I am always amused by the above posts - when the stock does actually fall like that, people often either don't buy in or buy in too early. There is also a pervasive sky-is-falling sentiment when that happens, and people get on here and stir that pot (I can remember two in particular, who have been absent over the last few months). No thank you. One would have to be able to predict that $200 was the bottom. Who is to say that this is not the new bottom? Granted, we are a little overbought here, and a little consolidation would not hurt, but a drop to $200??? Particularly after putting in a double top, I think that would do more damage in the intermediate term than good. Not arguing that everyone should buy in 100% now, but careful what you wish for.
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Long-term TSLA Investment Strategy
- Thread starter RobotGrease
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I went all in on margin when TSLA was falling and was around 230-240 ... much too early. I think I was its 20 day at the time. I cleared out my margin recently and would love to pick up some more calls if TSLA was to fall down to 200. I would not day trade so to speak ... just hold on to a block of options until I had made a Model 3 or two off of them
edit: I have about 99 percent of all of my wealth in TSLA. Also worth nothing that I Have a block of shares I picked up when TSLA was around 70 or 80 that I wont sell until its around 2000 per share
I see. Your desire to see 200 makes a lot more sense, then :smile:
Like you, I have around 100% of my wealth in TSLA. I entered into a margin position when TSLA was in the 130s after falling from 190s, though (not gloating here :wink: ). I hope you get more chances to increase your long position.
Very nice ... are you still holding onto that margin or have you sold to clear it at some point on the way up?
Still holding it all.
My stress tolerance is quite different from what it was a year ago.
I don't really ever plan on selling the margin. Rather, I'm slowly paying it off.
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Causalien
Prime 8 ball Oracle
Whoa, I am the most risky investor I know and even i wouldn't put 99% ofmy wealth into just one thing. If you are going to donthat, you might as well go to the casino.
erha
Member
I think this is very dependent on your situation in life. I too have 100 % (even more if you count my student loans) in TSLA. However, I'm 21 years old and don't have much money at all compared to others on this forum. I guess a lot of people would say what I do is insane, but I don't think so. I could pull out my money and have a pretty decent first payment on a flat in Norway, but the housing market here never collapsed like in the US. I think the risk is smaller in TSLA than in the housing market, and the upside much bigger. Especially because you are gearing when getting a loan. My investment in Tesla is also kind of an insurance for the engineering job market here.
On the other side, if I had a family, a house and a pension to think about I wouldn't put 100 % of my wealth in one stock. That would be too large of a risk in life
I thought people were talking millions when they said all in tesla!
i think it's fine for a young person to be heavy into a great company.
Bad assumption on my part
InTheShadows
Active Member
Gosh, there is no way I could sleep with 99% of my wealth in stocks. If one were 20 and single I could possibly see doing that for maybe 2 years.
I have tried that and I always feel like the casino is rigged. TSLA feels rigged in the other direction... they always lowball their actual guidance. If you watch close though they reveal their cards ahead of time ... such as the slide that JB showed during his stanford presentation. The ramp up to 700,000 cars they show there is pretty exciting !
That is a common sentiment. But I think the real reason everyone suggests diversification is that to suggest anything else is to beg the question, "which stock".
As for being all-in, you stop being so worried when your strategy is yielding 2x or so. (Currently at about 11x return in TSLA). Even if a big drop occurs I'm still WAY better than folks who diversified.
This may be the strongest indicator yet that I should sell.
Yes, going 99% in on a single stock can make you rich. It can also make you poor.
I am enjoying the gains in my TSLA stock. However, I won't go broke if Elon and JB die in a plane accident tomorrow.
Neither will I get as rich as someone 99% in if Tesla continues to do as well as I expect them to. I'm ok with that.
To each his/her own. The same sentiment has been relayed at $30/share, $50, $90, $120, $150, etc. The real question is about the future of Tesla. I would argue the stock is less risky now than it was back two years ago. Elon & team have proven that they can execute the vision.
Of course, risk and potential reward go hand-in-hand, so we may not be seeing the dramatic multipliers in the future.
Chickenlittle
Banned
Everyone has different styles. I find diversification to be a drag on return, expert diversification would guarantee average return. It would mean investing in firms sure to be losers in the future. I am not arguing that others shouldn't diversify just not right for me. Would never try to convince anyone what is the right strategy and I don't think others should either
anticitizen13.7
Not posting at TMC after 9/17/2018
I recommend that people keep a core of diversified index mutual funds in retirement accounts, and keep a different bucket of money for use in individual shares.
Betting the farm on one company is definitely very dangerous, no matter how good the prospects for that company.
In classic investment theory, each investment opportunity can be plotted by its expected return and risk. Every portfolio can also be plotted, recognizing that some investment's risks are negatively correlated with other's. One can calculate an "Efficient Portfolio Frontier" of those portfolios that have the highest return for each level of risk.
It is possible but highly unusual for a single stock to be on the Efficient Portfolio Frontier, and even more unusual for its level of risk to precisely line up with your preferred risk/return tradeoff. Hence, for nearly all investors nearly all the time, modern portfolio theory says you should hold a portfolio of investments.
This theory is premised, of course, on efficient pricing. I've always been skeptical of this premise, and my three years as a Tesla investor have completely convinced me that the market is often very inefficient in pricing.
It is possible but highly unusual for a single stock to be on the Efficient Portfolio Frontier, and even more unusual for its level of risk to precisely line up with your preferred risk/return tradeoff. Hence, for nearly all investors nearly all the time, modern portfolio theory says you should hold a portfolio of investments.
This theory is premised, of course, on efficient pricing. I've always been skeptical of this premise, and my three years as a Tesla investor have completely convinced me that the market is often very inefficient in pricing.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Classic investment theory also tells us that anyone with a portfolio (consisting of one or many stocks) who over time is able to outperform the market is either very lucky or trading on inside information. I.e. classic theory assumes that all investors have access to the same, public information. Well, it's all about understanding the information correctly and acting on it before the "average investor does". With Tesla I am extremely sure of the fact that I am way better than the average investor when it comes to analyzing the publically available information. I am also way better than the average investor at imagining what the future holds for TSLA. Therefore it makes perfect sense for me to be very overweight in TSLA. Doing so in fact decreases my risk, while at the same time (as long as Tesla continues to grow) having way above-average returns.
One last point is that we're all Tesla fans here but if something happened that was catastrophic to Tesla or there was some sudden technological advancement that changed their prospects over night I (we) would be able to recognize and understand the severity of that way before the general market. And in that case I could make a lot of money trading TSLA down again (writing calls and buying puts).
Lastly there's also the fear of great macroeconomic downturns but being "diversified" doesn't really protect a lot from that so IMO that argument for having a "balanced portfolio" is moot. If that's your main worry you should sit the whole stock market out and wait for the crash with your cash ready.
One last point is that we're all Tesla fans here but if something happened that was catastrophic to Tesla or there was some sudden technological advancement that changed their prospects over night I (we) would be able to recognize and understand the severity of that way before the general market. And in that case I could make a lot of money trading TSLA down again (writing calls and buying puts).
Lastly there's also the fear of great macroeconomic downturns but being "diversified" doesn't really protect a lot from that so IMO that argument for having a "balanced portfolio" is moot. If that's your main worry you should sit the whole stock market out and wait for the crash with your cash ready.
"The strategy we've adopted precludes our following standard diversification dogma. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it." - Warren Buffett
More on Buffett's view of diversification:
(the first part of the video cuts off, a longer segment is here where he says he'd probably put 1/2 into one company, Warren Buffett - Diversify Your Investments - AOL On)
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Right. On one hand we are supposed to be diversified. On the other hand we are supposed to invest in companies we understand well. Since I don't have time to understand and closely follow more than one or two stocks, the decision reduces to concentrating in 1-2 companies or punting and getting index funds. I am having more fun actively trading one stock
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