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Short term vs. Long term investing

haid

Member
Feb 14, 2013
97
110
Reston, VA
There seems to be a lot of chatter about options, call spreads and such. While such conversation generates interest, I seriously doubt it competes with "Buy and Hold".

I am all-in on Tesla and it is a ten bagger for me. But if you read the forums, you would get the impression that I am a chump for not timing the peaks and valleys.

I wonder if there are more "Teslanairs" that buy-and-hold than those that trade monthly (or more frequently).
 

aznt1217

Active Member
Aug 27, 2012
2,559
1,869
New York, NY
Did the options thing... Got burned and realized it deviated from my investing profile... So I just do buy and hold unless my conviction is really high on timing. Worked out well last time to recoup the q3 losses.

Excuse my stupidity, but what are the qualifications for a Teslanaire?
 

bhuwan

Active Member
Mar 30, 2013
1,321
63
Boston, MA
Did the options thing... Got burned and realized it deviated from my investing profile... So I just do buy and hold unless my conviction is really high on timing. Worked out well last time to recoup the q3 losses.

Excuse my stupidity, but what are the qualifications for a Teslanaire?
making $1M or more in 1 day from Tesla stock.
 

gg_got_a_tesla

Model S: VIN 65513, Model 3: VIN 1913
Jan 29, 2010
6,534
788
Redwood Shores, CA
making $1M or more in 1 day from Tesla stock.

$1m overall in the past 12-13 months is good enough, I'd think.

I do a bit of both: hold a core set of shares for the real long term - so they are only paper profits right now - while buying and selling other lots periodically (not always with perfect timing) to take profits. I'm playing with "house money" now for all of the latter activity.

I have no clue about all the puts/calls/options business and stick to plain old regular stock purchases/sales via a low cost brokerage (Sharebuilder).
 

Jonathan Hewitt

Active Member
Feb 19, 2013
1,485
4,737
Ohio
There seems to be a lot of chatter about options, call spreads and such. While such conversation generates interest, I seriously doubt it competes with "Buy and Hold".

I am all-in on Tesla and it is a ten bagger for me. But if you read the forums, you would get the impression that I am a chump for not timing the peaks and valleys.

I wonder if there are more "Teslanairs" that buy-and-hold than those that trade monthly (or more frequently).

I bought in stock at $34 with an amount of money designated lets say 2*X. I also bought some options with an additional amount of money equal to only X (half of the amount I started with for the stock) AFTER the Q1 ER and have been buying and selling since. I have not touched my orignal stock purchase. That original stock purchase is now worth ~14*X. My options money is now worth ~11*X even though last summer I took out 4*X amount of money from my options money to cover my entire original investment+taxes. In other words my return using options has given me almost twice as much return (pre-tax) than my buy and hold stockeven though I started much later, albeit with more effort, time, and stress.

No one is a chump for buying and holding, there are times I wish all I did was buy and hold.
 

mitch672

Active Member
Jul 1, 2012
1,861
15
Stoughton, MA
Every time I play short term options, it never works out.
My buy and hold has been a 4 bagger so far. If the Options IV is really high, I sell covered calls several strikes above the money, so far I've kept all of the premium to date... One day I'll get caught and have my shares called away, not such a bad thing.
TSLA is very volatile, chances are I'll be able to buy back in lower, but if not, I have no problems locking in my gains so far.
 

RABaby

Member
Mar 10, 2013
223
971
Vashon
The traditional advice is for investors to diversify and to buy and hold.
Your question about the benefits of some other strategy is legitimate and to a certain extent, one that I share. However, the way in which it is asked suggests you have always had plenty to invest and have essentially only tried one technique, or have not been successful with any others.


I started with nothing. I lost just about everything a couple of times and a majority of significant gains a few more times. As a buy and hold owner of TSLA, I also took a considerable hit in the fourth quarter, as you must have if you are also a long term holder. Of course, you held though the dip and have realized that ten-bagger, so your approach has been proven successful.. But what if TSLA had continued down or languished? You wouldn't be able to claim the same level of success.


And so you endorse the buy and hold, but what about allocation percentages? You didn't mention if all your holdings are in TSLA or if they represent only a modest, although now greater, percentage. Someone who put all their money into a superior performing stock has been much more successful than one who claims a great return on one of their holdings and not so great on all the rest.


When you don't have much, you tend to put it all on one company. If it succeeds, your gain is significant compared to those who diversify. If you sell when it is high and buy back when it drops, you can churn your gains significantly and outperform all the pros. But the reason that style is successful is because you have a small amount. When a major investor attempts to do that, it isn't quite as easy because most of the big bucks investors, and certainly any mutual fund, has a much smaller percentage in any one company so the total gains compared to someone starting out with only enough to trade one stock is less for the large investor.


Those with a lot of assets can afford to take a more conservative approach and wait for an investment to yield results. If you know a company will be profitable but don't have much to invest, you can wait a long time to realize gains. That isn't the way to get rich because a small investment that grows significantly ten years down the road isn't going to be as much as a small investment that is churned for eight years until enough is available to push into that still simmering company with potential that when it finally does pop, a really big gain is realized.


So to put this in perspective and use myself as an example, I ignored the rules for investing. I took chances and often didn't do well. That is true for a lot of people, but I didn't give up. I then started to churn the few companies I knew and that proved very successful. I was able to retire early because my 401K was grossing more than my salary. I rolled that into an IRA and had more options, but the circumstances were different and I tried various approaches that were not as successful. The one thing I did do was to overweight in a company that I believed would grow significantly. More times than not I have been successful doing that, but when one is retired, they are told to be conservative and protect what they have. I didn't do that.


I traded, but with more assets and more on the line and less time to recover, I took a slightly more conservative approach. Conservative is relative and so it was still aggressive compared to others I know.


And then I discovered TSLA and bought a sizable chunk after I put a deposit down on a model S. After it nearly tripled in value, I sold most everything else and shoved it all into TSLA. That isn't recommended, but it worked. I did sell my IRA and Roth holdings near the high because it seemed insane, especially considering the percentage of my holdings and my age, but I couldn't stay away and bought back in way too early. I took a big hit but still held on, pretty sure that this dip was orchestrated by shorts and ignorance. But I could have been wrong and selling to retain gains would not have been a bad choice.


There are lots of arguments for churning, but I needn't go into that. I will just fast forward to this year and I had made so much with the huge surge that reading about these strategies I wondered, as you do now, how it can possibly be as profitable as just holding. Timing the trades in TSLA is walking on thin ice, and I don't care to swim in freezing water. The options can easily lose value, but they can also pay off huge.


I was already 90% or better of my net worth into the stock, but figured I might as well go ahead and give it a shot with a very small investment. My trading cash available would compare to someone who was younger and had a good sized portfolio, but not enough to hold nearly as much in the stock as they could control with options.


My first attempt was just ten contracts and I saw a $3000 gain followed by a balance to the negative in the same amount. I decided when it was up about $600 I would take my money and walk. But then the stock dipped again and I decided to try again because it really seemed we were primed to pop. When the stock jumped on the 25th, I made a huge amount, yes, Teslanaire but that was because I owned so much stock. It was the recent purchase of calls, and yes, I bought a lot more contracts this time, but I was more excited about the success with that trade than the much greater amount I made in my regular stock. My option gains amounted to a 495% return in a week, and the only reason I didn't hold it to max out to 660% is because I had no way of knowing it would continue that high and I already saw how fast gains can turn into losses with even a minimum amount of stock movement. I would have been beyond greedy and stupid to hold longer. It wasn't that I had made the money so much as it opened my eyes to the possibilities. If TSLA were to pop again, I could sell stock, pocket the gains, and trade options alone for a lot less and make a tremendous amount more. It is a very viable way to go to realize good gains for those with a small amount to invest as well as those with a lot.


Trading options can be very successful, but I do it the simple way with calls, although I would consider puts. All of these other variations outlined (or detailed) by those who understand and trade that way is more than I care to learn about enough to employ. I read the posts, but that style doesn't interest me because I have enough that I don't need to do anything to squeeze even more out of this that I will never even spend. For those looking to build up their nest egg, I think that if it works for them, that is great. If it doesn't, they should abandon the tricks.


I don't know if that gives some insight into why some employ strategies that don't seem to be as profitable as buy and hold, especially when they speak about losses, but it really can work for those who can spend the time to pay attention and watch the movements. Anything that makes money in the market will take attention and it represents trading. Trading can be successful, or very successful, and certainly for some it will be a wipe-out.. Investing can also be successful. But a good trader will make more percentage-wise than a good investor. And a good investor will make more than anyone who trades unsuccessfully.


Each person has to weigh their risk tolerance. Just about everyone who has known me and discussed investing says they couldn't sleep at night or wouldn't have the balls to do what I do. That, very simply, is why they don't have the money I do. It takes dedication and nerve, but that does take a toll. If you are comfortable with what you have and what you hold, then that's all you need to be content. Others want more and take the risks. And some do it for the rush. It can be addicting, just as this board has become for some. Trading can be a successful approach to making money. I am sure you will read responses to your post that will offer their own reasons for why they choose to trade as they do. Maybe some will even tell you why buy and hold is better for them. One thing is sure; there has to be a rationale for why a trading technique is employed at all. Some do well or it wouldn't have any advocates.
 

Cattledog

Active Member
Supporting Member
Feb 9, 2012
2,226
3,355
San Antonio, TX
Did the options thing... Got burned and realized it deviated from my investing profile... So I just do buy and hold unless my conviction is really high on timing. Worked out well last time to recoup the q3 losses.

Excuse my stupidity, but what are the qualifications for a Teslanaire?

A few months back we qualified it as $1M in gains from TSLA investments. No time limit, no max or min starting value, simply $1M in gains.

Getting closer!
 
Last edited:

aznt1217

Active Member
Aug 27, 2012
2,559
1,869
New York, NY
$1m overall in the past 12-13 months is good enough, I'd think.

I do a bit of both: hold a core set of shares for the real long term - so they are only paper profits right now - while buying and selling other lots periodically (not always with perfect timing) to take profits. I'm playing with "house money" now for all of the latter activity.

I have no clue about all the puts/calls/options business and stick to plain old regular stock purchases/sales via a low cost brokerage (Sharebuilder).

wow thats a ton of money. Not a Teslanaire yet, but... one day i hope to get there sooner rather than later :). I probably should be studying more on options, but my job doesnt enable me to keep track of the market closely enough where i am comfortable with the amount of volatility. Tesla has "only" been a 4 bagger for me.
 

haid

Member
Feb 14, 2013
97
110
Reston, VA
The traditional advice is for investors to diversify and to buy and hold.
Your question about the benefits of some other strategy is legitimate and to a certain extent, one that I share. However, the way in which it is asked suggests you have always had plenty to invest and have essentially only tried one technique, or have not been successful with any others.

I am a software developer from a large, lower middle class family. All that I have I made myself. All investments are from my self-directed IRA. I was "Buy and Hold" into AAPL, until I learned about TSLA and then I switched all to Tesla. So no, I don't diversify. People say I'm crazy, but Its working out so far...

Diversification is easy advice to give, as any other advice would beg the question, "Which stock should I buy?"
 

DaveT

Searcher of green pastures
Nov 15, 2012
3,496
11,014
Texas
There seems to be a lot of chatter about options, call spreads and such. While such conversation generates interest, I seriously doubt it competes with "Buy and Hold".

I am all-in on Tesla and it is a ten bagger for me. But if you read the forums, you would get the impression that I am a chump for not timing the peaks and valleys.

I wonder if there are more "Teslanairs" that buy-and-hold than those that trade monthly (or more frequently).

I appreciate common stock because you have time advantage... you can wait out the dips and corrections (of course assuming the company is stellar and will recover).

I appreciate LEAPs since you get more leverage than stock and if you bought TSLA early on with LEAPs (ie., if you bought Jan15 LEAPs when TSLA was under $50) you'd probably have a 40-50 bagger by now if you held.

I appreciate short-term options since you get even more leverage than LEAPs and can take advantage of sudden strong moves but it involves a lot technical skills and shouldn't be taken lightly.

Each approach takes a different skill set and risk/reward tolerance.

The crazy genius (and that's not me) went all-in with short-term OTM calls going into Q1 2013 and then eventually rolled them all out to Jan15 leaps and has made a 200+ bagger by now.
 

Cattledog

Active Member
Supporting Member
Feb 9, 2012
2,226
3,355
San Antonio, TX
I appreciate common stock because you have time advantage... you can wait out the dips and corrections (of course assuming the company is stellar and will recover).

I appreciate LEAPs since you get more leverage than stock and if you bought TSLA early on with LEAPs (ie., if you bought Jan15 LEAPs when TSLA was under $50) you'd probably have a 40-50 bagger by now if you held.

I appreciate short-term options since you get even more leverage than LEAPs and can take advantage of sudden strong moves but it involves a lot technical skills and shouldn't be taken lightly.

Each approach takes a different skill set and risk/reward tolerance.

The crazy genius (and that's not me) went all-in with short-term OTM calls going into Q1 2013 and then eventually rolled them all out to Jan15 leaps and has made a 200+ bagger by now.

The crazy genius = Sleepy?
 

DaveT

Searcher of green pastures
Nov 15, 2012
3,496
11,014
Texas
The crazy genius (and that's not me) went all-in with short-term OTM calls going into Q1 2013 and then eventually rolled them all out to Jan15 leaps and has made a 200+ bagger by now.

To clarify, the crazy genius person is hypothetical. I don't personally know him/her.
 

sleepyhead

Active Member
May 31, 2013
1,896
11
Texas
The first time I bought into TSLA was on the day of Q1 2013 ER at about $56. I wish I had found this forum sooner, because I probably would have done that bet and gone all in on short term OTM options in TSLA. I only joined here in the month of May.

But that is okay, because there will be a bunch of other opportunities; and thanks to TSLA and solar I don't have to go all in anymore and can fight many battles all at once.

- - - Updated - - -

The crazy genius (and that's not me) went all-in with short-term OTM calls going into Q1 2013 and then eventually rolled them all out to Jan15 leaps and has made a 200+ bagger by now.

My main portfolio is "only" a 20-bagger since last year. All of my other portfolios are 5-10 baggers give or take. But all these gains can easily be erased if we have a repeat of 2008.
 

haid

Member
Feb 14, 2013
97
110
Reston, VA
I would agree that I don't have the skill set and risk/reward tolerance for short term investing. And its obviously profitable if you can be on the correct side of a trade. But what insight does one have that makes one think that they have a better than 50/50 chance of being on the correct side of a trade?

While I may be deluding myself but when I invest in an AAPL or TSLA, I have a thesis.... Some sort of argument that, if correct, will cause the stock price to seek a new (higher) level. In the case of AAPL, it was the "halo effect" of iPods (and later iPhones), that would increase interest in Apple computers. In the case of TSLA, it is the promise of 8% better battery tech every year for the next few years.

What is the investing thesis of a short term investor? A gut feel that they have seen similar patterns in the stock or overall market before?
 

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