TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker or making a Paypal contribution here: paypal.me/SupportTMC

Struggles with investing. As well as congrats and thank you's ;)

Discussion in 'TSLA Investor Discussions' started by yobigd20, May 9, 2013.

  1. yobigd20

    yobigd20 Well-Known Member

    Joined:
    Oct 28, 2012
    Messages:
    5,793
    Location:
    Skaneateles, NY
    The story of my life. I am fascinated by the stock market, ever since I was a little kid. But for the life of me, I just cannot choose the right entry and exit points. I understand this is a very difficult thing to master, probably so much that very few people ever do.

    I tried investing in TSLA here and there, but I guess my problem is that I tend to cut losses too quickly rather than wait things out. I played around a bit when TSLA was oscillating between 28 and 35. At one point I was up about $1500, then a few days later down about $2200 (~$700 in the hole) so I end up cutting out when I should have exited at $1500. It's not a huge amount of $$, but I'm not good enough yet to put more in. Then again, I should have just held through it all and I'd far in the plus. :(

    After trying this for 6 months or so and failing, when March came, (my delivery date), I just decided to exit everything and use that for a bigger down payment. In retrospect, that was a HUUUUUUUUUGEEEEEEEEEEE mistake. In my heart I knew TSLA was going to succeed (I wouldn't buy the car if I didn't believe that), and I understood the concept of short squeeze and I knew it was going to happen. At one point, I even had some $38 May Call options. I think I exited that when Broder's stupid article came out and sank my little investment. I knew TSLA was for real too and I knew Broder's story was totally full of crap. Even though I 100% fully trust in Tesla and have no doubt that they are going to succeed (they already have), I just didn't trust in myself and that just caused me to go down the rabbit hole - confused and disappointed at my own attempts at investing. Needless to say, I am extremely P.O.'d I didn't hold those calls.

    Now I don't have enough extra $$ floating around to reinvest. But given the story of my life, even if I did go in now it'd probably just go back down. Then I'd exit to cut losses, then it'd probably explode up again. I wish I could make some $$ here but I don't think this game is for me. The only time I ever really made real money is when I just dumped cash into some high-yield 10-15% dividend paying stocks. Perhaps that is the only game I should be playing. I don't think I'm cut out for the stress of trying to invests in more volatile stocks.

    My last note will be this - I hope this damn stock explodes over $200 and rips all those shorter's a new one. Tesla is going to succeed no matter how hard you try to put them down. Get that through your thick skulls. You are all in denial. YOU are the ones that should be cutting your losses now, not us. Electric cars are here to stay. EVs will win over every single person in this country one-by-one. It is only a matter of time. And that time is starting right now. Once an individual realizes they never have to pay for an ounce of gas and oil again and that these vehicles are basically maintenance free, a little light bulb will click in their head and they will never go back. I have had my P85 since March 6th, and a little over 60 days ownership I am already approaching $1000 in gas savings from my previous vehicle, and that's after factoring in what I pay for in electricity. This car is light years ahead of any other production vehicle in the world. I will never buy an ICE car again. In fact, the only vehicles I will probably ever buy again for the rest of my life will have the Tesla logo stamped on it. And my final thought to those shorters is this: Tesla has yet to market their vehicles. The only exposure they have been getting is through word of mouth and news reports. Imagine the impact whenever they start deciding to broadcast some commercials and advertise to the general public.....many, if not a majority of people still do not even know Tesla exists. I get "What is that?" and "Never heard of them before?" and "That's an EV? Is that a Fisker? I heard those cars catch fire and explode.". Funny thing is they seem to know more about Fisker than Tesla. the one I love the most is "Wow that car looks incredible? What is it? 'Tesla' Who makes it? 'Tesla'. Who?" They are busy with their lives. Once they catch wind of these Tesla cars ... I can't wait to see this company explode. They are already outselling every other high end luxury sedan on the market with 0 advertising :)

    Also, congrats to all shareholders right now. You are sitting very pretty after this past week and after yesterday's close. Now you all should have enough to buy the Model X outright :) I should also thank all the other owners right now. We made it happen. We believed, we trusted, they delivered. Thank you Elon. Keep up the hard work - I have to buy my daughters cars in about 14 years, lol.
     
  2. Majerus

    Majerus Member

    Joined:
    Jan 21, 2010
    Messages:
    689
    Location:
    Illinois
    Finding an entry point does suck. I am very new to investing and TSLA was the first company I have ever invested in. I started with the IPO and have slowly been building up more and more stock with the ultimate goal to have a nice down payment for a Model S. Well that has now come to past, however I am still very hesitant to push the sell button quite yet. As you stated Tesla does not advertise, and I think the most appealing thing is they do not make a mass market car as of yet. Once the general public can afford electric, and realize the benefits the stock will take off again.
     
  3. stevezzzz

    stevezzzz R;SigS;P85D;SigX

    Joined:
    Nov 13, 2009
    Messages:
    6,062
    Location:
    Colorado
    I am the least sophisticated investor on the planet. My guiding principle has always been buy and hold. As in, find a company you believe in and buy some stock. Wait. A long time, if necessary.

    So, as a Roadster owner with a Model S reservation (i.e., a True Believer), I bought the maximum allotment in the IPO. A few months ago, I bought some more at 37-ish. That's it: I've never sold a single share. I sleep well at night and don't sweat the price swings.

    Just thought it might be worth pointing out that investment fuddy-duddies like me exist and can actually do well over the long haul. I should also point out that my Tesla holding is a small percentage of my portfolio, and that I've got a lot more money in my S than in TSLA. But it's OK: I'm not a gambler, and I expect my stock will be worth a lot more than the car soon enough. Meanwhile, I get to drive the best car on the planet, every day.

    Life is good.
     
  4. ShortSlaver

    ShortSlaver Member

    Joined:
    Apr 19, 2013
    Messages:
    565
    Location:
    United States
    If anyone has trouble sleeping at night instead of counting sheep, counting short's jumping out of windows does it for me. ;)
     
  5. Bonken

    Bonken Member

    Joined:
    Apr 12, 2013
    Messages:
    99
    Location:
    USA
    hahah hilarious! :D
     
  6. Jhall118

    Jhall118 Member

    Joined:
    Sep 10, 2012
    Messages:
    339
    Location:
    Seattle, WA
    OKAY so sad story.
    I sold most of my (only 500 shares... I am young) at $55. I did this because I thought I would never be able to afford a Model S, and wanted a cool car. So I bought a 2012 Audi TT convertible instead. I could trade it in for a Gen 3 in three years, I told myself. I Needed the loan history I told myself. It's a killer deal (4k under bluebook value), I told myself. YOLO, I told myself. etc. etc.

    Every single time in the past I held through the earnings call, it came to haunt me, and I kicked myself for not selling earlier. So I could be happy that I made over 12,000 dollars in my first adventure in the stock market.... or kill myself for not doubling that number, and affording a Tesla Model S at the end of the summer.

    Live and learn. Painful lesson. Driving around with the top down helps the pain, but man, the next time I buy in, I am never selling!
     
  7. Citizen-T

    Citizen-T Active Member

    Joined:
    Aug 25, 2011
    Messages:
    2,442
    Location:
    Raleigh, NC
    I feel your pain, truly I do. I've been there. Let me see if I can help you learn the right lesson from this. I think you made two mistakes here.

    Your first mistake was that you did not hedge. You put all your eggs in one basket. You need to learn to decide what is most likely, and adjust your position accordingly. Why do you have to either go all-in or walk away from the table? There is lots of middle ground.

    For example: You seem like you believed in the long-term story of Tesla but were worried about the earnings call. What I would have advised then is to take some profits just before the call. Maybe 25% of your holdings. Then, if the call goes poorly, you can put that cash back to work and you'll own even more shares than you did before the call. Again, you believe in the long term---so this is a sale to you---something to be happy about. On the other hand, if the call goes great (as it did) then you get to party with everyone else. Sure, you didn't benefit as much as you could have, but that is a high quality problem to have (I didn't get quite as filthy rich as I could have).

    I firmly believe that your purchase or sale of stock should proportional to your confidence in what the stock is going to do. Therefore, to sell 100% of your holdings in a single trade, you must know for a fact what the stock is going to do. This leads to the obvious conclusion that you should never make a trade that moves 100% of your shares, because you can't possibly know with that much certainty (unless you are doing something illegal).

    Now, your second mistake (as I see it) is that you sold an incredibly valuable asset, with tons of potential to appreciate, and with the proceeds, you purchased something that might have already depreciated more than an earnings miss would have depreciated your holdings. You've moved investment dollars into consumption dollars. Now, ultimately, that's the whole idea...but you said you were young. If you had at least redeployed that cash into something boring that paid a nice dividend, it could have probably bought you that TT a dozen times by the time you retire.

    Time is the most powerful tool you have in investing. It is incredibly difficult to make up for lost time. Sit down and do this little bit of math: If I invest $1k a year at an average return of 10% for 7 years (so I put in $7k) then never contribute to my IRA again. You wait 7 years and in the 8th year start contributing $1k a year with the same 10% return, but you do it for 33 years (so you've invested $33k). How much money do we each have in our IRA when we retire?

    I think you'll find that despite the fact that you invested nearly 5x as much money as I did, our holdings are worth about the same when we retire.

    So what's the point? The point is next time you have a big win and you want to take your winnings out of harms way, don't store your wealth in a convertible. Allocate to other appreciating investments. Especially since time is on your side.

    Of course, convertibles are fun. So you'll have to weigh what is more important to you: convertibles today or yachts tomorrow. Your call. =P
     
  8. Jhall118

    Jhall118 Member

    Joined:
    Sep 10, 2012
    Messages:
    339
    Location:
    Seattle, WA
    Thank you Citizen-T. You have actually given me that exact same advice before. I listened, vowed to follow it, and then got caught up in stupid emotions.

    I think I got the message loud and clear this time though. I guess this is one of those lessons I can only learn the hard way! :(

    Hopefully there is a secondary offering coming up to bring the share price down to a good entry point, and this time, I will buy in steps, and sell in steps as well.
     
  9. ShortSlaver

    ShortSlaver Member

    Joined:
    Apr 19, 2013
    Messages:
    565
    Location:
    United States
    Yeah it's hard to keep emotions out, especially when you're already up big. I made a few trades on TSLA the last few weeks I kicked myself over. Luckily I was able to get back in reasonably fast (losing .75 cents per share for instance) and realized big gains. But, it was a massive risk going through the earnings call.

    Things have gone better than I could have imagined too. But as Citizen-T said, your best bet is to sell a chunk of your position OR buy some puts to insure your position.

    Hey, it's not too late to get back in. Go buy some more shares and see what happens.
     
  10. c041v

    c041v Member

    Joined:
    Jan 7, 2013
    Messages:
    509
    Location:
    Edmonton, AB
    I was talking to my father about believing in TSLA over the long term last night, and how I would hang on for a very long time despite the recent volatility for the exact reasons that Citizen has cited. He told me this story;

    Some years ago when he was working for a tech firm, a co-worker was given some stock options. He sat on them for a while, but he had a growing family and needed a new car. So he cashed in some options and bought a station wagon. Years later, he'd look out the window at the office and point to my dad, "Have a look at my million dollar station wagon."

    I guess the moral is, if have to buy a car, be careful where you source the funds.

    I must admit though, it's very tempting to sell sometimes... I've had an RS4 on my mind for some time. Time will hopefully turn that into a Model S.
     
  11. marvinat0rz

    marvinat0rz Member

    Joined:
    May 10, 2013
    Messages:
    269
    Location:
    Norway
    @yogibd20

    Don't invest in individual stocks if you don't know how the stock market works or have a solid understanding of what you're doing. Don't invest if your investments or the news keep you up at night. Don't do speculative (TSLA) investments with money you really care about losing. Don't try to time the market. There is almost by definition *no* way of knowing whether a successful timing of the market was due to luck or skill, and there is no way of knowing what risk (downside risk or upside risk) you took by timing your actions. Imagine all the people in this forum who "waited for an entry point" as the stock soared from 45 to 75. That's a *massive* loss right there, and everyone who buys and sells at different times takes this kind of risk. It is pure gambling.

    I'm glad that you seem to have made an honest decision that this might not be for you. Since you mention dividend stocks, I thought I'd like to mention that dividend stocks are very popular these days and that they aren't really any different than non-dividend paying stocks. There might be a bubble in this specific type of stock. So these stocks can also come to bite you in the ass at some point. If you are investing for the long term, you should be diversified, keep your costs low, never time the market and make regular contributions. Don't ever deviate from these rules on a whim. I'm saying this as someone who has been investing about 200% of my net worth (I have student loans) since right before the financial crisis in 2008. I've never sold any of my assets even when they have been down 40% or more. If you let psychology guide your hand, you are guaranteed to buy high and sell low. The easiest way of avoiding this trap is to never sell at all, then you have eliminated half the possibility of making mistakes. Capitalism is a fantastic machine that can work in your favor if you let it.

    I consider TSLA a very speculative investment, even though I follow the company closely and have more than doubled my money since I bought my first shares. TSLA has long been an all-or-nothing stock. This might have changed this week, although the share price has also changed to reflect the new reality.

    Good luck in your future investment endeavors :)
     
  12. kevin99

    kevin99 Banned

    Joined:
    Apr 22, 2013
    Messages:
    865
    Location:
    SF Bay Area, CA
    Bump into this thread accidentally. I too have been there, had a lousy record before I invest on TSLA. I even lost money on the employee stock options that would've made me a millionaire on paper due to the stupid AMT! :mad:

    Since the bubble, there were 2 or 3 rounds that I was in the market, perhaps for half year or so, in most case it ends with heavy loss. Nevertheless, I read books, trying out diffident methods, knowing how to avoid mistakes and go big. I even wrote my own trading algorithm for program trading. Well didn't pass the paper trading test phase.:redface:

    Until the time I started looking at TSLA in Feb. I started small, only 500 shares. But once I research more, I know this is the big fish to catch. Once it jumped over $40 on Apr. 1, I know it is time to apply all the lessons I learn: Buy the break out, and let the winner run. Don't double down on the losers etc.

    Now I am quite pleased with my portfolio, even though it is quite dangerous.:confused: I am amazed how courageous I am to hold these positions, and even add more at a few major pull backs. I guess the courage is proportional to the confidence and research you've done. And I am quite confident that I stay probably a month ahead of main street view. What I am trying to tell my friends one or two months ago, I don't do that any more, because it is all in the major news now.

    I guess for all of us, there could be one stock, one style or one type of investment suites you the best. Find the best match that make you comfortable and enjoy.

    I second my gratitude to the knowledge and info I learned from this forum. Thank you all and best of luck!
     
  13. ShortSlaver

    ShortSlaver Member

    Joined:
    Apr 19, 2013
    Messages:
    565
    Location:
    United States
    Anyone with employee stock options should look into early exercise. It's one of the best things you can do to not get burned on them.

    In essence, you're allowed to exercise your options, or a fraction of them, before they mature. This is great because you're granted the options at "fair market value" so when you early exercise them you have to pay tax on what your strike is and the fair market value. If you plan this right that is $0 - so no tax. Also, it starts long term capital gains early so if your company IPO's you can sell stock you've just been officially granted and only pay long term gains, avoiding the AMT all together.

    People can get stuck in situations where they want to leave the company but have options and because they are leaving they have to exercise them. If the fair market value has gone way up they end up with a tax bill they cannot afford, in essence making them a prisoner of their company unless they abandon the options. Or they have to exercise them and pay a huge tax on everything because of AMT.

    Even worse you can exercise your options and wait to pay taxes later and then then the company stock tanks. You're still responsible for the tax bill. Many people in the .com bust went into bankruptcy because of this! Some incentive! (many people exercised their options and then their companies lost 80% of their value. Their tax bill was more than the stock was worth)

    If you have employee stock options, please look into early exercise. It's probably worth it, especially if you see the company as having a bright future and you plan on being there to earn the grant over time.

    TSLA has made me enough money to early exercise a good portion of my employee stock options and I do not have to pay taxes on them.
     
  14. sleepyhead

    sleepyhead Active Member

    Joined:
    May 31, 2013
    Messages:
    1,915
    Location:
    Texas
    Here is an unconventional way of making big returns in stocks; a method that I personally employ. It requires you to take on a lot of risk and have patience:

    Step One - Find a sector that the market does not completely understand; one that is positioned for huge growth. Do your research to make sure that this industry will succeed. In your case you already found that sector and it is Electric Vehicles.

    Step Two - Figure out how fast this sector is going to grow and what kind of sales and profits it will be able to achieve in the near, mid, and long term future. Make sure that this is a growing industry and that there is nothing that can stop the industry from growing. In this case the EV industry is set to take off, and nobody is going to stop this from happening especially since the governments all over the world want the industry to take off.

    Step Three - Find the best company in the industry to invest in. In this case it is an easy choice in Tesla.

    Step Four - Figure out how much this company will grow sales and profits and figure out how much this stock will be worth in 5 years time. In this case Tesla will be worth $500 if Elon's goals become a reality.

    Step Five - If the current share price will net you a huge return then buy some shares. In this case you have a $100 share price, with a potential price target of $500 in 5 years.

    Step Six - Now this is the hard part: Pray that the stock price goes down (with no fundamental changes in the company, industry, or economy - do your research). Say Tesla goes down to $80. Research the company and industry to make sure that your investment thesis has not changed. Then buy more shares.

    Step Seven - Pray that the stock goes down even more (without any fundamental changes). Say Tesla goes down to $60; now you have a potential tenfold return on your hands with your $500 price target. Load up the boat on stock and wait patiently for big returns in the future.

    If the stock never went down from a $100, then you had a winner from the get go. If it did go down to $60, then you will have a huge winner on your hands.

    Step Eight - Be patient and stick firm with your investment strategy. Hold and watch your wealth grow.

    This is the exact Strategy I employed investing in SunPower one year ago. I researched the industry and knew that it was poised to take off. I found the best company in the entire industry in SunPower (no it is not SolarCity, not even close). I saw that it was at $8 (dropped from a high of about $160 from two years ago), so I bought some stock. Then it went down to $6 so I bought more. Bought more at $5, and even more at $4. I was sitting there and praying for the stock to keep going down, because I knew that I was right and the market was wrong. I even told all my friends, but nobody would listen.

    With every paycheck I kept buying more shares, and I was 100% invested. I only owned this one stock in all of my portfolios, including IRA's 401(k), etc. No diversification at all. The only mistake I made is that when the shares went up to $6, I sold about half of my investment for a nice gain, and the rest of it at $8. I thought that the stock would go back down to $4 and I would load up on even more. I hadn't realized that the market finally figured out what I had known long ago.

    I watched the stock keep going up, and I was kicking myself for not holding even though I had nice returns. I finally realized that the market figured something out. So I loaded up the boat at $12 a share again, since I knew that the stock was still significantly undervalued. Bought more at $16, and more at $18 and $20. It is now sitting at $21 - $22 and it is still undervalued as of today.

    In the mean time I started researching Tesla and realized that it is just as good an opportunity if not better. So I sold off a bunch of SPWR at about $20 and bought into Tesla at an average of about $100. Now I have 2/3 of my investments in SPWR and 1/3 in TSLA. Maxed out on margin too, because we are in a bull market and nothing is going to stop in the near term (except for maybe Bernanke).

    That is my diversification. My plan is that when one stock goes up a bunch, then hopefully the other goes down. That way, I sell a little of the winner and buy the loser. So in the future I might be 50% SPWR and 50% TSLA. Or 100% SPWR and 0% TSLA. Depends on price movements.

    I know that it is hard to want your investment to go down in value, but if you are truly convinced in a company then you want to be able to buy at the cheapest price possible. At the same time you want to be invested in that company in case it doesn't get cheaper.

    In the end, both stocks will be winners for sure in my opinion. I don't let short term price fluctuations affect my long-term outlook. My 5 year price targets for Tesla and SunPower are both fivefold returns at a minimum. No reason to diversify at all. I don't want 10% returns. I want 100% annual returns.
     
  15. MikeC

    MikeC Active Member

    Joined:
    Jul 9, 2012
    Messages:
    2,405
    Location:
    Los Angeles
    Could you elaborate on SunPower vs. SolarCity and why you chose SunPower?

    My portfolio is also undiversified, probably >95% is TSLA. I know it's bad, but I just can't bring myself to put my money into index funds or whatever else when I know TSLA will outperform them many times over, barring some unforeseen catastrophic event.
     
  16. DaveT

    DaveT Searcher of green pastures

    Joined:
    Nov 15, 2012
    Messages:
    2,564
    Location:
    San Diego
    I'm 90% in TSLA but don't think it's bad. I remember watching Warren Buffet saying that if you can read/understand companies in an area you're familiar with, then you shouldn't diversify but pick a company you can keep invested in for 30+ years (a company that has a competitive advantage, ie., "moat" around it). He says you'll do many times better than someone who diversified. He says you just need to find a handful of those companies over the course of your life. However, if you don't have the time or ability to really read/understand companies then he says it's better to just invest in the S&P 500.

    TSLA IMO is one of those special companies that you can keep invested in for a lifetime and even hand the stock over to your children/grandchildren.
     
  17. marvinat0rz

    marvinat0rz Member

    Joined:
    May 10, 2013
    Messages:
    269
    Location:
    Norway
    The AMT is lethal. People have been driven to personal bankruptcy over tax claims from this. Some guy told me off on a personal finance forum last week for pointing out that exercising stock options early, even if they are out of the money, could sometimes save you from a homungous tax bill or even bankruptcy. Hope the guy I was responding to won't get burned over it.
     
  18. ShortSlaver

    ShortSlaver Member

    Joined:
    Apr 19, 2013
    Messages:
    565
    Location:
    United States
    Yeah he's an idiot most likely - or misinformed probably.

    Early exercise has its own risks. If your company is something of a startup and you early exercise the options then you may end up with nothing anyhow if the company fails or doesn't have a nice IPO one day - if ever. If you just sit there and don't early exercise and the company tanks you've lost nothing. However, if you have reason to believe your company is going places then it's probably a good idea to early exercise at least a portion of your upcoming options.

    For instance, many people get options which are vested over 4 years. After 1 year you are granted 25% of your options and every month after that for 4 years you are granted a prorated portion. If you've been there for 6 months and it's going well, you may want to at least exercise 1 year's worth. It might even be of advantage to exercise 2 years worth. And then over time keep track of conditions and consider exercising the rest if it makes sense to.

    As I said before, I recommend people to lookup stories of silicon valley option holders from the late 90's who were given options at < $1 strike, exercised after the stock went up to $200 and were left holding them after the stock crashed to almost nothing. They were still left with a tax bill of $199/share. Had they early exercised when they had the opportunity they would have had to only pay a tax on their profits after they sold.
     
  19. sleepyhead

    sleepyhead Active Member

    Joined:
    May 31, 2013
    Messages:
    1,915
    Location:
    Texas
    In short I believe that SPWR is the safer investment (less volatile) and will probably perform better the scty, so it is a win-win. Although I do admit that scty is a wildcard and has potential to do better, but I have no idea how to value that company and there are too many unknowns. There is no way that scty should have a higher market cap than spwr as of today.

    Sunpower has:

    - Best, most efficient, longest lasting, lowest degradation, best warranty, highest quality, lowest levelized cost of energy (LCOE) panels on the planet. They have the best technology and are introducing products such as C7 tracker that will generate 6-7x the amount of electricity from each panel, and will require 6x less land to purchase to build a power plant.

    - Diversified across the entire world, and across product lines.

    - Just turned profitable and growing bottom line quickly. Margins improving each quarter as well

    - Stock is still undervalued at 1x Sales and 25x forward PE. Very low multiple for a growth company in the fastest growing industry in the world. I kind of know how to value this company as apposed to scty; although it is hard to figure out revenue recognition, etc.

    - Financial backing by Total S.A.

    - Great exposure to fastest growing markets in US and Japan.

    I would encourage you to read the May 15 Analyst Day presentation by Sunpower; make sure to download the slides. It is a good company and is expecting a big second half of the year financially (according to CEO). They are also sandbaggers and give out low guidance, so expect them to beat in the upcoming quarters.

    I could be wrong on Sunpower, but I think that the risk is moderate at best with a huge potential for returns. In the perfect scenario, I can see this stock going up fourfold by the end of next year, and I don't see it going down more than 30% at worse. Good risk/reward ratio. SCTY might go up even more, but I have no idea what to expect from that stock.
     

Share This Page