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

[djy]

I think you're misunderstanding what benchmarked against means.

It means they want to beat the results of the index.

Why would you mirror something you are trying to do better than?

They held 0 TSLA because they felt it would not help them BEAT the index results.

If a managed fund that charges significant fees were to report "Hey we exactly matched the returns o a passive S&P index fund!" their customers would wonder WTF they're spending their money on with those fees.

Buying into stocks NOT in the index is literally the only way to beat it





Again- how does that make any sense?

At that point they're just a passive index fund- not an actively managed fund trying to beat the index.

If you want to BEAT the index, mirroring it is exactly the way to insure you fail at your one job.



So pre-inclusion, an active fund manager either thought TSLA would do worse than the index as a whole, and bought 0.

Or she thought it would beat the index as a whole and bought shares (see ARK as the most obvious example of such a fund).

The same is true post inclusion.

I used to think this but then realized, active fund managers who don’t understand Tesla (most of them) will want to add TSLA to minimize their risk against the index and then try to beat the index with other positions that they do understand.

 

[M|S|M MYP]

Oh Gordo...guess my last tweet did it:

 

[-=buzz=-]

I think you're misunderstanding what benchmarked against means.

It means they want to beat the results of the index.

Why would you mirror something you are trying to do better than?

They held 0 TSLA because they felt it would not help them BEAT the index results.

If a managed fund that charges significant fees were to report "Hey we exactly matched the returns o a passive S&P index fund!" their customers would wonder WTF they're spending their money on with those fees.

Buying into stocks NOT in the index is literally the only way to beat it





Again- how does that make any sense?

At that point they're just a passive index fund- not an actively managed fund trying to beat the index.

If you want to BEAT the index, mirroring it is exactly the way to insure you fail at your one job.



So pre-inclusion, an active fund manager either thought TSLA would do worse than the index as a whole, and bought 0.

Or she thought it would beat the index as a whole and bought shares (see ARK as the most obvious example of such a fund).

The same is true post inclusion.

The argument is, that previously benchmarked funds could just ignore TSLA.
Now they have to actively decide to exclude it or maybe get a benchmark neutral position. Some Funds may even have requirements preventing them from adding TSLA earlier.

 

[M|S|M MYP]

This one made me LOL real hard:

 

[Todd Burch]

Volume doesn't look too bad, in any case, we're 4% up without obvious buying-frenzy, I'll take that fro the moment...

Volume's certainly better...but obviously a lot of that volume is still on the sell side. Silliness.

 

[Todd Burch]

This one made me LOL real hard:

View attachment 617623

Respond to him and say "Great advice! I will continue to hold the stock as it continues to make me gobs of money. I'll also hang onto the car, which I love and which is way better than anything I've ever driven. In fact, I might buy another with all this TSLA cash I'm swimming in."

 

[M|S|M MYP]

Respond to him and say "Great advice! I will continue to hold the stock as it continues to make me gobs of money. I'll also hang onto the car, which I love and which is way better than anything I've ever driven. In fact, I might buy another with all this TSLA cash I'm swimming in."

I would rather spend my efforts typing on this forum with y'all....at least we have 'constructive' discussions here

 

[Lessmog]

This one made me LOL real hard:

View attachment 617623

That lady (?) seems to have missed a century or two? Not an advisable course.

 

[Todd Burch]

I cannot understand the selling here, even though it's outweighed by the buying.

I can't understand it, until I realize that one of the dumbest kids in my high school class went on to become a day trader.

 

[viridi]

Someone does not want this to cross $635 again. Getting out the popcorn. (-;

 

[ggr]

Remember, tomorrow is the first day that actual S&P index funds can buy. Pressure today is from benchmark funds only, and they can take their time.

 

[H Mak]

I cannot understand the selling here, even though it's outweighed by the buying.

I can't understand it, until I realize that one of the dumbest kids in my high school class went on to become a day trader.

We are up 50% in a month. There's the reason.

 

[Lessmog]

Looks to my unschooled eye like the auth service agent is down, making login impossible. They recommend phoning in if you need to trade.

Earlier today, Google was reportedly also down for a half hour or so -- all except for search.

Wonder if there is a sinister actor behind both? Timing seems a bit sus ...

Anyway, looks like Nordnet is up again, was able to login afresh. Queer though.

 

[TheTalkingMule]

Remember, tomorrow is the first day that actual S&P index funds can buy. Pressure today is from benchmark funds only, and they can take their time.

I would've thought it'd be more like Wednesday, the 3 trading days prior to inclusion?

 

[Knightshade]

I would've thought it'd be more like Wednesday, the 3 trading days prior to inclusion?

We've been over this exhaustively, many many times now.

Each fund has its own rules.

Some could be allowed to buy today

Some not till 3 days in advance.

Some could've been allowed to buy last week even (though likely a small minority).

MOST funds that have a rule on this in their prospectus seem to be either 3 or 7 days... (and that's both pre and post inclusion date) but even those funds usually have some disclaimers about additional special cases.



All that said- several folks have posted sources in the past suggesting during previous inclusions most funds don't buy until the day before inclusion no matter their own rules.

Of course this isn't a typical inclusion so YMMV.

 

[vikings123]

I cannot understand the selling here, even though it's outweighed by the buying.

I can't understand it, until I realize that one of the dumbest kids in my high school class went on to become a day trader.

I honestly think all this is buying is from delta hedging. Lots of bullish call flow today just like every Monday.

I would like to see some “real” buying from institutions, organic growth(stock buying) vs inorganic growth(buying from delta hedging) is how I think about this.

 

[chiptoe]

We've been over this exhaustively, many many times now.

Each fund has its own rules.

Some could be allowed to buy today

Some not till 3 days in advance.

Some could've been allowed to buy last week even (though likely a small minority).

MOST funds that have a rule on this in their prospectus seem to be either 3 or 7 days... (and that's both pre and post inclusion date) but even those funds usually have some disclaimers about additional special cases.



All that said- several folks have posted sources in the past suggesting during previous inclusions most funds don't buy until the day before inclusion no matter their own rules.

Of course this isn't a typical inclusion so YMMV.

I am still not clear on whether those are 3/7 business days or calendar days??

 

[Knightshade]

Changing up the weighting of those stocks is a way to beat the index. i.e. double up on Apple and own half as much Stock X. Not buying Tesla now is an active choice, in that they believe Tesla will underperform. Previously they could just ignore it

... how was it not an active choice before but magically is one now?

If you thought it would outperform the index as a whole before you'd have bought it before. ARK sure did.

If you thought it wouldn't you wouldn't.

Active choice.

Same today.


I dunno- maybe my standards are too high...

If I was gonna pay fees to an actively managed fund I don't think I'd accept "we are just gonna add exactly index weight of this new index stock because we're too lazy to make a decision about it" for an answer.

WTF am I paying them for in that case?

 

[lafrisbee]

I think you're misunderstanding what benchmarked against means.

It means they want to beat the results of the index.

Why would you mirror something you are trying to do better than?

They held 0 TSLA because they felt it would not help them BEAT the index results.

If a managed fund that charges significant fees were to report "Hey we exactly matched the returns o a passive S&P index fund!" their customers would wonder WTF they're spending their money on with those fees.

Buying into stocks NOT in the index is literally the only way to beat it





Again- how does that make any sense?

At that point they're just a passive index fund- not an actively managed fund trying to beat the index.

If you want to BEAT the index, mirroring it is exactly the way to insure you fail at your one job.



So pre-inclusion, an active fund manager either thought TSLA would do worse than the index as a whole, and bought 0.

Or she thought it would beat the index as a whole and bought shares (see ARK as the most obvious example of such a fund).

The same is true post inclusion.

I will give you a differing opinion on how Benchmark funds "beat" the index.
Benchmark fund "managers" do not know every fund's business model. On ones they are not experts they hold the same weight as the index fund. And on the stocks/areas they are knowledgeable about their holdings reflect their comprehension.
I feel as though very few of the benchmark funds that understand TSLA will hold less TSLA than the index. And those that do not want to even try to understand TSLA will prudently have the exact % as the index fund.

 

[JBRR]

If anyone was wondering..

SolarWinds Customers

Tesla isn't a customer of Solarwinds.