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My broker likes TSLA

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daniel

Well-Known Member
May 7, 2009
5,732
5,508
Kihei, HI
I was talking to my broker about some investments she was recommending. Nice, safe, dividend-paying funds, like all my investments. I'm not a risk-taker. But I have some TSLA that I bought when I first got my Roadster, when it was around $35 or $40 pre-split, and the subject came up. Sometimes I wonder if the price of TSLA is massively overpriced. The broker doesn't think it is overpriced. She thinks Tesla is solid, with a lot of growth ongoing and into the future.

This was nice to hear, because here on TMC I know I'm talking to fans of Tesla (like me) who believe in what the company is doing, but I also know that we may be seeing Tesla through rose-colored glasses. It was nice to hear that a professional broker, with the resources of one of the biggest, most evil and greedy national banks behind her, recommends holding onto my shares, and thinks that even with the recent fall in price, it is going to go back up.
 
I left my original broker because we’d argue about TSLA every time we talked - he thought Tesla was about to be “displaced by a disrupter in the automotive field”. My stance was “right now Tesla is the disrupter and I will keep an eye out for a different disrupter but that doesn’t seem likely soon”. He floated the idea of hydrogen cars as the thing that would take over EVs and didn’t see how the expense of putting a hydrogen tank at your house and not having a strong network of hydrogen stations to refuel meant adoption would be slow.
 
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I asked my broker about TSLA in 2014 and he said "I can not recommend TSLA at this time." I pushed a little and he repeated "I can not recommend TSLA at this time." I think he was getting that from the firm. I should have just bought it on my own. Fortunately I did a couple years later and have still done quite well. It's good to hear there are investors recommending it now.
 
In 2014 Tesla was a very big risk. A good broker would not have recommended it. Of course, hydrogen was never a good idea and was always just a ploy to keep using fossil fuel. But in the early years Tesla could easily have gone bankrupt. I bought my shares never expecting them to do much, but I wanted to be a part of the company that made such a great car.

The difference is that now Tesla is well-established and strong: It's a successful company with good-quality products. Now it's a company a cautious broker can recommend. (I don't know if they're recommending buying it. She just told me that this would be a bad time to sell it. That was enough for me.)
 
I find most brokers and "experts" I have spoken to and read over the years know at most about 5% about Tesla/TSLA compared to the collective wisdom on TMC. They act like they know a lot, but when you dig beneath the surface you quickly realize how little they know and understand.

Overall, I expect Tesla, the company, to succeed in the long run. Strong company with great products. But TSLA the stock is subject to all the vagaries of the market. I believe the company will continue to succeed, but I have ZERO idea of whether the stock price accurately reflects the realistic growth of the company. Honestly, I think that we fans of Tesla are not in a good position to judge that. Our love of the cars can cloud our judgement about what the market will do. It's currently at 65% of its high. I cannot judge whether it was overpriced at $1,200 or under-priced at $782. Or still overpriced at $782, or underpriced even at $1,200. I've seen posts here from people convinced it will go to $2,000.

I was happy to get my broker's thoughts because the roller coaster is really hard for me to ride. Her opinion is not clouded by an emotional connection to the brand. She and the analysts at her brokerage look at the numbers, which I cannot do, and their opinions are informed by an understanding of how the market works.

I feel much better about holding onto my shares knowing that someone who sees the market unemotionally believes it will bounce back up.
 
Overall, I expect Tesla, the company, to succeed in the long run. Strong company with great products. But TSLA the stock is subject to all the vagaries of the market. I believe the company will continue to succeed, but I have ZERO idea of whether the stock price accurately reflects the realistic growth of the company. Honestly, I think that we fans of Tesla are not in a good position to judge that. Our love of the cars can cloud our judgement about what the market will do. It's currently at 65% of its high. I cannot judge whether it was overpriced at $1,200 or under-priced at $782. Or still overpriced at $782, or underpriced even at $1,200. I've seen posts here from people convinced it will go to $2,000.

I was happy to get my broker's thoughts because the roller coaster is really hard for me to ride. Her opinion is not clouded by an emotional connection to the brand. She and the analysts at her brokerage look at the numbers, which I cannot do, and their opinions are informed by an understanding of how the market works.

I feel much better about holding onto my shares knowing that someone who sees the market unemotionally believes it will bounce back up.
For what it's worth, I've been a long term investor in Tesla since 2014 but I haven't driven a Tesla, ever.

Of course that will change. My next vehicle (planned for early 2024) is going to be a Tesla, paid for with investment gains.

My point is that I have approached the stock from day 1 on other metrics than my "love for the car". I hear the cars are great, and I imagine this to be the case, but this is not a given for me.

What I do know, and why I feel very secure in my investment thesis is (in a nutshell):
- the company is growing at an insane rate;
- the growth rate is not slowing down any time soon (which would be the case with most companies that have grown so fast since its inception);
- demand for the products is solid and far outweighs supply (not speaking from personal love of the cars. Just look at the backlog and days of inventory);
- TSLA is hugely efficient with their money (Capex, R&D, etc);
- TSLA is printing money with industry leading margins that are still improving;
- therefore, the profits Tesla makes are outsized compared to competitors;
- TSLA is therefore a safe investment since they can either keep margins high as long as demand is there or - if demand were to be matched by supply - prices/margins can be lowered to stay competitive if this should be necessary (but that's still some time away IMO);
- Last but not least, Tesla is not only a car manufacturing company but consists of many businesses that each have a huge adressable market: Tesla Energy, Tesla AI/FSD (most far fetched one, but already generating revenue), Tesla Insurance, etc.

And fortunately Tesla is reaching a point where they could execute the vision laid out by Elon pretty well, even without Elon. Short term the stock would take a hit if Elon weren't involved with Tesla anymore (for any reason), but longer term this shouldn't matter since the fundamentals are so strong.


So yeah, I'm holding on to my shares and in about two years I'm converting some of them to my very first Tesla vehicle to see what all the fuss is about ;).
 
For what it's worth, I've been a long term investor in Tesla since 2014 but I haven't driven a Tesla, ever.

Of course that will change. My next vehicle (planned for early 2024) is going to be a Tesla, paid for with investment gains.

My point is that I have approached the stock from day 1 on other metrics than my "love for the car". I hear the cars are great, and I imagine this to be the case, but this is not a given for me.

What I do know, and why I feel very secure in my investment thesis is (in a nutshell):
- the company is growing at an insane rate;
- the growth rate is not slowing down any time soon (which would be the case with most companies that have grown so fast since its inception);
- demand for the products is solid and far outweighs supply (not speaking from personal love of the cars. Just look at the backlog and days of inventory);
- TSLA is hugely efficient with their money (Capex, R&D, etc);
- TSLA is printing money with industry leading margins that are still improving;
- therefore, the profits Tesla makes are outsized compared to competitors;
- TSLA is therefore a safe investment since they can either keep margins high as long as demand is there or - if demand were to be matched by supply - prices/margins can be lowered to stay competitive if this should be necessary (but that's still some time away IMO);
- Last but not least, Tesla is not only a car manufacturing company but consists of many businesses that each have a huge adressable market: Tesla Energy, Tesla AI/FSD (most far fetched one, but already generating revenue), Tesla Insurance, etc.

And fortunately Tesla is reaching a point where they could execute the vision laid out by Elon pretty well, even without Elon. Short term the stock would take a hit if Elon weren't involved with Tesla anymore (for any reason), but longer term this shouldn't matter since the fundamentals are so strong.


So yeah, I'm holding on to my shares and in about two years I'm converting some of them to my very first Tesla vehicle to see what all the fuss is about ;).

I suspect all those points you listed are why my broker likes TSLA.

FWIW, if I'd put the cost of my Roadster (2010 model year, purchased from inventory in 2011) into TSLA, I'd be so stinking filthy rich now it's nuts. But I would not have had the Roadster as my daily driver for six years. And I'm not a risk-taker, and TSLA was a total gamble back then.

In the words of Hermann the German from Pushkin's The Queen of Spades, "I refuse to risk the necessary in pursuit of the superfluous." However much I'd like to be disgustingly rich, I'm not willing to risk the comfortable life I have.

And the problem with investment hindsight is, if I had put 100K into TSLA at $35, would I have kept it to cash out at $1,000 post-split? Or would I have sold at $100 pre-split, thinking it couldn't possibly go higher? You have to sell at some point or you never get any benefit.
 
There's really no need to give more respect to 80% of the "financial professionals" as you would to a random stranger walking next to you in the grocery store. The most common financial products for most people are investment, real estate, and insurance, and I have worked or experience in all three. In order to get a Series 6/7, real estate, or insurance license, you just have to pass a test that typically only require a 70%-80% passing grade. It's literally a "can you read?" type of test. If you are a business major in college you can literally pass those tests after 1 week of studying, which is exactly what I did, and I am not one of those gifted people who photographic memories. Remember, it's 70% pass-fail with multiple choice questions. Your plumber or electrician will have more knowledge about their professions than most financial advisor, realtor, and insurance agents do theirs.

They are just salespeople who sell financial services. A financial advisor/investment broker doesn't know research companies. If they can say the words "diversify" and "dollar cost average" with a smile on their face they can keep their jobs. Most realtors have no idea about macroeconomics, market liquidity, or interest rate - they most likely got into the business because they can't find other jobs. As for insurance agents... 80% of them have no idea what they are selling. They just type in your information and read you the price quote that pops up on their screen.

I think it's better if most financial advisor or investment brokers still don't recommend TSLA. When that happens it means Tesla has matured and the days of explosive, unexpected growth potential is gone. If people start treating TSLA like it's AAPL or GOOG and give the "well you can't go wrong buying them" type of reaction, that's when I will want to start selling my shares.
 
I would agree with you about independent financial advisors. Not so much with respect to the people working for Big Evil Banks & Brokerages. Both the research department and the customer-facing brokers have more resources and have met higher standards to get their jobs. And as noted, I don't speculate or ask my broker to recommend individual stock issues. TSLA for me was a fluke. I fell into it because I was unable to buy a Nissan Leaf, so I got the Roadster instead, and loved the car so much. My broker puts me in safe, income-producing mutual funds. The fact that she likes TSLA and believes it will go back up just makes me feel better as I watch it plummet and wish I'd sold at $1,200.
 
I have not talked to my broker lately. I wonder what she'd say now. Today's close 664. Sure wish I'd sold at 1,200, or even 1,000.

Just hold onto it until January 20, 2025 and you’ll fine.

Assuming I live that long. At least if I were to sell now (not intending to!) I'd pay a lot less capital gains tax than if I'd sold it when I should have.
 
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