Notice the author? It's our buddy E.W. Niedermeyer.
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Notice the author? It's our buddy E.W. Niedermeyer.
RobStark
Well-Known Member
Some countries like France,Germany, The Netherlands don't have a strong correlation between income and size of car. As people move up in income in densely populated Europe most buy higher spec small cars. Without the US and Chinese market the S-Class and 7 Series would be a much smaller car if it existed at all because the domestic market would not have the economies of scale to support it.
This is not true in China and Korea. There is a strong correlation between increasing incomes and buying bigger cars.It is just that in China they have many more people outside the global middle class than in it
Some countries people still prefer small cars as incomes rise while in others people buy more stuff in their smaller cars.
if you're paying 7% on margined shares it's costing you $21/yr to carry those shares.
you could buy a deep in the money 200-220 jan 18 call that would have $5 in time premium and save a lot of carry i would venture.
you could buy a deep in the money 200-220 jan 18 call that would have $5 in time premium and save a lot of carry i would venture.
Who knows? One thing that Tesla (auto) has going for it is the run-off of resale and residual value guarantees from prior quarters. If you will recall from mid-2013 through mid-2016, those types of transactions caused GAAP losses and non-GAAP "profits" or at least lower losses because of the lease treatment caused by the contingent liabilities.
In mid-2016, Tesla discontinued reporting non-GAAP add- backs for resale/residual value guarantees, ostensibly because of SEC reprimands. The GAAP/non-GAAP situation has since reversed itself, as the run-offs now juice gross profits--take a look at the GM% for auto sales vs auto leases. If the guaranteed cars are returned, it does not really adversely impact the income statement--they just end up in "finished" goods inventory until they are sold and show up in " Services and Other" profit or loss. (That is unless the FMV is less than the RVG and the value in inventory has to be written down--unlikely, but check out the age of CPO vehicles on ev-cpo--Tesla carries used cars far longer than most "stealerships" who generally send them to auction if they can't move the metal within a month or two. FWIW, IMO this is a flaw of Tesla's direct sales approach--unlike "stealerships" where Used Cars are a profit center, Tesla doesn't have the staff/talent to do the necessary appraisals, financing and hand-holding to make used Teslas a profit center.)
OTOH, the Panasonic side of the GF was placed in service in early 1Q17. I haven't seen any recent announcement of significant PowerPack (or even PowerWall) sales to offset the depreciation that will be booked. IMO, TE GM% will be a drag on the bottom line.
TrendTrader007
Active Member
I already have more options than I care to carry so it makes sense for me to borrow money on margin for my shares out right
I have not exactly calculated but as of now I believe approximately 8 to 9% of my total portfolio is in long-term Tesla calls and I do not think it is prudent for me to increase my exposure to call options anymore
As tesla stock price appreciates rapidly the relative percentage off my portfolio and call options also increases disproportionately not that I mind it one bit but still it makes it much more riskier
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IMO, the idea that Tesla can write/facilitate true insurance to make purchase of its vehicles more attractive is a distracting non-starter for Tesla's core business. I think Tesla should re-evaluate whether and how to insure its own liability exposures. Google Translate
a long dated deep in the money option (1) costs less than a share, (2) costs less to carry than a share at your margin rate, and (3) gives you the same upside as that share, with (4) less risk.
and you would rather borrow money to own shares? that sounds economically irrational.
and you would rather borrow money to own shares? that sounds economically irrational.
Regarding my prior thoughts, Congress just went on vacation for two weeks, and there is still no coherent and complete evidence of a plan for a budget, or sufficient support to raise the debt ceiling.
The date everyone should be paying attention to is April 28th.
After Passing Debt Ceiling Deadline, What Are The Odds Of A Government Shutdown?
Anyone honestly think it's a coincidence Trump decided to try and thrust his "muscles" against North Korea today in a move that could have unpredictable consequences?
Very worried about what is going to happen when Iran, Syria, Russia, and/or one of Russia's "satellite countries" decides to make good on their promise to retaliate.
I don't think Trump has any aversion to being viewed as a failure. His approval rating is already at an unprecedented low. If the "Government can't keep the lights on" for an extended time, Trump will do the same thing he does when discussing Syria, and the debt - blame it on Obama, and not comment any further.
I wonder how the CIS (Commonwealth of Independant States) will affect how things play out.
The date everyone should be paying attention to is April 28th.
After Passing Debt Ceiling Deadline, What Are The Odds Of A Government Shutdown?
Anyone honestly think it's a coincidence Trump decided to try and thrust his "muscles" against North Korea today in a move that could have unpredictable consequences?
Very worried about what is going to happen when Iran, Syria, Russia, and/or one of Russia's "satellite countries" decides to make good on their promise to retaliate.
I don't think Trump has any aversion to being viewed as a failure. His approval rating is already at an unprecedented low. If the "Government can't keep the lights on" for an extended time, Trump will do the same thing he does when discussing Syria, and the debt - blame it on Obama, and not comment any further.
I wonder how the CIS (Commonwealth of Independant States) will affect how things play out.
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Yeah. Like everyone else, I am not entirely sure why he is so extreme in his conservative ramp. I understand it directionally. Elon is chronically underestimating risk (or overoptimistic if you prefer). That helps him say things like 'hey -- lets go to Mars' over a realist, but you have to discount his timelines. Manufacturing isn't even the only bottleneck. Everything from cobalt, to sales and service, to demand generation, to batteries all going to TE, to delays for installing more automation, is plausibly constraining. If you think of it logarithmically this is a multiple of 5x production, another 5x and they are past BMW, and another 5x and they are bigger than Toyota or Volkswagen (biggest on planet). So, it can take years and be just fine.
Nevertheless, yes, I think the stock is worth more if they actually do better.
Wrong. You are just burying your assumptions in complexity you don't understand and calling it risk reduction. But hey remember 2009? And those were professionals.
(incidentally Hewitt - use your words and grow up with the spite voting)
there's no complexity, it's a simple inequality. cost of carry for margin shares is > cost of carry (time premium) of deep in the money option.
If you show me a tsla example with stock + margin stock vs cash + deep in the money options that shows margin is a better idea i will be happy to revisit my understanding of this topic.
2009 they were writing leveraged options. we are talking about buying options using cash not loans. blowup risk is zero.
If you show me a tsla example with stock + margin stock vs cash + deep in the money options that shows margin is a better idea i will be happy to revisit my understanding of this topic.
2009 they were writing leveraged options. we are talking about buying options using cash not loans. blowup risk is zero.
This video from 2011 does a great job explaining what the CIS is, and provides some context what is happening today. I find it very interesting that there are very few videos on YouTube about the CIS (Commonwealth of Independent States), which was basically created in 1993 to establish a "New and somewhat related USSR" out of specific parts of the former USSR.
It is very rarely mentioned that the USSR didn't cease to exist after it "collapsed". A lot of the influence and power wielded by the USSR became part of the CIS.
Might be a coincidence, but I find it interesting the words "three pronged approach" are the same words that Trump has been using, albeit for different things.
It is very rarely mentioned that the USSR didn't cease to exist after it "collapsed". A lot of the influence and power wielded by the USSR became part of the CIS.
Might be a coincidence, but I find it interesting the words "three pronged approach" are the same words that Trump has been using, albeit for different things.
I know the Chinese government had already announced they would stop N. Korean coal shipments (essentially half of N. Korea export money), but the US supply was unexpected to me. Trump -Xi negotiations? Pretty surprising way for Trump to support his voting constituents economically.
I doubt the debt ceiling will be an issue. Republican Legislature and Executive and arguably Supreme Court. It was only an issue with divided legislature/executive branches (for political points and gamesmanship).
I suspect the Carrier fleet to N. Korea is part of an agreement between Xi-Trump and not a way to divert attention from the debt ceiling due to Republican Legislature/Executive. They are likely to pass a last minute bill and move on. And at this point I do not see Putin particularly hyperventilating about the losing crazy guy in the peninsula either.
China, IMHO, has no love for generation 3 of the N. Korean dynasty. Their trusted liaisons with the N.Korean govn't have been executed by generation 3. Further he basically spat on Xi's face by killing his own half-brother, who was under Chinese protection. Not wise. China is unlikely to raise a finger against N. Korea, but then again, they may not raise a finger for generation 3 when and if push comes to shove. I wouldn't be surprised if the US was to successfully take out gen 3, that China would step in with a convenient successor and prevent further chaos, thereby maintain status quo.
I would not be surprised if the posturing over Syria (by Russia) is just that. They were likely not particularly happy with Assad's use of Chemical Weapons, but as an "ally" didn't feel they could prevent it. So basically let the American's do it, and we'll just wag a finger and tell Assad "told you so..." and chastise the Americans for being belligerent. So ultimately, I doubt much will come of this missile strike except a slowdown in cooperation against ISIS.
China rejects North Korean coal shipments, opts for US supplies instead
China rejects North Korean coal shipments, opts for US supplies instead
Fox News - 3h ago
China has sent a flotilla of North Korean freighters loaded with coking coal back to their home ports, according to an exclusive Reuters report.
There was recent talk with Eberhard and Tarpenning at Stanford, and Eberhard claimed that if there is a cobalt shortage, or the price gets excessive, it can be replaced by manganese, so to the Cobalt investors here, look into it. 21:18 36:34
btw. good talk, Eberhard seems still be somewhat hostile towards Tesla
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MitchJi
Trying to learn kindness, patience & forgiveness
If they are not profitable, but substantially closer than the market expects, and SCTY contributes profits for Q1, with expectations of SCTY contributing profits for every quarter through the M3 ramp don't you think thatt would trigger an SP bump?
Just replace enough of your shares with J19 $280's or $300's (currently about $46.00 each) to get control of the same number of shares as borrowing 50k. Zero worries about short term dips.
Exactly!
Charlie Anderson Q4-2016 about 62 minutes said:
Ken, don't you believe that "quite exciting" for 2 or 3 Gigafactories means something other than a cap raise. IMO the way that would be quite exciting, is by going right to the edge.Elon Musk Q4-2016 about 63 minutes said:
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TrendTrader007
Active Member
but i like being economically irrational!
Yep, sure do Mitch.
And he may have another way to accomplish besides Cap raise (or at least with only a limited one). I think that's a very good possibility.
If so, that would reduce the priority to forcibly jack the SP, with a specific strategy of financial levers as luvb2b is suggesting. I think the SP will increase just on execution and GF announcements alone.
Although Tesla may in fact GAAP positive for 4 quarters, I'm not seeing it as a pressing priority, which for me, translates to levers not being pulled unnecessarily...
Sooooo - my 'warning' is with that as a risk, play TSLA with long term stock or DITM calls J19 (keeping anything else to discretionary monies).
TrendTrader007
Active Member
i must admit you guys are way too sophisticated for me. i am a rather simple minded investor who just does not understand the complexities of high finance. if i see a stock go up i buy it. if a stock goes down i sell it. and since my personal means are quite limited i end up using a bit of leverage. i do have a lot to learn and i appreciate you guys taking the time from your busy schedules to teach. Thanks!
That's boilerplate; you don't need a guarantee or a liability to pay off a subsidiary's debt.
Watch the trend in the debt outstanding on each facility from quarter to quarter.
Of course, it just makes sense to use lower-interest-rate sources of borrowing. That's kind of a "duh".
This question wasn't addressed to me since I absolutely don't do that, but I would never borrow more to invest into TSLA.
This is what I'd do instead. If I was tempted to borrow money to invest into TSLA, I would instead buy deep in the money calls (back when the stock was closer to $240, I bought some $120 Jan 2019 calls). Basically I'm putting half the money down (and the other half I have to pay in Jan 2019 in order to execute the option), so it's like borrowing money.
I pay a premium, which is like paying interest, but I have to pay it upfront in cash. The nice part is that the effective interest rate is lower than I can get on margin loans. (By all means, compare the two, if you are getting great rates on margin loans, it may be different for you.)
Anyway, the thing is, Tesla is volatile; you never want to be at risk of margin calls.
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