but I don't think so and if something big drops, or if Trump fires Mueller before it drops, what happens to the markets? I guess we can get some guidance from the past...

During the Watergate scandal, when Cox was fired and then-Attorney General Elliot Richardson resigned in protest — the S&P 500 fell 14% from October 1st through November. But investors shouldn’t jump to conclusions. Nixon’s so-called Saturday Night Massacre took place while Wall Street was already mired in one of the worst bear markets in history. From January 1973 through August 1974 — a period that includes the conviction of the Watergate burglars, Nixon’s resignation, global oil shock, Middle East turmoil, and a dramatic spike in inflation — stocks lost 42% of their value.

The S&P 500 fell nearly 20% in the weeks leading up to special prosecutor Kenneth Starr’s report on President Clinton, which ultimately resulted in Clinton’s impeachment. And that was in the late 1990s, when the stock market and economy were booming.

The problem with selling, holding cash, then buying back in is, of course, capital gains. We can shelter that in RRSPs in Canada so I am leaning towards selling my wife and my RRSP stock holdings which are self-directed so I can go online now and sell them all. I also bought a lot when our dollar was near par so there's gains there to. I would sure hate to lose what it's worth now and I have to keep reminding myself we haven't made the stock price until we sell, since tomorrow it can crash. So I'm leaning towards selling the stocks inside our RRSPs. Anyone else have similar thoughts or advice?

I have had this fear for some time, but I worry about having it all in cash, much like Causalien noted (if I understood correctly). In January, I was just worried about how the markets would react to the new normal of extreme politics and style of government with the current administration. We rebalanced to move a higher percentage to much safer investments, but still left a lot in equities. I think it's time to re-think again. In our case we'd like to retire in 4 years so we need to be able to make the adjustments required for that in an up or down market. That was also a driver for the earlier rebalancing.

 

[Zloy]

Is anyone thinking like me, that this may a good time to sell all stocks? The market is at all time highs and leaving politics aside, except as it relates to stocks, it looks like something big from Mueller is about to drop. Flynn's and and Papadopoulos' plea deals make this clear to me, especially since Flynn said he has "a story to tell" when he was looking for immunity. Now he's a convicted felon so it seems Mueller knows his story, and still got a conviction, so it must be some story that goes beyond just obstruction. Then again, I could be reading it wrong but I don't think so and if something big drops, or if Trump fires Mueller before it drops, what happens to the markets? I guess we can get some guidance from the past...

During the Watergate scandal, when Cox was fired and then-Attorney General Elliot Richardson resigned in protest — the S&P 500 fell 14% from October 1st through November. But investors shouldn’t jump to conclusions. Nixon’s so-called Saturday Night Massacre took place while Wall Street was already mired in one of the worst bear markets in history. From January 1973 through August 1974 — a period that includes the conviction of the Watergate burglars, Nixon’s resignation, global oil shock, Middle East turmoil, and a dramatic spike in inflation — stocks lost 42% of their value.

The S&P 500 fell nearly 20% in the weeks leading up to special prosecutor Kenneth Starr’s report on President Clinton, which ultimately resulted in Clinton’s impeachment. And that was in the late 1990s, when the stock market and economy were booming.

The problem with selling, holding cash, then buying back in is, of course, capital gains. We can shelter that in RRSPs in Canada so I am leaning towards selling my wife and my RRSP stock holdings which are self-directed so I can go online now and sell them all. I also bought a lot when our dollar was near par so there's gains there to. I would sure hate to lose what it's worth now and I have to keep reminding myself we haven't made the stock price until we sell, since tomorrow it can crash. So I'm leaning towards selling the stocks inside our RRSPs. Anyone else have similar thoughts or advice?

I've been accumulating TSLA since early 2014. I've been buying highs and, luckily, lows too. So far the worst decisions I made with this stock was selling (even though at profit). I stopped selling a while ago. I could have sold at ATH making a nice profit, but in the end, I find myself being more comfortable with making less or being in red, rather having FOMO. Actually, I feel good when I can still buy it at a lower price.

I think it all depends on your investment horizon. If you think the stock will make a nice return in 5 to 10 years, why bother selling, other than when you have to?

 

[EinSV]

It isn't hard to find industry experts this year telling us that long range BEV Semi in 2020ish, even in limited numbers, was/is impossible (except maybe as a demonstrator / pilot project - not an economic project that makes money).

On cue, according to the attached article (or at least the Google translation), Volvo AB (truck company) and Scania mocked the Tesla Semi, saying battery weight makes it impossible for an EV Semi to be practical for long distance trucking. Konkurrentene håner Teslas lastebil: - Den kan bare frakte potetgullposer

Only good for transporting "bags of potato chips."

We shall see about that ....

 

[MitchJi]

Oh, glad to see that!

If you're curious, I'm backing off on options at the moment in favor of just owning a lot of stock. I suppose J19 or J20 LEAPS would be fine if I wanted leverage though.

I really feel very unsure about timing right now which is making options plays harder. (I also have very large upcoming expenses of uncertain date and I'm not sure how much cash I'll actually have after they're done, which is making me cautious even with selling puts -- I may sit down in mid-April and wish I'd invested more, but it's better for me than sitting down in mid-April and realizing I need to take out a loan to pay my taxes. Better to sleep at night.)

One of my replies to my friend:

What I’m advising friends is 2020 LEAPS strike price about $320. I’m not being that conservative myself. We currently have Jan2019 $350’s and June $340’s.

I bet that the June options are pretty safe but they feel a little bit risky to me. So in January when the September quarterlies become available I’m thinking about moving a big percentage of our options to September options with a strike price that is close to the money whatever that is at the time.

We really blew it on our timing getting back in but I’m confident that we’ll do extremely well in spite of that.

I wrote this paper on buying TSLA options a while ago, it’s a little bit out of date:

J19LEAPS-BuyInJan2017.pdf

I’m planning to send him this (the two paragraphs below are quoted from a previous email):

My SP estimate is based as much on past experience as the raw numbers. I believe that there are two reasons for the recent bumps to ~$385. Some of that is based on future expectations but I don’t believe that they need to dominate the entire world vehicle market to justify a substantially higher valuation than GM or Ford.

Those two reasons are the MX being produced successfully and anticipation of the M3 ramp going smoothly. I believe that the big dip is overblown due to memories of the MX problems. The M3 is an entirely different situation and I believe that when it ramps successfully that the price will blow past the previous high (reality is better than anticipation).
Hundreds of Tesla Model 3 vehicles spotted at delivery centers as regular customer deliveries start
I believe that there’s a connection between that and the fact that the SP increased by over $13 today. In other words I rest my case.

 

[Canuck]

I wonder how much you will get for selling your wife, will it be more or less than your RRSP stock holdings? Grammar matters sometimes.

Yes, sorry, I meant to say selling my RRSPs and trading my wife in for a younger model -- not selling her.

If you think the stock will make a nice return in 5 to 10 years, why bother selling, other than when you have to?

I guess because I have always been long and while I don't need the cash, there looks to be a great investment opportunity to be had if the market falls sharply. Again, leaving politics aside, if a Trump indictment drops from Mueller, and that's within the realm of possibility, what does it mean the tax plan and the economy? I know Trump can still fight it, and tax reform can still pass, but the markets could fall significantly in the interim, and there could be great potential for gains, especially for sheltered gains.

I would think it better to sell some of your holdings over the next 1-4 months. The fed is going to be raising rates in 2018 again, and QE is supposed to start being reduced. Not a good combination. Getting defensive is probably a good strategy right now.

Thanks for the advice -- and I agree. It's just so hard for me to actually sell that I don't know if I can bring myself to do it. I'd make the worst day trader.

So far the worst decisions I made with this stock was selling (even though at profit).

That's my concern. I'm only selling with the intention of getting back in and I've thought so many times in the past few years to sell since it can't go any higher -- only to be proven wrong -- and being glad I didn't sell. It's much like the property values out here.

 

[adiggs]

On cue, according to the attached article (or at least the Google translation), Volvo AB (truck company) and Scania mocked the Tesla Semi, saying battery weight makes it impossible for an EV Semi to be practical for long distance trucking. Konkurrentene håner Teslas lastebil: - Den kan bare frakte potetgullposer

Only good for transporting "bags of potato chips."

We shall see about that ....

surely it would also work for pillows! Maybe packing peanuts.

 

[Causalien]

To us Canadians, tax planning is important as our gov is dead set on increasing taxes.

What I've realized is that paper gains means nothing as that gain is not geberating cash flow. It only count as yours, once you've sold, then paid taxes and now the wealth is generating cash flow. Otherwise that money is not really contributing to your well being at all.

Notice that this is 3 differebt stages and each stage takes about 1 year to happen.

So I recommend selling about 10% of tesla per year. That is if you are like me and is done with accumulation and the exponential increase part.

Move the new wealth into rate reset preferred shares that increase with interest rate hikes and is below $25.

That last part is my greatest contribution for my fellow Canadian lumberjacks in flannel and touque. Don't believe I've mentioned it in public yet, but rate reset preferred is probably an open secret in Canada now and safe to recommend.

 

[DurandalAI]

My personal take on the Semi is beyond the point that it is a way to substantially cut down on emissions, it also completely cuts out the line that “BEVs can’t.....” That’s what the Semi and Roadster event combined was to do. Blow away preconceived notions on what BEVs can and cannot do.

From a business perspective, the Tesla Semi provides an opportunity to sell Tesla Energy products to those that buy the Semi. $0.07/KWh is cheap, but it’s even cheaper when you make it yourself!

 

[Jack6591]

If it were only Tesla, the Republican Party would unquestionably rescind the Federal EV tax credit.

However, it is the Lobbyists determining the state of play. The other car makers that are desperately lagging behind Tesla. They are the ones that can’t afford to lose the EV tax credit.

My prediction, the other guys will lobby to retain the Federal EV Tax Credit.

But....I could be wrong.

 

[ggies07]

hahahaha. I fell off the couch reading this....

Ford exec: Hybrids are better suited for self-driving cars than EVs

 

[defc0n]

My personal take on the Semi is beyond the point that it is a way to substantially cut down on emissions, it also completely cuts out the line that “BEVs can’t.....” That’s what the Semi and Roadster event combined was to do. Blow away preconceived notions on what BEVs can and cannot do.

From a business perspective, the Tesla Semi provides an opportunity to sell Tesla Energy products to those that buy the Semi. $0.07/KWh is cheap, but it’s even cheaper when you make it yourself!

Your line of thinking is similar to mine. However when talking about it with others, I summed it up as Elon Musk saying “**** you” to the diesel and supercar industries both.

 

[Intl Professor]

This Belongs at the Macro-economic thread, like many posts above so I will cross post, maybe ggr will move us all. In any case, respond there or ignore.
Consider this a pointer to the Macro thread posting. I would prefer that people post in the right place, and only once. -- mod(ggr).

 

[Waiting4M3]

If it were only Tesla, the Republican Party would unquestionably rescind the Federal EV tax credit.

However, it is the Lobbyists determining the state of play. The other car makers that are desperately lagging behind Tesla. They are the ones that can’t afford to lose the EV tax credit.

My prediction, the other guys will lobby to retain the Federal EV Tax Credit.

But....I could be wrong.

I think there won't be significant lobbying from traditional automakers. Because majority of them still don't think they need to migrate to EV ASAP. They think they can wait 5-10 years for the battery price to come down and supply chain to fill up, then they can swoop in and swap motors into their ICE chassis and keep making $ business as usual. They don't see that Tesla and Chinese EV makers will eat their lunch, dinner, breakfast, afternoon tea, and take their kids ice cream cone in < 5 years.