S&P spike - when to sell and when to re-buy?

[Buckminster]

Rough thinking: I want to sell at least 50% of my portfolio at less than 30% of the peak. I don't know what the peak will be... Also, I may not be able to sell during the peak - working or AH. Equally, I don't want to hold on to 100%, waiting for $10k that never happens.

Next problem is when to re-buy. $3k? What happens if it doesn't drop to $3k?

Seems I might need to start using take profit limit orders for the first time. Do these generally work after hours? Anyone using them on LEAPS?

#firstworldproblems

 

[Buckminster]

Already proven to be not bullish enough with my predictions recently:

If I had to guess at stock price movements:

Today - $1208
Pre ER (20th July) - $1300
Post ER (30th July) - $1400
Pre S&P announcement (14th August) - $1500
Post S&P announcement (~16 August) - $1600
6 days later (22 August) - Spike to $10k (could last seconds or days) - market cap>AMZN@$1.4Tn
7 days later (23 August) - $5000
15 days later (31 August) - $2500 (I don't expect funds to meet the 7 day requirement)
Pre battery day (14th Sep) - $2000
Post battery day (16th Sep) - $2200
Post P&D (3rd Oct) - $2500
Post ER (1st Nov) - $2700 ($500Bn market cap Vs Facebook at $665)

How are Bailie Gifford for example structured? Do they have limit orders in place where the traders are authorised to sell above? Or would they hold an emergency board meeting to authorise selling?

Who is ready for the rollercoaster of your lives?

Let's hope my $10k peak is also.

 

[Right_Said_Fred]

What if many of the approx. 25-30 million shares needed by the index funds have already been bought up by frontrunners (explained here by Rob Maurer). What if the rest will have been bought up before we reach $2000 and the actual inclusion becomes a sell the news event and we drop back to $1500 or lower? That’s a scenario you also have to consider. Will you sell anything then?

 

[Buckminster]

What if many of the approx. 25-30 million shares needed by the index funds have already been bought up by frontrunners (explained here by Rob Maurer). What if the rest will have been bought up before we reach $2000 and the actual inclusion becomes a sell the news event and we drop back to $1500 or lower? That’s a scenario you also have to consider. Will you sell anything then?

Nope - I won't even deleverage into stock below ~$3k. My valuation is around $5k but I think the market will value at around $2-3k (post battery day and inclusion). I don't think we have seen much more than 10% of S&P inclusion yet. Each ~10% doubles in power and we have another 4 or so to go. Rising share price reduces the power though - everyone has their price - or do they?

 

[eloder]

I guess it all depends on your risk tolerance and if you have other things to spend it on. Vague answer but that's probably the only accurate one anyone can give you. Trying to time peaks is a sure-fire way to lose money in the long run, and we're still a fraction the market cap of other big tech names and I'm still confident Tesla will reach/eclipse in time. I had a pretty good track record of selling peaks in the past 5 years with my play shares, but the one time I horribly mis-timed it also happened to dwarf all the profit I made from every lucky trade over five years.

I've personally sold a good amount to secure profits for things (house, Model 3, etc.) thus reducing my risk and exposure. Those sales, and the ones I've sold in panic (corona dip), have all lost me money compared to simply holding.

There's a number of strategies you could impose such as trailing stop losses on a portion of shares, cost averaging out, using some option play to secure profits, etc. Personally if this starts reaching the 2-2.5k numbers I'll probably consider selling off some of my options (currently just holding two LEAPs, a few smaller spreads, and a small number of shares). Will it be the best for money in the long term? Most likely not. The lower exposure would just help me sleep easier at night to diversify elsewhere.

 

[paydirt76]

Rough thinking: I want to sell at least 50% of my portfolio at less than 30% of the peak. I don't know what the peak will be... Also, I may not be able to sell during the peak - working or AH. Equally, I don't want to hold on to 100%, waiting for $10k that never happens.

I don't think this is an attainable goal -- to sell within x% of the peak. When S&P announces a date, I don't think it would be terrible to put in a GTC limit of 50% higher than the price (hours) before the S&P announcement. If you get a fill, you've made a lot of money, if not then you didn't sell below your value for the stock.

 

[Buckminster]

I don't think this is an attainable goal -- to sell within x% of the peak. When S&P announces a date, I don't think it would be terrible to put in a GTC limit of 50% higher than the price (hours) before the S&P announcement. If you get a fill, you've made a lot of money, if not then you didn't sell below your value for the stock.

Is this because you think the spike will last seconds and/or occur within a few hours AH? Otherwise, why can't I progressively sell as we near what I think is the spike?

 

[paydirt76]

Is this because you think the spike will last seconds and/or occur within a few hours AH? Otherwise, why can't I progressively sell as we near what I think is the spike?

No one has a clue, how big/long/etc the spike would be.
You can do whatever you want of course.
If you want coverage, then you can do limit day orders and then limit extended hours orders. You can get a mobile app on your phone and put in the orders that way.

 

[WarpedOne]

Fool's errands ... buy n hold, sell when you need the cash.

 

[Buckminster]

Some relevant plans from the main thread:

Everyone’s decision whether and when to sell any of their TSLA position is uniquely based on personal circumstances.

But it would be helpful to keep in mind a reasonable fair value of TSLA, because it is quite possible for the market to assign an unreasonably high valuation, just as it assigned an unreasonably low valuation not that long ago.

Even for a future trillion plus company, Tesla is so far from justifying that on current earnings, that a steep discount needs to be applied. A quarter of a trillion now seems very rich. Half a trillion seems to me obviously too rich. So I’d say anything over $2000 is unreasonably high.

I’m not predicting how high the SP is going to go now, but I am predicting that if it goes over $2000, it will correct below $2000 as soon as the fever breaks.

Yes I agree although it isn't fashionable to say it on here.

I am a big Tesla bull. But time is also a function of money. I will sell 20% of my stock at $2,000. That will net me about $1m which is life changing for me. It is goes up to $3,000, I will sell another 20%.

That means I can retire if I want (I am 40 years old with a young family) and live in Spain which is a cheap place to live

Whatever happens, I will keep 50% of my Tesla share long term. I will "never" sell those. And if the shareprice drops after I sell any of my shares then I will buy back in again

This will be Tesla. Triple in 3 minutes. Watch.

$3200 to $9500 in less than 3 minutes for some scam coin. Tesla has Elon, a national treasure who “likes the rockets, and happens to be very good with the rockets”. So you’re going to tell me Tesla can’t 2x in a day? I don’t see why it can’t go 4x or even 40x today. Elon lands rockets backwards on a pancake but TSLA can’t go $100k+, even for a split second? It’s just some freaking pixels on an LCD. Wake up people

At the start of the year I did an evaluation based on product roadmap, production plans, competition, margins, expected free cash flow and various other factors that a fair market price for TSLA was in the $700 - $900 range. With reasonable execution and absent vast improvements by the competition and with no contribution from Tesla network their revenues would grow by 70% and free cash flow by a bit less than 100%. This would continue for several years. So that by the end of the year a fair market price would be $1350 - $1900.

Since then execution has been excellent (not just reasonable), the roadmap still looks good, production plans seem ahead of schedule, competition has been a big disappointment and margins on the Y look very good. So I would now put the end of year TSLA price at $1600 - $2200 and for the end of 2021 as $3200 - $4400. Similarly for 2022, after that I expect Tesla and TSLA to grow more slowly, but still much faster than their peers (Apple, Microsoft, Amazon).

If this evaluation is correct then the current share price is not high and even $2000 is only ahead by a few months, and being at such a price could continue without a significant drop until after Q4 earnings. A share price of $3000 in the next few months would be ahead by a year or so and one of $4000 by 18 months in both cases I would expect a correction back to something around $2000 by the end of the year.

For the share price to reach $4000 or above might happen due to a short squeeze and S&P 500 inclusion, but to stay there would be irrational. However "The market can stay irrational longer than you can stay solvent" applies in this case.

My current thoughts on strategy are to sell 1% of my holdings at $3500 and then another 1% for each $200 raise above that. The on the way down buy back shares. As I plan to buy a house in the next year it doesn't matter too much if I am left holding some cash, my UK capital gains tax allowance would allow selling about $30000 worth of shares tax free, which would be enough for a deposit on the house. That however is second best as I really plan to HODL with most of my shares.

This is a spring that's been artificially held down for the last 5 years.

HOWEVER - there will be dips in the coming days/weeks that will make this forum take a wild turn towards the negative.

I highly encourage everyone to develop a strategy (if they haven't already) and stick to it.

Mine is to sell ~30% of my holdings if it hits $4k by the end of July. If it doesn't do that, I will be selling 10% of my profits at the end of the month to lock in some gains and selling 10% of what's remaining at each step in the following increments:

$4k
$6k
$10k
$15k
$20k

I don't have the nerve, Best wishes! (I'd say luck but not really).
My shares are doing just fine on their own. I would pay for the certificates if we could have them.
Doing nothing is how I help raise the stock price - I have no exit strategy or mark.

My TSLA Investment Strategy

Contains my short term (1-2 years) Tesla model.

I wouldn't really buy any options right now. Maybe some short term options speculating on S&P 500 inclusion, but I expect those are already super expensive too. The only reason I'm not converting my current options to stock yet is because I think there's more near term upside due to S&P 500 inclusion, and due to the street underestimating Q3 and Q4 deliveries and financials.

If we hit $2,500 in the next few weeks or months, I'll probably go 90% or 100% stock. Or perhaps even ~80% stock and ~20% cash covered PUTs.

 

[Buckminster]

I have recently realised that I don't really want to sell my LEAPS so that I can delay taxes. This may mean that I don't sell until I am confident that it is a spike and that it is near the top. I could therefore miss the peak and keep the LEAPS through to 2021. This will become more interesting for me now - perhaps too interesting!

 

[LN1_Casey]

I put in a sell order each time for when I felt would be a good price. When the stocks were at $600 post Corona, I put in a small 5 share sell for $950. When it past that, I put in one for $1420 for 2 shares. Then, with the possible quick spike from S&P500 and short squeeze, I put one in for 9 shares at $7k--which is enough to get me my Tesla, and then I'll happily sit on the remaining ones of my hoard.

My plan may miss the peak of a spike, but it's also much more chill than trying to time the spike. You could also instead of one, en-mass sell you can put smaller, step sells in. 1% at 5k, 1% at 6k, etc, so you can catch the shooting star no matter how much it doesn't rise. Just be happy with whatever price you put in for them.

 

[Buckminster]

Haha, rather than when to sell, my thoughts have been more on whether to leverage up my LEAPS...

 

[adiggs]

Way too early to tell, and I hope this post ages horribly. But is it possible the market will react to the S&P inclusion with a similar indifference as battery day and Q3 results?

I figure anything is possible.

BUT it seems like it takes a few weeks for good news to get priced in with TSLA, and more importantly to me - it isn't the S&P 500 inclusion itself that I see pushing the share price; it's the front running that roughly everybody is going to be engaged in prior to the index funds buying.

This has sunk funds in other industries, and I kind of expect this particular inclusion to change how the S&P 500 adds companies (or at least substantially large ones) in the future. The index funds are going to be buying a lot of shares at a reasonably well known point in time. And it's not the volume of shares - it's the fraction of the company that is going to be purchased. Even if the impact is the 6% I remember others have mentioned, that is still a 6% moved at a reasonable well known point in time (I expect the move to be significantly more).


I don't know how far the front running, and then the actual inclusion buying, can push the shares up.


I do expect a post inclusion crash in the share price, as all of that front running money then bails out for the next hot thing. The front runners won't be looking to own TSLA long term - they'll be looking for a quick buck. It wouldn't surprise me if we're right back here by mid/late January.

 

[paydirt76]

Index funds may wait until mid December to buy, so we can see some indifference and weakness in the interim. I think the big funds will want to break up inclusion dates to Dec 14th & Dec 21st as the S&P is offering.

I don't think it will be a continual ramp up until Dec 11th (and then Dec 18th). It may start post Thanksgiving though.

I have some room to add to my position and am not doing so today.

 

[paydirt76]

Donated $250k of calls to my kids' school today so they can get "needle point plasma" air treatment to kill viruses and knock pollution out of recycled air. They will also use some of the funds to put in new HVAC systems since the current ones are nearly 20 years old.

 

[smorgasbord]

I think the front-running had mostly happened - even with the Sept snub almost everyone knew Tesla would be added in Dec or Mar at the latest. So now the question is whether there have been so many front-runners that when the Index funds do buy, there are ready and willing sellers. And, with two tranches, buying is spread out over more time.

 

[MP3Mike]

I think the front-running had mostly happened - even with the Sept snub almost everyone knew Tesla would be added in Dec or Mar at the latest. So now the question is whether there have been so many front-runners that when the Index funds do buy, there are ready and willing sellers. And, with two tranches, buying is spread out over more time.

If the front-runners have already accumulated shares the question then becomes how much are they willing to sell them for? $450? $550? $650?

Or maybe with as much time as has passed they learned more and changed their minds and want to HODL a while for the larger gains coming.

 

[Buckminster]

$8bn of buying in TSLA

157 of 189 large cap managers that track S&P500 that GS follows do NOT hold TSLA.

"Tesla’s scheduled December 21 inclusion in the S&P 500 could result in $8 billion of demand from active US large-cap mutual funds. Based on current market pricing, Tesla would account for around 1.5% of the S&P 500 index. Since many large-cap core funds are benchmarked to the S&P 500, managers will have to consider including the stock in their portfolios. Of the 189 large-cap core funds in our universe, 157 funds that manage around $500 billion in AUM did not hold TSLA on September 30. Assuming these 157 funds choose to hold TSLA at benchmark weight following its inclusion in the S&P 500, we estimate $8 billion of potential net buying of the stock (2% of TSLA market cap"

The brave warrior managers that decide not to buy will have nightmares about MS "bull case"

$8bn of buying in TSLA | The Market Ear

 

[Buckminster]

Timeline assuming 100% purchasing on the 21st. This is likely wrong - please advise.

1. Today - feedback to S&P must complete
2. Throughout - speculative purchasing from active funds that benchmark against S&P500 (plus other funds etc.)
3. 26-27 Nov - Thanksgiving
4. 30 Nov - S&P advise how inclusion will go down
5. Likely mini-squeeze 1st December on news above?
6. 16th? December - Indexes can start purchasing
7. 18th? December - Closing price determine % of Tesla to be purchased
8. 21st December - Inclusion
9. 24th? December - Indexes must have completed purchasing
10. 4th? Jan - P&D