Tesla Investor's General Macroeconomic / Market Discussion

[Intl Professor]

Here's a good summary of my concerns.

Rising Debt + Rising Rates

Sorry I didn't get around to reading this promptly. I think I'm not competent enough to make sensible comment so agree only with the facts. (That's a top horse manure maneuver even for me.)

However, there may be other things to worry about from an interesting source, a NYT reporter with degrees in physics who covers the economic scene (and formerly a member of its editorial board). Economics from a first physics principles perspective?

Eduardo Porter oops, wrong link.

Big Profits Drove a Stock Boom. Did the Economy Pay a Price?

An economics prof and later Dean of our School once said years ago when we also had low inflation, she disagreed, "it had shifted to the stock market."

Of course Musk's companies are so fresh because they address the stronghold "renters" have in transport and energy fields with his real investment in the future. No wonder he's attacked by those "renters" and cannot even sell directly to consumers in eight states.

Edit: Corrected the link.

 

[Intl Professor]

There's so much fake news these days with threats capable of shattering the market because of a careless noose that some may interpret as threatening the White House. Cf today's news regarding the Mueller investigation which appears to be about a conspiracy of Russians with no direct evidence regarding their affect on the election. As with Watergate, today's investigation reveals the importance of "following the money." (I worry about the general market and its decline due to political fluctuations which could effect Tesla.)

My favorite Nobel laureate is the late Ilya Prigogine (Wikipedia's transliteration) whose last name sounds like the Ruble-bagman for the conspiracy—Yevgeniy Viktorovich Prigozhin. (Courtesy of a link to the indictment.)

Read the Special Counsel’s Indictment Against the Internet Research Agency and Others

When you read the actual indictment you find from the original Russian both men have the same last name—Приго́жин.

I was hoping to find an error in the document but Mueller's transliteration sounds better. Prigogine spent much of his life in Belgium after his parents fled the Soviet Union. Perhaps that transliteration is better in French thus explaining the conundrum.

Thus I can certify as an "extinguished professor" of Soviet studies the superiority over wikipedia in Mueller's investigation. That part is not fake news. A small point, I admit, but every litter bit counts when you're extinguished.

 

[Manton]

Subscribe to read - "Subprime US car lenders fall on bad debts" Article from financial times.

Any thoughts as to the subprime car lending issue? Might it be a forecast of a downtrend?

 

[Intl Professor]

Here's more on Prigozhin, Putin's bagman for the US election meddling. This is a very clear and entertaining discourse on how sometimes self-made oligarchs connect with Putin to do business and give the business to foreigners like us without the fingerprint of direct involvement by the Russian government.

Yevgeny Prigozhin, Russian Oligarch Indicted by U.S., Is Known as ‘Putin’s Cook’

I fear the pattern is reflected here in what we often call crony capitalism, whether associated with support for green industries under Democratic administrations and Nixon's inauguration of the Environmental Protections Agency, or scandals which will eventually be revealed in the current administration.

Even in Stalin's day it was well understood that influence (or connections) is more important than the leader as evidenced in the phrase, "Blat is higher than Stalin."

 

[TheDoktor]

Subscribe to read - "Subprime US car lenders fall on bad debts" Article from financial times.

Any thoughts as to the subprime car lending issue? Might it be a forecast of a downtrend?

Hmm...not sure I have too much to say on this but I have followed the market casually for a bit.

Subprime auto was great for years. In a low interest environment, the Street loved this paper, and lenders loved doing the loans. If the borrowers don’t pay, the originator or servicers can repo the car, guaranteeing some value/return. Because used car prices have been high for the last few years, this made the value proposition that much more compelling.

However, at the same time the US fleet of vehicles was aging, meaning at some point the pressure for replacement vehicles was/is going to rise. If consumer confidence is high or the economy picks up, there will be more new vehicles as replacements, the used car market gets soft, resale values drop, and subprime paper built on that market suffers.

So, subprime auto loses in a healthy market.

My take, from 30,000 feet

 

[Intl Professor]

Future Political Shock

Another big shock is expected in the Russia investigation which will have little immediate effect but may portend eventual negative reaction by the general market. Gates, Manafort's long-time business partner and top official in the Trump inaugural committee is about to reach a plea deal with Special Counsel Mueller. Further, based on interviews by CNN of witnesses questioned by investigators, there are indications of digging into Jared Kushner's business interests, a possible red line for Trump. Thus inquiring minds want to know if Mueller's investigation might be stymied. Two authoritative authors have a suggestion in today's Times which bolsters Bork's reputation in a situation similar to today's.

Opinion | A Better Way to Protect Mueller

 

[DurandalAI]

Subscribe to read - "Subprime US car lenders fall on bad debts" Article from financial times.

Any thoughts as to the subprime car lending issue? Might it be a forecast of a downtrend?

Once upon a time I worked for one of those sub prime financial companies owned by an auto manufacturer in Detroit Michigan. The practices described in this video are not exaggerated at all, It really is like that.

 

[TrendTrader007]

Just found out last night that my Brokeridge forcibly liquidated well over half of my tesla stock position because of outstanding margin call which occurred during the last downturn.

I’m simply devastated.

I will be selling the rest of my tesla position today but will continue to hold the few calls that I have left.

If and only if Tesla drops below $280 then I will consider buying it again Otherwise I’m out for good With steep losses

 

[30seconds]

Just found out last night that my Brokeridge forcibly liquidated well over half of my tesla stock position because of outstanding margin call which occurred during the last downturn.

I’m simply devastated.

I will be selling the rest of my tesla position today but will continue to hold the few calls that I have left.

If and only if Tesla drops below $280 then I will consider buying it again Otherwise I’m out for good With steep losses

Sorry to hear. Hope you recover the portfolio soon.

 

[DurandalAI]

Just found out last night that my Brokeridge forcibly liquidated well over half of my tesla stock position because of outstanding margin call which occurred during the last downturn.

I’m simply devastated.

I will be selling the rest of my tesla position today but will continue to hold the few calls that I have left.

If and only if Tesla drops below $280 then I will consider buying it again Otherwise I’m out for good With steep losses

That sucks, dude. The past couple of months have been rough for all of us, for sure. Keep positive, don’t let it bring you down long term, just let it be a learning experience on hopefully reducing risk.

 

[ggr]

Just found out last night that my Brokeridge forcibly liquidated well over half of my tesla stock position because of outstanding margin call which occurred during the last downturn.

I’m simply devastated.

I will be selling the rest of my tesla position today but will continue to hold the few calls that I have left.

If and only if Tesla drops below $280 then I will consider buying it again Otherwise I’m out for good With steep losses

Surely the brokerage had to notify you of the margin call? Or were you away or something and didn't get the notification? You would probably have had to liquidate something to meet it anyway, but better to do it on your own terms.

I've learned through sad experience never to be out of touch when I have options about to expire either. Unexpected movements, even positive ones, can have bad consequences. For example, some calls I had written off in my mind as worthless managed to actually be slightly in the money when they expired, so the brokerage bought the stock for me (I was on a plane at the time), which pushed me over the margin limit and caused a call. Of course by Monday the market was down again, and I had to sell the stock at more of a loss than I had already lost if the call hadn't been in the money.

 

[TrendTrader007]

Surely the brokerage had to notify you of the margin call? Or were you away or something and didn't get the notification? You would probably have had to liquidate something to meet it anyway, but better to do it on your own terms.

I've learned through sad experience never to be out of touch when I have options about to expire either. Unexpected movements, even positive ones, can have bad consequences. For example, some calls I had written off in my mind as worthless managed to actually be slightly in the money when they expired, so the brokerage bought the stock for me (I was on a plane at the time), which pushed me over the margin limit and caused a call. Of course by Monday the market was down again, and I had to sell the stock at more of a loss than I had already lost if the call hadn't been in the money.

they tried calling me but could not reach me. I had $7.2 million margin loan and they told me the amount was too large for them to wait
so they liquidated well over half of my position at a loss. sadly, I had bought even more stock just before the ER
I ended up liquidating all of my Tesla stock at the open today for a total loss of $5.3 million since all my buying before ER had pushed up my cost basis steeply.
I only have less than 10% of my original capital left. I lost over 90% of my total capital. I am shell shocked and have never ever taken these kind of huge losses before
I will stay on the sidelines and hope for a pullback to $280 before I can gather the courage to pull the trigger on TSLA again
let this be a cautionary tale for all those who go on margin
I will never go on margin ever again and maybe stay out of the stock market for the rest of the year

 

[Starno]

they tried calling me but could not reach me. I had $7.2 million margin loan and they told me the amount was too large for them to wait
so they liquidated well over half of my position at a loss. sadly, I had bought even more stock just before the ER
I ended up liquidating all of my Tesla stock at the open today for a total loss of $5.3 million since all my buying before ER had pushed up my cost basis steeply.
I only have less than 10% of my original capital left. I lost over 90% of my total capital. I am shell shocked and have never ever taken these kind of huge losses before
I will stay on the sidelines and hope for a pullback to $280 before I can gather the courage to pull the trigger on TSLA again
let this be a cautionary tale for all those who go on margin
I will never go on margin ever again and maybe stay out of the stock market for the rest of the year

That's why I never buy with margin.

Yea it might take decades before I become filthy rich, but I don't consider myself smart enough to get the timing right and at least I sleep like a baby at night.

 

[ggr]

That's why I never buy with margin.

Yea it might take decades before I become filthy rich, but I don't consider myself smart enough to get the timing right and at least I sleep like a baby at night.

Sorry to ask painful questions of @TrendTrader007, I'm just hoping to learn/educate here.

First, why liquidate the rest? It seems to be on an upswing, most advisors would say hold long and strong. It isn't a loss until you sell, which you did...

Second, was it all stock on margin, or were you into options too? If it was only stock, at first I didn't understand how you managed to lose 90% of your capital? Suppose one started with $1m, to make calculations easy. One then buys $4m worth of TSLA at $389.61 (the ATH). Call it 10,000 shares for $3 896 100. 25% is the current margin rate on TSLA at all brokers, as far as I can tell, so one gets to buy 4 times as many shares as one has cash for. Then one sells them all at the local minimum, $296.53 or so, one gets back ... oops...$2 965 000, which is about what was borrowed. But this is the absolute worst case. So, yeah, now I get it. A 25% correction in a stock with a margin rate of 25% will do that to you.

I am heavily margined, mostly on TSLA, too, but I stay well away from the edge, at 50%, not 25%. The correction hurt but not enough for a call (at least not this time...).

 

[AlMc]

they tried calling me but could not reach me. I had $7.2 million margin loan and they told me the amount was too large for them to wait
so they liquidated well over half of my position at a loss. sadly, I had bought even more stock just before the ER
I ended up liquidating all of my Tesla stock at the open today for a total loss of $5.3 million since all my buying before ER had pushed up my cost basis steeply.
I only have less than 10% of my original capital left. I lost over 90% of my total capital. I am shell shocked and have never ever taken these kind of huge losses before
I will stay on the sidelines and hope for a pullback to $280 before I can gather the courage to pull the trigger on TSLA again
let this be a cautionary tale for all those who go on margin
I will never go on margin ever again and maybe stay out of the stock market for the rest of the year

Sorry to hear. Best of luck moving forward and thanks for sharing your thoughts on using margin, now and in the future.

 

[pz1975]

they tried calling me but could not reach me. I had $7.2 million margin loan and they told me the amount was too large for them to wait
so they liquidated well over half of my position at a loss. sadly, I had bought even more stock just before the ER
I ended up liquidating all of my Tesla stock at the open today for a total loss of $5.3 million since all my buying before ER had pushed up my cost basis steeply.
I only have less than 10% of my original capital left. I lost over 90% of my total capital. I am shell shocked and have never ever taken these kind of huge losses before
I will stay on the sidelines and hope for a pullback to $280 before I can gather the courage to pull the trigger on TSLA again
let this be a cautionary tale for all those who go on margin
I will never go on margin ever again and maybe stay out of the stock market for the rest of the year

I don't understand this. You had said your average buy price was around $240-280 I believe. How could you have lost 90% of your capital when the stock never went below $295 on the latest dip?

 

[The Blue Owl]

I only have less than 10% of my original capital left. I lost over 90% of my total capital. I am shell shocked and have never ever taken these kind of huge losses before

Man. This SUCKS. I'm sorry you have to go through this. I know, because I've been there.

I'm going to say a few things I learned from that experience. This is not necessarily directed at you, TrendTrader007. The inferno you're going through right now cannot be helped by some words on a message board. I don't claim that my experience matches anyone else's, either. However, it might, and maybe it will be of use to at least one person out there who wants to avoid a similar fate.

I learned two types of things: stuff about trading/investing/capital management, and stuff about myself. The former can be absorbed from books, lectures, and such. The latter... you kinda have to be there.

When one evaluates a set of trading choices, based on an underlying theory of the company, the stock, and the macro context, one visualizes the consequences of what could go wrong, and balances those against the imagined wins if things go right. When the mind is clear of emotion, that simulation is going to be as good as it's going to get for that particular trader given his level of skill. The outcomes over the long run will be primarily driven by the accuracy of the model of reality that the trader is capable to articulate.

Let's say you are him and you prove to be pretty astute, as confirmed by the market several times in a row. You guessed the price movements better than most for a while, putting a number of wins in your column. Let's further assume those wins are outsized. If you are like most people, the first thing that will happen is that you will experience a strong high. Simultaneously, the following will cross your mind:

1. "I really nailed this, more than once, which means I kinda know what I'm doing."

2. "To win big, one must risk big. I could take a third (or a quarter, or a half) of my latest gains and make these really big bets. If I lose, it won't matter; in fact, I'll still be ahead. But if I'm right one or two more times, a life-changing number will materialize on my account statement and I will cross over to the other side. I won't have to do this ever again."

3. Next, you run the simulation in your head as you always do. You compare the various scenarios, visualizing the potential losses against the possible gains. But a funny thing happens: the ocean of endorphins, or adrenaline, or dopamine, whatever, that flooded your senses after your recent wins are masking the pain that you are supposed to feel when you imagine the possible losses. At the same time, the imagined wins enhance your current high. You are not thinking clearly, just as people who've fallen hard in love are not thinking clearly. Desirable outcomes seem more likely and blissful than they really are, while undesirable ones seem less likely and less painful. This leads to making bad bets. It is the same process as that which underlies the behaviour of high-stakes compulsive gamblers.

Six months earlier, if you tried to imagine what it would be like to lose $100k, you would have said "Ouch! better sit this one out". Right now, however, that same imagined loss of $100k feels like "Meh. I'll still have all this other loot to play with". Moreover, the likelihood that you'll make $500k rather than lose $100k will seem so much higher than it should, because it has actually happened in the very recent past! It's very easy to imagine it will happen again; you can practically smell it.

In other words, you are on drugs. It doesn't matter how skilled you are or you proved to be in the past, because that skill is not what is driving your trades anymore. Soon, reality catches up with you.

The best thing to do after really big wins is nothing. You take a break for as long as it takes for your high to wear off. And I guarantee you, it should be longer than you think. A small number of people can handle certain drugs and function just fine, but for every one of them there are a hundred others who think they can, but actually can't. Margin and leverage are powerful but dangerous weapons having strong psychological impact on those who use them. Maintaining a clear mind is paramount, but doing so is much harder than it looks.

This will hurt like hell, possibly for months or even years. Hang in there. You can come back after this, but only after adopting a different kind of thinking than the one that led to failure in the first place. Stay strong and good luck.

 

[elasalle]

they tried calling me but could not reach me. I had $7.2 million margin loan and they told me the amount was too large for them to wait
so they liquidated well over half of my position at a loss. sadly, I had bought even more stock just before the ER
I ended up liquidating all of my Tesla stock at the open today for a total loss of $5.3 million since all my buying before ER had pushed up my cost basis steeply.
I only have less than 10% of my original capital left. I lost over 90% of my total capital. I am shell shocked and have never ever taken these kind of huge losses before
I will stay on the sidelines and hope for a pullback to $280 before I can gather the courage to pull the trigger on TSLA again
let this be a cautionary tale for all those who go on margin
I will never go on margin ever again and maybe stay out of the stock market for the rest of the year

My initial thought was that you were just joking ..
Also per previous posts I thought towards Jan 18, you had to exercise Jan 18's etc and you had a good profit, not to mention the few cars you bought.
Best of luck, with your skills i am sure you will be back with profits very soon.

 

[Tenable]

they tried calling me but could not reach me. I had $7.2 million margin loan and they told me the amount was too large for them to wait
so they liquidated well over half of my position at a loss. sadly, I had bought even more stock just before the ER
I ended up liquidating all of my Tesla stock at the open today for a total loss of $5.3 million since all my buying before ER had pushed up my cost basis steeply.
I only have less than 10% of my original capital left. I lost over 90% of my total capital. I am shell shocked and have never ever taken these kind of huge losses before
I will stay on the sidelines and hope for a pullback to $280 before I can gather the courage to pull the trigger on TSLA again
let this be a cautionary tale for all those who go on margin
I will never go on margin ever again and maybe stay out of the stock market for the rest of the year

TT007, I'm so so very sorry to hear this. I've been crushed for 60% of my portfolio, but never for a sum as large as this. I hope you're able to recover mentally as well as financially to rejoin us. Best wishes.

 

[Esme Es Mejor]

Just found out last night that my Brokeridge forcibly liquidated well over half of my tesla stock position

Very sorry to hear it. The good news, as I understand it, is that you are relatively young, smart, have a well-paying job and a woman who loves you. Nothing about this loss should stop you from being happy, healthy, and retiring as a multi-millionaire. I’m sure it pushes the date back a bit, but that isn’t important.

Best of luck!