Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Bet TSLA]

Another nonsense piece in Forbes, written by a guy who says he just went short TSLA for the first time on Friday.
Do S&P 500 Investors Really Want To Buy Tesla Now?

He points to Yahoo being added to the S&P 500 in 1999 as a cautionary tale. And cites Scott McNealy's whining about how Sun's stock was overvalued and crashed (on a personal note, I left Sun in 1999 when my stock options were still worth something, then proceeded to lose it all and more in the .com crash). Then he asks us "On May 1, Elon Musk himself tweeted he thought Tesla was overvalued. Back then, Tesla was trading at 6x sales. Today, the multiple exceeds 18 times sales. Has Tesla become three times better of a company in just six months?"

He seems to be shocked that the S&P committee has rules for inclusion and doesn't consider a bunch of other stuff:
For some reason, S&P overlooks the fact that Tesla trades at a trailing P/E ratio of 928, and a forward P/E of 252, both of which are well above the long-term average P/E for the S&P 500 of around 17.

For some reason, it doesn’t matter whether Tesla earns one dollar of net profit or a billion dollars of net profit. Profitability is viewed through a simplistic prism akin to a pass fail exam.

S&P 500 investors: Does that seem rational?

And then he claims to be a Tesla fan as described in this piece he wrote in 2018 in which he showed himself to be an investing idiot who actively prevents his clients from making good money:
https://www.realclearmarkets.com/ar...s_are_scary_thank_goodness_for_elon_musk.html

I really can't believe that anybody who is obviously so conservative would go short TSLA now, so I imagine it's just a few shares. But what I can believe is that people who were totally wrong in 2018 are still totally wrong.

 

[EinSV]

As it turns out, my view is that every point in that first group, how Tesla’s addition is unique or atypical, are attributes that likely add to any upswing TSLA was going to have due to the addition.

Theres one item I think is important (and counterintuitive) re TSLA that is typical of S&P adds, that point I view as a current in all this trading in the direction of moderating TSLA’s rise towards the norm.

So, overall, more extra boost than not.

How have I handled this?

Two points of context first... I’ve kept a basic core position without any sells from 2012 through 2019 based on valuation. It was valuation, with plenty of help from TMC in estimating that despite all the noise, that had me hold through those years and just add trading shares on irrational selloffs. This whole S&P event I see as a trading event, not tied to Tesla’s performance and underlying value. I doubt anybody really has insight re where the trading goes near term... neither $1,100, $350, or both within the next 5-6 weeks would surprise me.

Second point, I had a very large portion of my assets in TSLA over that time, and it’s probably not even a good idea for me to focus on hitting homeruns in my portfolio at this point.


So, as I saw from the $408 price at announcement better than avg S&P add dynamics likely in this non-valuation event, I’ve had a somewhat bullish bias, offset by my valuation focus and awareness that this move is not about a change in Tesla’s success.

I could see TSLA doing anything from 2X to 10X over the next decade as reasonably plausible scenarios. With that I trimmed in a first round at an avg price of $490, and I’m in the middle of doing so again in what would avg $590 if completed. Would do so again from about $660-720... which would bring me to TSLA being about 25% of my assets.

Another element is that there are deeply polarized views on TSLA's valuation (or future potential, if you prefer). On one end of the spectrum there are many who think TSLA has the potential to deliver 5-10X or more over the next 5-10 years. At the other end are investors who think TSLA is worthless, or at least vastly overvalued. A large group of strong bulls are going to be hard to convince to sell at anything close to the current price.

In other words, demand for TSLA shares -- unlike most stocks -- is fairly inelastic.

This isn't just shareholders who have a "HODL" mentality or want to hold for reasons other than potential returns -- it is often strongly held views about TSLA's future potential that are not accepted by the market or reflected yet in the stock price.

 

[ZeApelido]

TSLA would need to average around a 4% rise each day this week to reach $700. Not highly likely, but I certainly wouldn't bet against it either.

 

[Words of HABIT]

As it turns out, my view is that every point in that first group, how Tesla’s addition is unique or atypical, are attributes that likely add to any upswing TSLA was going to have due to the addition.

Theres one item I think is important (and counterintuitive) re TSLA that is typical of S&P adds, that point I view as a current in all this trading in the direction of moderating TSLA’s rise towards the norm.

So, overall, more extra boost than not.

How have I handled this?

Two points of context first... I’ve kept a basic core position without any sells from 2012 through 2019 based on valuation. It was valuation, with plenty of help from TMC in estimating that despite all the noise, that had me hold through those years and just add trading shares on irrational selloffs. This whole S&P event I see as a trading event, not tied to Tesla’s performance and underlying value. I doubt anybody really has insight re where the trading goes near term... neither $1,100, $350, or both within the next 5-6 weeks would surprise me.

Second point, I had a very large portion of my assets in TSLA over that time, and it’s probably not even a good idea for me to focus on hitting homeruns in my portfolio at this point.


So, as I saw from the $408 price at announcement better than avg S&P add dynamics likely in this non-valuation event, I’ve had a somewhat bullish bias, offset by my valuation focus and awareness that this move is not about a change in Tesla’s success.

I could see TSLA doing anything from 2X to 10X over the next decade as reasonably plausible scenarios. With that I trimmed in a first round at an avg price of $490, and I’m in the middle of doing so again in what would avg $590 if completed. Would do so again from about $660-720... which would bring me to TSLA being about 25% of my assets.

@SteveG3, I believe you are going about selling the wrong way. If need to sell, one should time their selling to events that are known, not the share price. The share price is not in one's control. However many known events are in your control, such as S&P500 inclusion for December 21st, P&D 4Q F'20 numbers, CC 4Q F'20, opening of Berlin GF, etc. If you are looking at trimming perhaps waiting till just prior to next event. Not an advice.

 

[SteveG3]

@SteveG3, I believe you are going about selling the wrong way. If need to sell, one should time their selling to events that are known, not the share price. The share price is not in one's control. However many known events are in your control, such as S&P500 inclusion for December 21st, P&D 4Q F'20 numbers, CC 4Q F'20, opening of Berlin GF, etc. If you are looking at trimming perhaps waiting till just prior to next event. Not an advice.

Tying to my sense of the S&P event (nobody really knows, but I think the music stops somewhere between $600 and $850), in the context of my valuation of Tesla (again, as little as a double and as much as a 10X over the next decade are about the limits of what I think there’s a reasonably plausible case for. I think 2.5X to 5X are about the meat of that range). All of that in the context of my personal circumstances... I don’t need to outperform the market or even close to that. So, lower risk has value to me. If I was 30 and a big win would make a big difference in my circumstances, I’d probably have gone from 100% to 75% now, possibly stay 100%.

 

[UnknownSoldier]

I'm fed up. People completely ignore moderator instructions to stop posting about ... anything... colonoscopies, child seats, politics, island vs. mountain, Coronavirus, sex, sexism, attacks on other members, whatever. Then there are so many different off-topic subjects that there is no hope of managing them; mods can at best handle one subject at a time, and only if they catch it in time. Some people get upset when we delete something and post anti-mod diatribes (which, by the way, we don't usually delete, because they aren't against any actual rules), and even lie about the contents of what was deleted, or claim it was autocorrect. Others tell us how to do our jobs, or how to fix the software that we have no say in.

I'm going to be blunt here.

You're not being paid to do this, so don't get frustrated or take it too seriously. All the actual trolls who posted with malicious intent are long gone after the stock's run this year, so we're pretty much all here because we're investors and support the company and it's mission. People will veer off topic, a conversation might happen for awhile, eventually people will get tired of the off-topic thread and it will peter out on it's own. It's just not worth the effort to get emotional about it. I'm only speaking for myself but I'm sure everyone here shares the sentiment that no one hates you or any of the moderators here. People who aren't happy will always end up leaving in the end and nothing you do or don't do will change that, so it's best not to worry about it.

 

[SteveG3]

Another element is that there are deeply polarized views on TSLA's valuation (or future potential, if you prefer). On one end of the spectrum there are many who think TSLA has the potential to deliver 5-10X or more over the next 5-10 years. At the other end are investors who think TSLA is worthless, or at least vastly overvalued. A large group of strong bulls are going to be hard to convince to sell at anything close to the current price.

In other words, demand for TSLA shares -- unlike most stocks -- is fairly inelastic.

This isn't just shareholders who have a "HODL" mentality or want to hold for reasons other than potential returns -- it is often strongly held views about TSLA's future potential that are not accepted by the market or reflected yet in the stock price.

the shareholders you refer to *who are still confident we are undervalued* I include in the HODL group.

 

[Singuy]

Another nonsense piece in Forbes, written by a guy who says he just went short TSLA for the first time on Friday.
Do S&P 500 Investors Really Want To Buy Tesla Now?

He points to Yahoo being added to the S&P 500 in 1999 as a cautionary tale. And cites Scott McNealy's whining about how Sun's stock was overvalued and crashed (on a personal note, I left Sun in 1999 when my stock options were still worth something, then proceeded to lose it all and more in the .com crash). Then he asks us "On May 1, Elon Musk himself tweeted he thought Tesla was overvalued. Back then, Tesla was trading at 6x sales. Today, the multiple exceeds 18 times sales. Has Tesla become three times better of a company in just six months?"

He seems to be shocked that the S&P committee has rules for inclusion and doesn't consider a bunch of other stuff:
For some reason, S&P overlooks the fact that Tesla trades at a trailing P/E ratio of 928, and a forward P/E of 252, both of which are well above the long-term average P/E for the S&P 500 of around 17.

For some reason, it doesn’t matter whether Tesla earns one dollar of net profit or a billion dollars of net profit. Profitability is viewed through a simplistic prism akin to a pass fail exam.

S&P 500 investors: Does that seem rational?

And then he claims to be a Tesla fan as described in this piece he wrote in 2018 in which he showed himself to be an investing idiot who actively prevents his clients from making good money:
https://www.realclearmarkets.com/ar...s_are_scary_thank_goodness_for_elon_musk.html

I really can't believe that anybody who is obviously so conservative would go short TSLA now, so I imagine it's just a few shares. But what I can believe is that people who were totally wrong in 2018 are still totally wrong.

Must be some screws loose in his brain. Pointed to Yahoo as a cautionary tale...and yet not follow through. Yahoo rose throughout the entire week post S&P announcement and then hitting a crescendo the night before inclusion.....so shouldn't you be shorting on the day prior to inclusion or on the day of inclusion?

Yahoo soars on eve of addition to S&P 500 - CNET

 

[lafrisbee]

I'm fed up. People completely ignore moderator instructions to stop posting about ... anything... colonoscopies, child seats, politics, island vs. mountain, Coronavirus, sex, sexism, attacks on other members, whatever. Then there are so many different off-topic subjects that there is no hope of managing them; mods can at best handle one subject at a time, and only if they catch it in time. Some people get upset when we delete something and post anti-mod diatribes (which, by the way, we don't usually delete, because they aren't against any actual rules), and even lie about the contents of what was deleted, or claim it was autocorrect. Others tell us how to do our jobs, or how to fix the software that we have no say in.

I am not surprised you would post something as off topic as this on a Sunday evening!

 

[SteveG3]

@SteveG3 , so if TSLA was then 25% of your assets, you'd have 75% that are invested in something better? What on earth could that be? Thanks for sharing.

at $720, or $3600 pre-split would be 25% of my assets. a bit over 35% at the moment.

I am looking at some alternatives. They don’t need to be homeruns, but there’s a couple I think could be. Would require pre-IPO access.

Investment isn’t all about maximizing returns for me at this point. Not to be obnoxious, but I’ve started thinking about how to do “social good” with a considerable portion of the money.

 

[OrthoSurg]

I'm going to be blunt here.

You're not being paid to do this, so don't get frustrated or take it too seriously. All the actual trolls who posted with malicious intent are long gone after the stock's run this year, so we're pretty much all here because we're investors and support the company and it's mission. People will veer off topic, a conversation might happen for awhile, eventually people will get tired of the off-topic thread and it will peter out on it's own. It's just not worth the effort to get emotional about it. I'm only speaking for myself but I'm sure everyone here shares the sentiment that no one hates you or any of the moderators here. People who aren't happy will always end up leaving in the end and nothing you do or don't do will change that, so it's best not to worry about it.

Sometimes when it gets off topic I learn new interesting things. As long as the info posted makes me learn something new, useful and interesting, it completes my forum presence objective: acquire new knowledge.
As long as the off topic series of post is not a useless 4 pages of one liners...

 

[BornToFly]

How difficult is it to move from, let's say, Fidelity to IBKR, when you have shares and have sold call and put options? Asking for a friend.

 

[OrthoSurg]

at $720, or $3600 pre-split would be 25% of my assets. a bit over 35% at the moment.

I am looking at some alternatives. They don’t need to be homeruns, but there’s a couple I think could be. Would require pre-IPO access.

Investment isn’t all about maximizing returns for me at this point. Not to be obnoxious, but I’ve started thinking about how to do “social good” with about half the money.

a homerun could be Starlink

 

[SteveG3]

a homerun could be Starlink

yup. I know it’s not often available but Spacex is one of the ideas I’m looking at.

 

[lafrisbee]

as to off topic "threads" within this thread...I can mash that tesla accelerator to the next post, and as soon as I see the word "apple" or nm or tax.... it is pedal to the metal.
I did suggest months ago that an "OT" function be listed with the "likes and dislikes" where after say ten(?) people hit the Off topic button it does go "hidden" unless clicked on.
I got yelled at for it.
So OK.

 

[Words of HABIT]

Tying to my sense of the S&P event (nobody really knows, but I think the music stops somewhere between $600 and $850), in the context of my valuation of Tesla (again, as little as a double and as much as a 10X over the next decade are about the limits of what I think there’s a reasonably plausible case for. I think 2.5X to 5X are about the meat of that range). All of that in the context of my personal circumstances... I don’t need to outperform the market or even close to that. So, lower risk has value to me. If I was 30 and a big win would make a big difference in my circumstances, I’d probably have gone from 100% to 75% now, possibly stay 100%.

We all have different risk tolerances, and would not criticize anywone selling at these levels. A bird in the hand is worth two in the bush. From your profile you have been investing in Tesla since at least 2012 and most likely have substantial gains. You have served Tesla well during their bankwuptzy phase. Glad that you will consider leaving 1/4 of your TSLA for long term growth.

IMHO I am less shocked that Tesla is up 600% YTD during a World wide pandemic not seen in 100 years, than that many on this forum find 600% is still not enough, they need more, need to take addition risk, leverage, margin, calls, puts...My brother just bought a race horse, so what do I know?

 

[SteveG3]

We all have different risk tolerances, and would not criticize anywone selling at these levels. A bird in the hand is worth two in the bush. From your profile you have been investing in Tesla since at least 2012 and most likely have substantial gains. You have served Tesla well during their bankwuptzy phase. Glad that you will consider leaving 1/4 of your TSLA for long term growth.
View attachment 612999
IMHO I am less shocked that Tesla is up 600% YTD during a World wide pandemic not seen in 100 years, than that many on this forum find 600% is not enough, they need more, need to take addition risk, leverage, calls, puts.

thanks, and yup, passed 100X in core shares last week

 

[ZeApelido]

Hmm that made me think of an interesting question: Do you think TSLA share price would be the same, lower, or higher if there was no pandemic?

 

[lafrisbee]

Damn it's been so sloooow this 2 and a half day week end...come on. Open already....someone in Japan or Germany or somewhere tell us some stock price...hell just make one up!

Sorta OT...
But if you think we feel funny now, wait till Xmas. Christmas Day will be on a Friday. The stock market will be closing at 1 PM EST on christmas eve (thursday).

And with potentially the craziest week prior to closing on Christmas Eve, the market will be closed for the next three and a half days, practically FOUR DAYS!
What will that feel like? Whatever happens between then and now is going to be of so much interest, and perhaps entertaining... and then all of us get shoved in deprivation tanks for almost four days!

Focus People. FOCUS! One day at a time... it'll be over in a flash... when the market closes at 1 PM EST on the 24th, you guys?... Whose gonna HODL my hand?

 

[ClownMouth]

At what point should I stop buying stock?
When will or did you stop buying?

Deserves its own thread IMO. Gets into how many X you think $TSLA will increase over time as well as how much $$ is “enough” and therefore, what to diversify into after that.

Notably, to me at least, Audie reiterated today that he thinks we are still early in the story which may seem obvious to some but also might seem outrageous to those here who have been spreading the gospel for almost a decade.