General Discussion: 2018 Investor Roundtable

[Sudre]

I have to hand it to the brave shorts that did not cover. They know exactly how to make huge losses. If they would have covered at 245 a few days ago they could have reshorted even more at yesterday’s high. Instead they chose to hold out for bankruptcy. This morning sure has proven their point about how to lose money.

 

[elasalle]

Nice read on short volume: Why Short Volume is Important | Volumebot

 

[Menifeer]

I have to hand it to the brave shorts that did not cover. They know exactly how to make huge losses. If they would have covered at 245 a few days ago they could have reshorted even more at yesterday’s high. Instead they chose to hold out for bankruptcy. This morning sure has proven their point about how to lose money.

Moreso than the longs who didn't sell in the $380's??

 

[sundaymorning]

Moreso than the longs who didn't sell in the $380's??

The accumulation is just as important. At these levels, we’re seeing a lot of that.

 

[Waiting4M3]

Moreso than the longs who didn't sell in the $380's??

Yes, because the potential loss for longs are limited at 100%, and potential loss on a short position could be infinite. Also as the price drops, any additional drop in % is smaller (a 2% drop at $250 is much smaller $ amount than at $380), so the pain becomes incrementally smaller for longs as the price drops. But it's reverse for shorts, the higher the price goes, the more pain any pop will cause.

 

[mongo]

Moreso than the longs who didn't sell in the $380's??

Oy! We will be back in the the green when the stock rises. Shorts will never be green unless TSLA drops. (not that I bought that high... but close)

 

[Drax7]

I have to hand it to the brave shorts that did not cover. They know exactly how to make huge losses. If they would have covered at 245 a few days ago they could have reshorted even more at yesterday’s high. Instead they chose to hold out for bankruptcy. This morning sure has proven their point about how to lose money.

Will the shorts need a capital raise?

 

[sundaymorning]

Bought more shares at $274.5, what a great bargain. In the short term Tesla could see a large rush of buyers in China who wants to avoid paying the extra tariff. It’s just a smart move to buy the car now rather than waiting for the supposedly “later date” to kick in. Regardless, of what happens, all these tariff talk will only benefit Tesla in the near term.

 

[Menifeer]

Yes, because the potential loss for longs are limited at 100%, and potential loss on a short position could be infinite. Also as the price drops, any additional drop in % is smaller (a 2% drop at $250 is much smaller $ amount than at $380), so the pain becomes incrementally smaller for longs as the price drops. But it's reverse for shorts, the higher the price goes, the more pain any pop will cause.

I think the term you're searching for is "rationalization."

It's hard to accept the fact that the bears have been right for the last move in stock price. They may be emboldened by the drop and stay short, just the way longs thought the price was headed to the sky when it was in the 380s.

All I'm saying is that selling in the 380s and buying back in at current levels would have been a very good move. Long-term investors with unrealistic expectations missed that opportunity.

 

[mongo]

All I'm saying is that selling in the 380s and buying back in at current levels would have been a very good move. Long-term investors with unrealistic expectations missed that opportunity.

You first sentence would have been a profitable choice.

However, your second sentence does not compute. Long term investors are not short term traders. If a someone expects TSLA to go to $500 (or more, entering further into your potential definition of unreasonable expectation), then waiting out a downturn instead of selling before the stock has hit thier target price would be the very definition of a longer term investor. To a long tern investor, dips are merely opportunities to purchase more.
(and that's how I sleep at night )

 

[Waiting4M3]

I think the term you're searching for is "rationalization."

It's hard to accept the fact that the bears have been right for the last move in stock price. They may be emboldened by the drop and stay short, just the way longs thought the price was headed to the sky when it was in the 380s.

All I'm saying is that selling in the 380s and buying back in at current levels would have been a very good move. Long-term investors with unrealistic expectations missed that opportunity.

I thought the argument was about who has bigger balls. If you insist that longs have bigger balls buying and holding, no argument from me

My point is the short is inherently a more risky position than long. Longs can always hold through a dip, as long as they don't use margin, nothing can force them out of a position at the wrong time and miss the recovery back up. Shorting by definition use some kind of margin, so there is a chance that during a pop they will be forced out of their position at the top by margin calls and miss the recovery down.

 

[elasalle]

I think the term you're searching for is "rationalization."

It's hard to accept the fact that the bears have been right for the last move in stock price. They may be emboldened by the drop and stay short, just the way longs thought the price was headed to the sky when it was in the 380s.

All I'm saying is that selling in the 380s and buying back in at current levels would have been a very good move. Long-term investors with unrealistic expectations missed that opportunity.

Yes SP has favoured the BEARS, but the reasoning's behind it ..namely Tesla cash-burn going to bankwptcy is still wrong.

If longs are seeing potential to at least 500/600 range why would they sell their core holdings at 380. Trading is another thing.

What is realistic price range that would induce a short to close their positions?

 

[Waiting4M3]

Yes SP has favoured the BEARS, but the reasoning's behind it ..namely Tesla cash-burn going to bankwptcy is still wrong.

If longs are seeing potential to at least 500/600 range why would they sell their core holdings at 380. Trading is another thing.

What is realistic price range that would induce a short to close their positions?

I think @MattEnth mentioned $430

 

[elasalle]

I think @MattEnth mentioned $430

I meant Close on Profit, not Cover on Loss

 

[aubreymcfato]

FWIW, Norway in 2 days sold the same amount of Tesla they sold in the whole April 2017.

 

[Yggdrasill]

FWIW, Norway in 2 days sold the same amount of Tesla they sold in the whole April 2017.

True. Likely due to this:

Elon Musk on Twitter

 

[Waiting4M3]

I meant Close on Profit, not Cover on Loss

Good question, he's still here so I assume he didn't close his short and take profit.

The funny thing is I just remembered that $430 is around the exit point I have for some of my trading shares, so I guess I know who I'll be selling it to

Edit: it's easy to forget ones exit point some times, and bam, 5 years later, profit! just like that

 

[sundaymorning]

Is that $280? I can’t believe I’m saying this but I’m glad to see it again. Thanks for the buying opportunity, shorts. Your move now.

 

[TradingInvest]

Why China can have a 25% tariff on US cars, but US only have a 2.5% tariff on Chinese cars?
Why foreign car companies have to set up 50/50 joint venture in China and transfer knowledge?
Why Google is not allowed to do real business in China?
When US gives tax benefits to EV buyers, all EV brands are included. China gives huge incentives to EV buyers, but only applies to EVs produced locally.

If the trade is balanced, I might understand their actions. But all these have been happening for many years, while China has 300~400 billion dollars trade surplus a year against US. We already have 21 trillion dollars of debt, still increasing at a fast pace. If each US household gets $4000 new debt every year, how long can the family sustain?

These are genuine questions. Who decides what is a fair trade? Are they just bullying US because we are weak? or because we are dumb to realize the problem?

I remember a few years ago, Warren Buffett said the nation could be ruined if we continue to have huge trade deficit without action (something like that). His suggestion was to implement a credit system. Importers have to buy credits from exporters to import equivalent amount of products. So trade will automatically be balanced and it doesn't violate trade rules.

I thought Buffett's suggestion is a great idea. Why nobody talk about it?

 

[adiggs]

...

All I'm saying is that selling in the 380s and buying back in at current levels would have been a very good move. Long-term investors with unrealistic expectations missed that opportunity.

I think you're confusing long term investing, and trading. As a long term investor, it is absolutely the case that I missed out on the trading opportunity afforded by selling in the 380's and buying back in at the 250's. I also missed out on the tax ramifications of selling, the incremental work on next year's taxes of reporting the sales, paying the appropriate taxes. I also missed out on the daily / weekly / monthly worry / energy that goes into evaluating whether now is the time to trade or not.

And all of this is a backwards looking view that presumes that I knew at 380 that it was a time to sell because the next big move would be down (rather than up) AND that I knew at 250 that it was time to buy because the next big move would be up (rather than down).


As a long term investor in Tesla, my time scale is about 10 years today (it was 10+years when I started, and the intervening years have served to keep the range constant at 10+).

I have an intermediate check point that I currently expect to arrive sometime in 2019 and will be marked by M3 achieving strong production volumes, and will be marked by US consumers being able to order and receive an M3 without already being on the reservation list in say 3 months or less (so still a big backlog - just that we'll start seeing signs the backlog is kind of clearing). The current ramp noise, for me, is noise - M3 is ramping (fast or slow can be argued), and what I was looking for in the most recent quarterly production #'s, fast enough to probably avoid a cap raise to fund the ramp. The long term thesis is right on track.

I do follow the company closely, looking for evidence that my fundamental investment thesis has become invalidated. The M3 ramp hasn't changed anything for me and the long term thesis.

My time scale isn't necessarily that of other long term investors. I do figure that the bare minimum time scale for a long term investor is around 1-2 years (the furthest out LEAP is just barely far enough out to be minimally usable for a long term investor). But that's my view of time, and I don't trade in LEAPs (I've thought about it).

Along the way, I've ridden the stock price from the 20's to the high 100's, back down to the low 100's, up to the 200's, back down, up into the 300's, back down, and sideways for long stretches. If I'd been able to call all of those local highs and lows, and traded them, wow. All that's happened along the way is two additional situations where we had available cash, and a local thought that the company was unrealistically cheap, so it was time to buy more. We bought more in the 160's while the stock was in the middle of sliding from 180/90's to 130's (ouch!). We bought more in the 330's that subsequently went into the 310's, the 380's, and now the 250's. Never a bad night's sleep from excitement about highs or lows, because I don't have evidence of the long term investment thesis changing.

Trading on the 380 to 250 drop would have required knowledge I didn't have at any time along the way, energy invested in following daily movements REALLY closely, etc..

I don't know when Tesla will trade at 3k+ - only that I see a company with access to big enough markets, good enough technology, and the right culture (mostly), to take big share in those markets, at big margins (for those markets), that can expand by another 10 bagger from here. For a 10 bagger, I only need to be kind of right on the timing and scale - if it takes 10 years and grows 5x, I'm ok with that.


My read on the current quarterly hyperventilation is that it won't matter even in a year to the long term trend. It matters deeply to the traders. (Side bar - there's a reason I don't read the Market Action thread). Tesla is expanding the number of produced and delivered units by a lot this quarter. And will expand them further by a lot in Q2.


My really unrealistic, far out there expectation, is that Tesla might not be the first company to $1T market cap, but we WILL see it become the largest publicly traded company in the world by market cap. My guess is 5-10 years, but being "conservative", 2 decades. Oh, and it'll clear $1T. The markets are too big, the technology is too good, the company is too aggressive, and the incumbents are too passive. I'm happy to hang around for 3 years or 30 for a 20-30 bagger from here.