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

lafrisbee

Active Member
Dec 13, 2019
1,537
4,863
Indialantic FL
Agreed. I am one of those scaredy-cat HODL people. As much as I am tempted to try to play the timing game, I know I am but a tadpole in a river of piranhas. I keep convincing myself it just can't be that easy as everyone else would be trying to do the same.

I hope and expect I will be here again in a month to once again congratulate all of you with the conviction to make big timing bets. Best of luck!
OK OK this is extremely OT but come on the guy was referencing tadpoles and piranhas completely wrong. You're in my pond of expertise here. Skip it if you don't want to know but you might find it if interest...


Piranhas are extremely nervous scared fish. if anything the individual investors are piranhas. You see they do travel in schools and need each other to take down prey. But the worst thing you can be around a piranha is another piranha. They do not fear an animal many times larger than themselves. but what they have to worry about is when a frenzy starts you don't want to be at the front. Well because the piranha behind you is worked up and goes in half blind biting the first his mouth touches... it's a piranha eat piranha world out there... Piranhas will fake rush a target and pull out hoping the next piranha behind em will hit the target first...sounds familiar? Talk about Sun Tzu.

Now tadpoles, Tadpoles are monsters. Most species I know have a weird genetic makeup. As tadpoles some have the "cannibal" gene, not all just some. It's a survival mechanism.
When the tadpoles hatch in a puddle the race is on. They have to evolve into adults before the puddle dries up. And eating a diet low in protein slows their growth, eating high protein accelerates their growth. And if there are sources of high protein food then only some of the tadpoles have their cannibal gene activated. Not all just "some." And the perfect protein source for any animal is identical to its amino acid percentages, which means...ain't nothing better for a tadpole to eat than another tadpole. This increases the likelihood that some of the tadpoles will become adults, but at the expense of some of the tadpoles which are eaten. And yet nature makes sure that only a percentage of tadpoles become cannibals so they don't end up killing each other off by viciously injuring the whole population which would likely happen if they all or a great percentage of them became cannibals. (Sidebar: Sand tiger sharks in the womb have long been known to eat other embryonic sharks in the womb. At first it was believed to be an advantage for the developing shark to become large enough at birth to be able to fend off predation. Now it is thought to ALSO insure that the first male shark to fertilize the female eliminates the younger sharks of another male. But that strategy is limited in scope.)
And even cooler, the cannibal strategy isn't such a high percentage that a majority of the non-cannibal tadpoles are eaten. So nature provides that if the conditions are right that a massive number of tadpoles mature into adults. Thus creating another strategy of survival.
As stock purchasers and sellers perhaps we are both tadpoles and piranhas of various types, using various strategies... I tied it back to the stock market.
 

Artful Dodger

"Ducimus, lit"
Aug 9, 2018
8,266
101,030
Canada
What’s S&P?
Good point. Many noobs may not actually know that:

"S&P Dow Jones Indices LLC (/daʊ/) is a joint venture between S&P Global, the CME Group, and News Corp that was announced in 2011 and later launched in 2012. It produces, maintains, licenses, and markets stock market indices as benchmarks and as the basis of investable products, such as exchange-traded funds (ETFs), mutual funds, and structured products."​

Cheers to the longs!
 

lafrisbee

Active Member
Dec 13, 2019
1,537
4,863
Indialantic FL
I don't see this as physically possible. Nothing has changed.

SP still ratchets up any time more than a handful of orders are placed with any modest volume. No indication there's been significant buying yet from the institutional side. This should all still happen....in the buying window.

Will anyone be selling in a window where we spike from $650 to $900 or more? Perhaps, but not nearly enough to overwhelm buyers needing 8-16% of the float.

How are these institutional buyers gonna sell after the peak when the entire purpose of buying was to simply mimic TSLA's position in the S&P500? They're holding the shares forever, should be a post peak slide, but by definition it can't be back to the pre-window high. Unless of course things get really really out of control in the next 2 weeks.
I knew I had NOT figured it out. But YOU just made it worse.
Would you guys get together and figure this out. All of it.
Logically figure it out. identify all the parts, and the issue, and get to work a la Frank SG.
 
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Knightshade

Well-Known Member
Jul 31, 2017
11,150
14,458
NC
The have until Dec 18th to complete their buying.

No, they really don't.

This has been explained like 50 times lately, not sure why folks keep repeating the claim.



There are conflicting opinions on this. Personally, I fall into the camp that believes that Index funds are limited to buying within three business days of the inclusion date. Source, SPY prospectus:

Conflicting opinions- but only one set of facts.

The time any fund has to buy the shares are set by the rules of that fund.

Each fund has its own rules.

SPY- as you cite, has 3 days before and after the inclusion date to buy.

Other funds have 7 days either way.

Other funds have other windows.

Some also include specific disclaimers allowing the managers to briefly deviate from the normal rules in situations they think appropriate.


That said-

Furthermore, why would an index fund buy early? Their purpose is to simply track the index, not beat it. They should be agnostic to the share price, and could be placing their jobs in jeopardy by purchasing outside the days surrounding the inclusion date.

In other words, I think all of this run-up can be attributed to speculators, benchmarked funds, and others hoping to dump shares to index funds at as high of a price as possible.

Absolutely... most of the larger funds I'm aware of at least would not, and in fact by their own rules could not be buying this early... and no earlier than Dec 14... (and potentially as late as Dec 28).


Does that mean the Index funds cannot start buying TSLA before Dec.11, since they do not know what to sell to free up the money ?


See above.

Most can't buy because their own rules don't allow buying that far ahead of inclusion date.

Who they're dropping doesn't really matter that much, it's not like they're dropping someone with the same weighted market cap as Tesla where it'd be dollar for dollar anyway- they'll need to sell down some of EVERYTHING.





Remember that index funds are not the only big buyers for this event. Funds benchmarked to the index might buy even more than the indexers. (Benchmarked funds have $6.6 trillion in assets versus $4.6 trillion in the index funds, according to Rob Maurer.)

It is not even clear that indexers will be done buying on Dec 21, according to several sources cited by Rob. But even if the indexers are done then, when will the benchmarkers buy? While the indexers are gobbling up shares?

This argument is really perplexing.

Since you're not an index fund you can buy or sell whatever shares you want whenever you want (within the bounds of your fund rules- like if you're a real estate fund you probably can't buy Boeing or whatever)

If your goal, as the benchmarkers goal is, is to BEAT the returns of the S&P 500, you'd already own a bunch of Tesla and would have for a while now

You'd have no need to buy a bunch more during a price spike.... on the contrary the spike would make the bunch you smartly bought 6 months or a year ago look fantastic on your results...

(see ARK funds results vs an S&P500 index fund for some examples).
 

ZeApelido

Active Member
Jun 1, 2016
2,676
20,798
The Peninsula, CA

Artful Dodger

"Ducimus, lit"
Aug 9, 2018
8,266
101,030
Canada
Hmmm, when is the %age weighting of $TSLA in the S&P being set, is that today after market close? If yes, might this be the reason behind the immense effort to keep it down?

Just wondering...
I think that gets announced on Fri, Dec 11. Does anybody know what the S&P schedule is for it's Dec rebalancing announcement? Are these two events going to both occur on Dec 11? TIA.

Cheers!
 
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StealthP3D

Well-Known Member
Dec 12, 2018
8,629
63,235
Maple Falls, WA
There are conflicting opinions on this. Personally, I fall into the camp that believes that Index funds are limited to buying within three business days of the inclusion date. Source, SPY prospectus:

"Specifically, the Trustee is required to adjust the composition of the Portfolio whenever there is a change in the identity of any Index Security (i.e., a substitution of one security for another) within three (3) Business Days before or after the day on which the change is scheduled to take effect."

There shouldn't be conflicting opinions on this.

Every fund is unique and has their own rules. S&P has no say in the matter. For example, the Schwab SPY fund allows considerable leeway to the fund manager to buy early or late due to circumstances. This gives them a potential leg up on funds that have less discretion. I assume Schwab isn't the only one that allows this. It could also cause them to underperform the Index if they misjudge so the natural inclination is to stick closely to the inclusion date.

The bottom line is the S&P 500 Index fund buying will be concentrated towards the inclusion date and 3 days on either side. The funds benchmarked to the S&P typically have unlimited discretion. This is what will help create a floor for TSLA share price before and after the inclusion event. If the price drops, a lot of benchmarked funds that didn't want to pay what they considered "nosebleed" prices will jump in.
 

Artful Dodger

"Ducimus, lit"
Aug 9, 2018
8,266
101,030
Canada
Gary did lookup the last big addition to theSP500 which was FB and he did mention that the bulk of the buying was on the last day.

Given the liquidity concerns, Dec-18 might be a bit lower compared to the FB last day %, but I think it will still be the biggest volume day of the inclusion period

https://twitter.com/garyblack00/status/1329082599755501568
https://twitter.com/garyblack00/status/1329060291045371915

I don't think there was $28B shares sold short against FB, artificially inflating their float, and about to go 'poof' on by Dec 11-ish... :p

Cheer!
 

MP3Mike

Well-Known Member
Feb 1, 2016
14,978
31,853
Oregon
Bloomberg is reporting that the Tripp lawsuit has settled. He will pay $400k and admit wrongdoing.

Ex-Tesla Factory Worker to Pay $400,000 to End Feud With Musk

Something tells me that this won't be the end of the story. Either he won't pay and we will be back in court, or he will turn on the people who paid him for leaking. It would be great to know names and amounts.

Where is he going to come up with $400k? Is the short seller that was funding his law suit going to pay?

This might make Tesla employees think twice about leaking information to reporters... (Which I think is a good thing.)
 

Causalien

Prime 8 ball Oracle
Nov 19, 2012
3,738
13,521
Pothead's Republic of Canukstan (PRC)
Bloomberg is reporting that the Tripp lawsuit has settled. He will pay $400k and admit wrongdoing.

Ex-Tesla Factory Worker to Pay $400,000 to End Feud With Musk

Something tells me that this won't be the end of the story. Either he won't pay and we will be back in court, or he will turn on the people who paid him for leaking. It would be great to know names and amounts.

Yes. 400k is peanuts for TSLA. I want to know the ppl behind Tripp
 

Curt Renz

Well-Known Member
Mar 5, 2013
6,276
78,935
USA
The drop before close today should be a sign for everyone on what will happen after Dec. 21st. I will be shocked if we have less than a 30% drop between the 21st and the end of the year. (Not advice, since I'm often wrong...)

There has not been an automaker in the Dow Jones Industrial Average since the General Motors bankruptcy in 2009. Now that the committee will be putting Tesla in the S&P 500, I suspect the next consideration will be for the DJIA. However, since the DJIA is share price weighted, I assume a requirement for Tesla inclusion will be another stock split. :cool:
 

dc_h

Active Member
Feb 14, 2015
3,471
12,974
Naperville, IL
My observation over the last several months is that he wants VW to fire him and is becoming disillusioned that it's taking them so long. He will likely end up working for Tesla in Berlin. He's a perfect fit.
It would be an amazing way for Elon to get his Tim Cook COO. It would free him up to focus on engineering and design and more effort in SpaceX, Boring and Neuralink.
 

Bet TSLA

Active Member
Dec 8, 2014
2,807
10,249
Cupertino, CA
It would be an amazing way for Elon to get his Tim Cook COO. It would free him up to focus on engineering and design and more effort in SpaceX, Boring and Neuralink.
Diess being in charge of anything at Tesla would be ridiculous. How would he have any idea how to function in an environment where his fundamental job is to foster innovation? Anybody with that mindset at VW lost their jobs years ago.

Elon's admiration for Diess isn't the "I'd hire you in a heartbeat" type; it's the "I'm impressed you can function at all in that sh**show of a company. I'd die." type.
 

dakh

Supporting Member
Jun 14, 2015
1,137
2,472
Seattle, WA
If the SP does what I expect, I'm going make a killing on the way up and down. I have a boatload of calls already that are way up and I will hold them until near Dec. 18/21. Then when the top seems near, I will buy a boatload of shoter-term puts with some of the profits from my calls. (no I would not be a bear as my core shares/LEAPS I am not touching and they will massively dwarf any puts I buy). This could end up being a 10-30 bagger both up and down!

Thanks to you my calls are already 350% up (what is it, a 4-bagger). Could go get myself a second Tesla on this small play. Please set up a Patreon account so I can sponsor your beverages of choice for a while :)
 

gabeincal

HODLer / Theta seller
Jul 5, 2016
1,075
5,547
SF Bay, CA
Gary did lookup the last big addition to theSP500 which was FB and he did mention that the bulk of the buying was on the last day.

Given the liquidity concerns, Dec-18 might be a bit lower compared to the FB last day %, but I think it will still be the biggest volume day of the inclusion period

https://twitter.com/garyblack00/status/1329082599755501568
https://twitter.com/garyblack00/status/1329060291045371915
View attachment 613249

Thank you for this. And the price action for that 2013 event is below. It dips after the 24th, but not for long. And I bet FB didn't have that volume of short that TSLA does.

Screen Shot 2020-11-30 at 9.38.39 PM.png
 

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