2017 Investor Roundtable: TSLA Market Action

[Intl Professor]

Could TSLA go down to $300.81 or $264.80 or $254.12 technically on a wild impulse move to downside?
Absolutely! Crazier things happen in the stock market all the time
Is it likely.?
Not really
I bet on probabilities
And the probability of this being closer to the bottom is very high for several technical reasons
I’ll explain with charts later this weekend but all I can do is read the charts and place my bets
If I’m wrong I lose
If I’m right I win
Either ways it’s only money
It’s not the freaking end of the world
I’m already down $3.5 from the last high and I couldn’t care less
If and when I get a margin call I’ll sell enough to meet the call and carry the rest of my position for long term
It’s all just a game a few millions here a few millions there you can’t take the game too seriously
If you do you’re history
Gone for good
Nobody said becoming a billionaire was a easy
Otherwise every other idiot would be one

My teacher in statistics used to say a paranoid is someone who confuses probability with possibility. Similarly, there must be a distinction between outliers and outright liars. The long tails of the standard distribution contain both the accurate predictions of the lucky and the unlucky. That is why Taleb prefers Mandelbrot's probability. Which do you use, or is that deeply buried in your unconscious?

Just a smart-ass question. Not trying to shrink your brain, just in a race to fill the empty spaces in my brain before more of the plaque sets in.

Edit: Removed some garbage accidentally posted at beginning.

 

[SteveG3]

But Tesla hasn't missed M3 guidance!

They are exactly where Elon said they would be!
This time they are on time:
Now, will we actually be able to achieve volume production on July 1 next year? Of course not.
The reason is that even if 99% of the internally produced items and supplier items are available on July 1, we still cannot produce the car because you cannot produce a car that is missing 1% of its components.

Nonetheless, we need to, both internally and with suppliers, take that date seriously, and there need to be some penalties for anyone, internally or externally, who does not meet that timeframe. This has to be the case because there's just no way that you have several thousand components, all of whom make it on a particular date.

The reality is that the volume production will then be some number of months later, as we solve the supply chain and internal production issues.

Thanks Mitch... I've had in mind for weeks to post here that I give Tesla a preliminary "A-" on their guidance on the Model 3 ramp, vs. a "D" on the X ramp guidance, but I hadn't found the time to dig up the statements that back this up. You just shared a great example. A- to Tesla and Elon for threading a needle of simultaneously giving us investors a picture of what to expect, while minimizing slippage of Tesla's suppliers and internal teams taking the July 1 deadline seriously.

I think there are two elements to understanding "Elon time." 1) Elon will set extremely high expectations so even getting within 75% of the target represents executing at a sprinter's pace, 2) Elon will publicly state goals so internal teams and suppliers are less comfortable running his goals through an "Elon time" translator. Sure we've been frustrated by this at times, but, I think in the case of the Model 3 ramp guidance, his guidance was far more about the second aspect than the first.

 

[Esme Es Mejor]

Nobody said becoming a billionaire was a easy

Why would anyone want to become a billionaire? Once you have $100M, you should be generating at least $3-5M annual income, even with very conservative investments. Seems like becoming a billionaire should just happen as a side effect of changing the world in a massive way.

 

[Intl Professor]

Sometimes it just becomes a habit. For others it's like politics, you just have a drive for power. Musk does not, I think and hope. Besides, he is an intellectual who enjoys the game of solving problems for the purpose of doing good. Very rare in a shrewd businessman.

 

[MitchJi]

Oh, its better than that, My Master!

Did you see the daily minimum: $316.66
Doesn't get any more perfect than that, triple sixes!
You nailed this pattern perfectly!

Wrong!

$666.00 is a much better triple six!

Of course $666.66 is also much better.

 

[Chickenlittle]

Wow. Just watched in depth video (1hr 10 min) review of model3. Most in depth one I have seen. I reserved my first model S 6 months before first one was delivered. It was one of the first 5000 delivered. When I compare that to the model3, there is no doubt in my mind the superiority of the model3 to that model S. Longer range, autopilot, adaptive cruise, better fit, materials finish at half the price. Only down side is slightly smaller size. If I were presented with that model S or the model3 (even if the same price I paid originally), I would have taken the model3. The video is on evannex email. I have no residual concern that model3 will not be success. This will affect share price in very positive way. Too many here concerned about number produced so far. Tesla has taken longer than expected to get up to speed in all three prior models. The model3 they showed may be delayed by weeks but is so far advanced from model S on first manufacture. My model S did not have rear seat heaters, summons, self parking, autopilot, collision avoidance visor mirrors, coat hooks, reasonable coat hangers, trunk lighting etc

 

[dennis]

Sounds obvious but the wording below is "quite possible" and I'm not a car guy, so asking for help.

@dennis - I think your post is assuming all cars produced in or after 2Q will be dual motor...

If dual motor requires two reduction gears, and if reduction gear order is doubled, and if dual motor production comprises less than all of production in 2Q and beyond, then it's still a significant increase in cars produced.

I was offering a different and what I believe to be a higher probability interpretation of the order doubling with the Chinese supplier. When Tesla made their original forecast to this supplier before production started, I believe they had an approximate idea of when they would complete the initial RWD orders and switch to making predominantly AWD units to clear out a backlog of more than 2 years at that time. They would have had much less clarity about when they would be able to double production to 10K/week.

Personally, I am not drawing any conclusions about the timing of step up to 10K/week from the Chinese supplier's statements.

 

[Navin]

I think Elon and tesla are both honest companies serving a righteous mission. I really don’t think they are out to mislead or cheat anyone. Read any of Elon’s letters or shareholder videos and it’s obvious. The company bleeds integrity.

With that said - I am still showing off-dec for my model 3delivery. If there were major delays that weren’t initially expected - why wouldn’t tesla push that timing estimate back? This single data point is keeping me cool and collected in this mania of m3 production issues.

 

[RobStark]

 

[dennis]

I think Elon and tesla are both honest companies serving a righteous mission. I really don’t think they are out to mislead or cheat anyone. Read any of Elon’s letters or shareholder videos and it’s obvious. The company bleeds integrity.

With that said - I am still showing off-dec for my model 3delivery. If there were major delays that weren’t initially expected - why wouldn’t tesla push that timing estimate back? This single data point is keeping me cool and collected in this mania of m3 production issues.

Well there is this saying in project management "Only slip a schedule once". Until Tesla is through production hell they will not know what the new dates are.

 

[EinSV]

A 70 minute review. Is there a Cliff's Notes version?

 

[GoTslaGo]

A 70 minute review. Is there a Cliff's Notes version?

Yes:

It’s awesome!

 

[SteveG3]

A 70 minute review. Is there a Cliff's Notes version?

Tesla Model 3: first hour long in-depth look at early production unit

 

[neroden]

Normal investors who don't have the time and experience to research companies, should stay with index.

You can say that again. I've come to realize that one of the major reasons most people, including most professionals, can't beat the indexes is that they don't spend massive numbers of hours doing research. There are many ways to do research, but the bottom line is, you have to have more information than the "average trader", and the way that happens is by researching a lot.

If you know you have the skill and energy to beat the index, you should put about 20% into each holdings. You can allow it to grow into a larger percentage. This small diversification is very important for your account's safety, performance and your sleep quality. If you are not sure about this part, study the views from Peter Lynch, Warren Buffett, and Philip Fisher.

Yeah. I'm overconcentrated right now, but not quite to the point of sleep disruption; I'm on the edge of that so I know I should stop.

Again for normal investors: Don't use borrowed money. Don't use margin.

I'm particularly allergic to borrowing, so right now I'm getting sleep disruption from the mere potential of borrowing at 5% rates for two months, even though I know it's very definitively the right thing to do (for tax rate reasons I want to do a sale next year rather than this year). I think I can stand it but I'm going to clean it up immediately in January...

Investors need to know their own risk tolerances; there are many types of risk. You can be tolerant of one form of risk and not of another form.

Don't do anything which keeps you up at night. Don't do anything you don't understand backwards and forwards.

 

[neroden]

Why would anyone want to become a billionaire?

Well, if you have extremely expensive desires, it would make sense.

Like building a high-speed rail network across the US (and under the oceans), in my case; once I priced it out, and it costs many billions upfront even if you do make it most efficiently and most profitably.

Or colonizing Mars, in the case of Musk.

Once you have $100M, you should be generating at least $3-5M annual income, even with very conservative investments. Seems like becoming a billionaire should just happen as a side effect of changing the world in a massive way.

Perhaps one of our larger problem with world society is that a number of people want to become billionaires just to "have a high score" and have no rational or sane idea what they would do with the money, and some of them have been successful at doing so. They're very unhelpful people socially speaking: they're the ones who keep wanting to lower their own taxes.

I prefer billionaires for whom money is a tool to an end, and specifically a *good* end, such as preserving the world's environment. (So, billionaires who use money as a tool for establishing religious theocracy around the world are not cool: example, several previous Saudi and UAE royals)

 

[neroden]

Well there is this saying in project management "Only slip a schedule once". Until Tesla is through production hell they will not know what the new dates are.

Yeah, but if you find yourself offering customers estimated delivery dates in the *past* you don't really have a choice: you have to slip the schedule RIGHT THEN. If you're smart you slip the schedule enough that time that you don't have to do it again, but you don't know...

 

[neroden]

Wow. Just watched in depth video (1hr 10 min) review of model3. Most in depth one I have seen. I reserved my first model S 6 months before first one was delivered. It was one of the first 5000 delivered. When I compare that to the model3, there is no doubt in my mind the superiority of the model3 to that model S. Longer range, autopilot, adaptive cruise, better fit, materials finish at half the price. Only down side is slightly smaller size. If I were presented with that model S or the model3 (even if the same price I paid originally), I would have taken the model3. The video is on evannex email. I have no residual concern that model3 will not be success.

Certainly demand will be off the hook, giving Tesla some time to get through production hell. (The worst fear would be that they would not solve the production bottlenecks in a reasonable timeframe, but I consider this highly unlikely. They can always throw money at the problems as long as the reservation backlog remains huge.)

This will affect share price in very positive way.

Well... *eventually*. The stock market does crazy stuff in the short term.

 

[EinSV]

Tesla Model 3: first hour long in-depth look at early production unit

Thanks for the link to the Electrek article -- that index is very helpful.

Also, I should retract or at least modify my earlier snarky comment. 70 minutes is a bit much for me since I already have answers to the two Model 3 questions I personally care about: (1) demand is going to be off the hook; and (2) I want one.

If anyone has questions about either of those issues, the video could be very useful, especially with the handy index that allows you to skip to the parts you care about.

 

[RobStark]

Why would anyone want to become a billionaire? Once you have $100M, you should be generating at least $3-5M annual income, even with very conservative investments. Seems like becoming a billionaire should just happen as a side effect of changing the world in a massive way.

This guy used his Lakers money to buy 155 Five Guys franchises in 2009.

In the next five years he should surpass $1,000,000,000 net worth.


* He also used some of that Lakers money to buy pre IPO Google stock.

 

[TradingInvest]

I have learned a lot from you and continue to learn from your huge investing experience and deep insights. I look forward to our next hour long conversation in the near future and over the next several years. I’m looking forward to having a Charlie Munger and Warren Buffet like investment team approach with you. Thank you very much for your kind words

I will be honored to work with you in a team approach. We both have made enough mistakes to know the market is difficult to predict and is almost always smarter than us. If we speculate using some trading profits, we could probably survive, maybe even make a decent return.