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

[Todd Burch]

Lol that straight line down. Such natural movement!

 

[jkeyser14]

Setting up a limit sell order for 4 figures. If the funds are waiting for the last minute to buy they will not be happy.

 

[Knightshade]

To be an S&P index fund, you have to obey their rules, which specify three days before, day of inclusion, three days after. (Trading days.) If you are a benchmark fund but not an index fund, you make your own rules... but then have to comply with them, whatever they are.

Can you cite where S&P has such a rule?

I ask because specific Index funds each appear to have their own, different, rules- some are 3 days some are not.

This would be the first I've heard of S&P themselves imposing any rules whatsoever on this.

 

[chrsk]

How deep will this shake bee...? Have a feeling it’s not over yet.

 

[FrankSG]

Another shake the tree event? This action just all seems so dirty to me.

Wall Street, you so dirty.

NASDAQ down 0.5% in last 15 min.

TSLA amplified, because of delta hedging, and perhaps some panic selling too because people expected more S&P squeezing around this time.

 

[Opus BC fan]

I have been extraordinarily accurate in my long term TSLA predictions.
Short term - not so much...

 

[Unpilot]

This seems a little silly doesn't it?

 

[Nocturnal]

Can somebody let the market know that if they make it dip we will just buy more calls?

 

[ProfTournesol]

Shake the tree (hard)....
(on the 11th they did it a hour later)

 

[StealthP3D]

We would really need to separate short term supply/demand from long term as well. For many reasons those curves will be very different. Agreed that some holders won't sell no matter what (think Elon), some will sell but only at very high prices (many here), and some will sell at modest prices or any price (traders, Ark invest etc.).

Truly modeling the supply and demand curves for something like TSLA would be an immense task. Just modelling something like a model 3 is not easy.

Not only an immense task, it actually isn't modelling - it's speculation. Because the future supply and demand is driven by unpredictable humans. If any of your economy professors ever try to tell you that humans are just predictable machines when it comes to money, you know they don't know what they are talking about.

I know we saw data saying the S&P funds havent bought yet, but I am beginning to think that there could be some agreement to transfer all shares in a non-volatile way around $640 a share between some of the front runners and some of the funds. We are just stuck to hard to $640 (and have been for a week) when we have all been expecting big volume.

That would be very illegal.

It would be illegal if the agreement to sell at non-market prices was made at the same time as the sale. And I believe it would run afoul of perhaps some funds legal prospectus even when done in advance.

However, a contract to transfer a fixed number of shares at a fixed price in the future wouldn't necessarily be illegal if that price was justifiable by de-risking and increasing liquidity etc. Because the law obviously allows an entity to value the certainty and liquidity this could bring and the funds all lose if the very act of buying distorts markets in such a way that they over-pay, only to have the price come back to normal after they have bought in. For this to be legal in the context of an Index fund (or any fund for that matter) the fund would have had to disclose in it's prospectus that they have the right to enter into speculative contracts like this (essentially a custom or special purpose call contract). I'm not a lawyer but my interpretation of Schwab's S&P Index Fund (SWPPX) prospectus is that it allows them to do exactly that when the fund manager determines it's in the best interest of the fund.

And I think it's possible, and maybe even probable, that a lot of shares are trading hands via this method although I have no direct evidence to support it (just that it looks to me to be legal and makes common sense). This entry into the S&P is unprecedented in scope and that could explain some of the delay in being admitted to the Index (S&P wanted to ensure mechanisms were in place for adequate liquidity). At the very least, this is something I would consider before trading through this period.

 

[Nocturnal]

Not only an immense task, it actually isn't modelling - it's speculation. Because the future supply and demand is driven by unpredictable humans. If any of your economy professors ever try to tell you that humans are just predictable machines when it comes to money, you know they don't know what they are talking about.

Getting a little out of scope for this discussion but yeah, realistically. I think there may be a point where we have enough computing power to genuinely model something like that but for now it's in the realm of Science Fiction. We need Hari Seldon to assist with that.

 

[Right_Said_Fred]

Too many speculators are afraid of 'the big dip'. So if they think the plug gets pulled, they jump ship. This price action makes sense.

 

[Singuy]

QQQ dropped like a rock so don't get too excited and making up conspiracy theories.

 

[Knightshade]

However, a contract to transfer a fixed number of shares at a fixed price in the future wouldn't necessarily be illegal if that price was justifiable by de-risking, etc. Because the law obviously allows an entity to value the certainty and liquidity this could bring. For this to be legal in the context of an Index fund (or any fund for that matter) the fund would have had to disclose in it's prospectus that they have the right to enter into speculative contracts like this (essentially a custom or special purpose call contract). I'm not a lawyer but my interpretation of Schwab's S&P Index Fund (SWPPX) prospectus is that it allows them to do exactly that when the fund manager determines it's in the best interest of the fund.

And I think it's possible, and maybe even probable, that a lot of shares are trading hands via this method although I have no direct evidence to support it (just that it looks to me to be legal and make common sense). This entry into the S&P is unprecedented in scope and that could explain some of the delay in being admitted to the Index (S&P wanted to ensure mechanisms were in place for adequate liquidity). At the very least, this is something I would consider before trading through this period.

I can't speak to schwab but SPYs prospectus appears to explicitly NOT allow the use of options and other such contracts in the fund- other than a specific exception for options awarded as dividends from owned stock.

Apart from that-in general Index funds have no reason to want to do something like that.

Their goal is to MIRROR the performance of the index, not beat it.

Benchmark funds might be interested in arrangements like this but index funds don't care what stock costs, just that their fund matches the index reference.

 

[OrthoSurg]

Your wife's reading /r/wsb

She asked me to answer to that post however I feel like anyone who base their opinion on the look as the first criteria is not worth arguing in the first place.

 

[T@oo]

If any of your economy professors ever try to tell you that humans are just predictable machines when it comes to money, you know they don't know what they are talking about.

A single human no. But a group of humans (the more, the better), yes. It‘s called Psychohistory.

 

[OrthoSurg]

And this here is what gives us an unfair advantage over the market, I believe. Below was a little something I wrote couple of months ago. TL;DR: You need a second Elon Musk to compete with Tesla.

THE FUTILE JOURNEY TO FIND THE NEXT TESLA
I find it sad that 99% of so called investors have no idea who Elon Musk is. I attribute this to the nasty media attack on Musk and the general ignorance/shallowness of the average investor. Now that I'm done insulting you, allow me to give you a glimpse into the man Neil de Grasse Tyson called the most important human on Earth:
Born in South Africa, Musk began reading at a young age. By 9, he has already finished the Encyclopedia Britanica and countless other books. He's said to have photographic memory and can recite rocket formulas from conversation with SpaceX employees.
At 32 year old, he has created and sold Zip2 and PayPal, pocketing nearly $200M.
He proceeded to split that money into SpaceX and Tesla, challenging Lockheed Martin, Boeing, the entire automotive industry.
SpaceX has now become the leading space exploration company, undercutting existing launch companies by 80% per launch.
Tesla is now worth nearly the entire automotive industry combined.
SpaceX and Tesla are the top 2 dream employers for graduating engineering students. They only employ the brightest and hungriest engineers.
Musk is known for working his employees to the bones, often on a 90 hour weekly schedule.
Most employees and associates, even enemies and fired employees, mention his name with respect and admiration. Musk is loved, feared, and worshipped by his employees.
Whenever an engineer tells him something cant be done, they would be fired from the team with Musk assuming the employee's job and finishing it.
SpaceX and Tesla, therefore, have the highest risk taking attitude in the world. Thats how they beat companies once worth 100x their valuation.
Musk's philosophy is called the first principle: taking every problem down to the physic level. Whatever works, do it. No politics. No committees. Only relentless trials and errors until a solution has been reach. Rinse and repeat on a perpentual pursuit of the cheapest way to make the best products to accelerate the world's transitition to renewable energy.
So why is this important!?
Much like how thinking in First Principle has brought SpaceX and Tesla to a cult status, investors should also use it to study a company.
It amuses me when people think, now that GM, Ford, VW, etc. have promised to pour billions of dollar into researching EVs, they will become worthwhile competitors to Tesla. Equally sad are the new crop of EV startups: NKLA, SPAQ, HYLN, WKHS, etc. Some think money is the key. Some think experience. Infrastructure. Batteries.
Wrong.
Dead wrong.
If any of these was the key, SpaceX and Tesla would never have survived. Both basically started out in little garages. Musk came close to running out of money amid 2008. While GM filed for bankruptcy and Ford put up its blue oval emblem for collateral for a loan, Tesla survived with all of its dignity. While Mitt Romney called Tesla a loser in the 2008 debate with Barrack Obama, Tesla paid back the governtment loan it took early, every cent with interest.
No.
The culture is the key. It is simply unfathomable for the average so called investor what a team of brightest minds working under the most ruthless leader in the world could accomplish. And who sit atop that culture? Musk.
As Marc Tarpening, Tesla co-founder said, you dont want to compete against Musk. He will crush you totally in every aspect.
So anyone looking for the next Tesla, do you have the next Elon Musk? If not, you will fail.
It also amuses me that the number one reason anyone would go out and look for the next Tesla is that they think they miss the boat on TSLA.
Let me paint you a picture: you gave Elon Musk $200M and the Great Recession and he built the two most valuable companies, each in its respective industry. Today, Tesla has first dib on engineering talents, factories and stores in every continent, and 15 ****ing billion dollars in the bank, and you think Tesla is at the end of its growth curve? This is just the ramp up stage to a multi trillion dollar company within a decade.
Wake up. There will not be the next Tesla. Its already here. Its called Tesla. You have front row ticket to this significant piece of history. Its your choice whether to join it or just watch.

The journey to find the next Tesla is useless.
However, finding the 2nd to Tesla will be finding a 10-15 bagger stock.

 

[Artful Dodger]

I think the price elasticity declines at some point to the right on the chart. Many shares are locked up and will not be available at any price. You need a variable that will give you a curved line. Econ is over 30 years ago, so my demand charting brain cells would require a refresher course, but usually supply and demand are non-linear. Some people just need to sell at any price and sometimes more shares become available as the price goes down (market makers hitting limit loss orders) and some shares won't sell no matter how much the stock rises day to day.

As a mental exercise, it is important and helpful to remember, that some people will sell as the stock rises. Not everyone is a TMC'r and even here, some people will reduce holdings when some magic number or feeling is hit. We had a lot of big winners on the original rise from 15 to 297 back in the 2012-2015 run. They may still check in and lurk, but I think most of them cashed out enough to retire or play with Nvidia and other stocks. Personally, I have some in the money calls and may move to deleverage if we go over some number. I am currently thinking I'll do this incrementally if we move over $700 this week. If that doesn't happen, my assumption is the indexers have managed to buy in without a squeeze. The stock could still fall after inclusion, but in that instance, I think deliveries, profits and product updates and new production will drive the price.

So, when shall we expect you to post your model? (difficult to evaluate "instincts")

 

[Cherry Wine]

Too many speculators are afraid of 'the big dip'. So if they think the plug gets pulled, they jump ship. This price action makes sense.

Agreed. So far my thought on volatile trading this week between $600-$650 until Friday's closing cross is holding out.

 

[Chunky Jr.]

Doug DeMuro and Ben Sullins have video reviews of the Mach-E today. Looks like Ford is trying to make a push in social media in an attempt to generate buzz like Tesla. Good luck with that. I hope it does well because I like EVs, but I don't see Mach-E becoming a target of desire like Tesla.