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

[OrthoSurg]

I really have a hard time convincing myself to post in the investment sub-forum, as it just gets to be too emotional of a subject. At work, there are three subjects I refuse to discuss: Politics, Religion, and Investing.

But I'm going to bite the bullet, and just post one time. Take it or leave it, this is my opinion on investing, and is the strategy I've used since I bought my very first shares of stock in 1985.

Buy and hold.

If you look at the vast majority of successful growth companies, you'll find that the investors that came out on top were the ones that recognized the company's potential, bought the stock, and HELD ONTO IT until the company exited the growth stage. Yes, there are exceptions to this rule, but the MAJORITY of the time it holds true.

The saddest investors are the ones that tried to time the market along the way. When you buy a stock and hold it LONG TERM, you have a long time to be "right." When you day trade and/or short term trade, your time window to be right is very short. Are you willing to risk your long term financial stability on your short term stock price forecasting skills? I'm not. Attempting to absolutely maximize your return on investment by "buying the lows, selling the highs" with a growth stock is a fool's errand.

Adding to your position during price drops (as long as nothing negative in the stock's fundamentals has changed) is fine, but selling your whole lot on a "high" and waiting to buy back in during a "low" is not a good idea.

Dollar cost averaging (purchasing stock over a period of time) and long term stock holding are proven wealth builders. Short term and day trading are not. Sure, there are pros out there that are able to do well with day/short term trading, but for the average guy (and even pros like Warren Buffet) long term buy and hold will end up being a far better wealth builder than short term trading.

I have a great deal of confidence in Tesla's stock price to go up LONG TERM. But I have zero confidence in my ability to forecast short term price fluctuations.

IMO, attempting to buy the lows and sell the highs in a growth stock is a fools errand. Attempting to "maximize" your return on investment this way is just NOT a proven way for the average guy to make a good return. There will ALWAYS be money left on the table. Be happy with what you got, put an X in the win column, and move on. You will simply NEVER be able to squeeze every potential penny out of a stock. That being the case, do what guys like Warren Buffet and Peter Lynch do: Buy and hold. Add to your position when the stock pulls back, but NEVER sell. Don't sell until the company finally exits its growth stage.

I purchased my initial TSLA stock in the middle of August, 2019, a few days after I took delivery of my car. I had been following the company for years, and had put YEARS worth of research in the company. Purchasing the product was the final straw; I KNEW I was looking at the future with this car. Why the bold "future"? Because that's when I'm going to sell my TSLA stock. Way, way, way into the future. I put 30 grand into my initial TSLA purchase, and I'm still adding to my position every Thursday of every week. I don't even bother to look at the stock price until after the trade goes through. Why? Because I don't care what the price is right now. I'm not going to care what the stock price is until years from now. Why? Because I have ZERO faith in my ability to look into a crystal ball and see what the price of the stock will be tomorrow, next week, next month, next year. But I DO have faith that ten years from now, the stock is going to be higher than it is right now. And that's all that matters.

“Glamisduner said: ↑
I sold TSLA durring the S&P 500 entry.... Thought all the gains were priced in due to the 50% run up.
Please help!
I am having a hard time thinking I can still buy back in (although with allot less shares)”


From 2012 to 2019 I swing traded TSLA a bit with spare money.
In the first run up when I sold at $1150 because someone convinced me to take profit and not be greedy, I quickly realized at $1550 this was not a swing trading stock anymore but a growth stock.
I had 420 shares before.
To acquire 300 shares back at a higher price was mentally difficult.
I then added every 2-3 weeks or so on red days and built back my position to the same amount of shares if I did not let myself influenced by my friend.

Do it, buy back, in 2 years it will seem like a great move.

 

[wipster]

elon already had it

Doesn't mean you can't get it again if it's been long enough... not that I'm wanting him to get it ...

 

[WattsHappening]

Here's a pdf I just downloaded on it (I was looking too). Looks like eTrade's is more flexible but you need to speak to your broker to be sure. I only need to draw a minimum of a thousand at a time and per another member of this forum, eTrade doesn't require monthly payments. Just an FYI.

Thanks. Ya, I was looking at that also. Not a big fan of having to take down a minimum of $70K.

 

[UncaNed]

Smart money is going to exercise most of those options so as to postpone capital gains tax. That won't pressure the stock at all.

How would exercising options postpone Cap gains tax exactly?

 

[reardencode]

How would exercising options postpone Cap gains tax exactly?

At least in the US the gains are shifted into the basis of the stock, so they aren't taxable until you sell. Wait a year and it's long term.

 

[Mo City]

From 2012 to 2019 I swing traded TSLA a bit with spare money.
In the first run up when I sold at $1150 because someone convinced me to take profit and not be greedy, I quickly realized at $1550 this was not a swing trading stock anymore but a growth stock.
I had 420 shares before.
To acquire 300 shares back at a higher price was mentally difficult.
I then added every 2-3 weeks or so on red days and built back my position to the same amount of shares if I did not let myself influenced by my friend.

We had a Zoom reunion yesterday evening, the same guy congratulated me for my move and acknowledged he was wrong. However he concluded that profit taking is never bad. Another friend said I was crazy and this stock could go to zero. I told him not to judge how I would spend my couple grands of free money and I would not judge him spending $700,000 in expansion renovations in his house he purchased $800,000 5 years ago and previously plowed $400,000 to renew the interior.
He told me that his house is an investment and could not disappear in one day like my TSLA stock if there was a new rumour of Elon on Twitter.
Every time I speak with doctors about money and investments, I realize the vast majority are worse than the McDonalds employees I used to work with as a student. They spend like crazy and think 2M in a house is an investment. Some have money invested but the majority are starting to put money asides for their retirement at 59-60 years old. SMH

Someone convinced you to take profits, was wrong and it ended up being a giant mistake.
Same person admitted being wrong but then concluded profit taking is never bad.

Another friend called you crazy and said TSLA could go to zero.
Same friend said your TSLA stock could disappear in one day.

Maybe you should stop talking to people about TSLA. Seems to be an exercise in frustration that sometimes leads you to make bad decisions. The statements "profit taking is never bad" and "TSLA could go to zero" are ignorant beyond description. Those two are unsalvageable. Don't waste your time.

 

[JustSaying]

Speaking of dead investors, earlier this year I was looking into getting more life insurance because covid. But then I realized that I already had substantial extra "free" life insurance from TSLA because of the cost-basis reset when stocks are inherited. At that time the tax savings was the equivalent of a modest policy. Today it's the equivalent of a pretty big policy (partly due to some new purchases just after the S&P announcement not yet having long-term status).

God only knows what tax laws President Biden will change and he ain't talkin.
But this is low lying fruit and truthfully the carry over basis for inherited assets always made sense to me.

PolitiFact - Yes, Biden seeks to eliminate policy that reduces inheritance taxes

 

[UncaNed]

Well worth watching and not just related to ARK, it has lots of relevance to TSLA.

Not impressed. Sounds like a recent trading school graduate parroting whatever his industry brainwashed instructors instilled in him. Then he ricochets from random stock to random stock he bought because they told him to "diversify" (plan for failure).

 

[Chunky Jr.]

https://twitter.com/elonmusk/status/1348043839022370817

Maybe a Tesla AI day later this year

 

[st_lopes]

Schwab calls it a Pledged Asset Line (PAL). I don't know anything about it, but I'm also interested in learning more about this option.

If anything like the PALs in Canada, not permitted to own options within the pledged account, and some banks don’t allow sale of CCs against holdings in the pledged account either.

Although one interesting feature of PALs at some of our banks is that they will loan you 70% of value of account (excl. option positions), and up to 200% value of account if you recontribute the loaned amount to the pledged accounts. A different form of leverage and typically much lower rates than margin rates.

 

[st_lopes]

Not impressed. Sounds like a recent trading school graduate parroting whatever his industry brainwashed instructors instilled in him. Then he ricochets from random stock to random stock he bought because they told him to "diversify" (plan for failure).

It really wasn’t impressive. I’m actually surprised he’s amassed as large a following as he has. Could have been summarized in one sentence.

Buy and hold.

 

[WolfHero]

Model Q

That sounds fantastic. It is such an interesting sound. Nothing else is similar.
"I just bought a Q."
"Let's take my Q."

Then again all us old farts will name the vehicle Susie Q.

"Oh Susie Q how I love you, Oh Susie Q."

Or the not quite as old, A CCR Version.

Both are great travelling songs.

Also the James Bond Reference can't be wasted on Elon.
Q (James Bond) - Wikipedia

A rare car (Q) for the common man.

Elon would love the Brain Hopscotching

I also love this idea of Model Q. Honestly for a small car Q sounds.... cute.

 

[Prunesquallor]

https://twitter.com/rationaletienne/status/1348028478738849792?s=21

From Kim Paquette on Twitter. "Elon"?

 

[Chunky Jr.]

https://twitter.com/ray4tesla/status/1348062263408693253?s=21

“Model Y ordered now gets delivered in May”, said a Tesla sales rep according to a social media post. The photo shows a local store in Shanghai still busy 9 days after MIC Model Y pricing update. The backlog for Y is looooooooooong.

 

[Prunesquallor]

Not impressed. Sounds like a recent trading school graduate parroting whatever his industry brainwashed instructors instilled in him. Then he ricochets from random stock to random stock he bought because they told him to "diversify" (plan for failure).

Yeah, it's: Cathy Wood is really smart, don’t buy high and sell low, here's some stocks.

 

[WolfHero]

This was the fundamental model of the long-failed Israeli company Better Place. I was a consultant to a venture company that wanted to bring the model to Australia. I can't go into detail, but the conclusion was that the only thing going for that way of doing things was that it capitalized on people's range anxiety and familiarity with gas stations. As soon as customers got familiar with EVs in day to day life, they'd buy something else. Also the specifics of the chosen vehicle for the Oz market was just plain stupid (they wanted to convert Holden Commodore/ Opel Senator to BEV).

I wouldn't be surprised Nio is copying Taiwanese electric scooter's idea which was established back in 2015. It's easy and fast battery module swapping station and subscription service.
https://www.gogoro.com/gogoro-network/

 

[MXWing]

You could potentially sell some OTM options you think will expire worthless to raise cash. If you're in the situation I describe above you'd be able to sell pretty far OTM weeklies for the next 3 months for example to raise some $. Always a risk of exercise, but if you were considering selling shares anyway that'd get you a premium for em plus a higher than now price.

Define OTM. 800 was a good 35% over current share prices of 600 for a covered call.

I could roll that covered call out for 3 years, buy Bitcoin with the premium and see if BTC catches up fast enough to close out that call.

 

[lascavarian]

4. Sell calls on a regular basis, but buy back if you risk losing the shares. Then you’re betting you will win more than you’ll lose. I.e. being the house is usually wise.

What’s risky is selling calls at a price for which you would be unwilling to sell the shares because you think you’re smart enough that the shares won’t get called.

I am developing a plan along #4 for selling covered calls 1 to 3 weeks out. I have a formula to choose a price point and regularly my returns change due to volatility. I started with very small number and have been slowly expanding with experience.

I expected increased volatility approaching the Q4 financials but expected the S&P inclusion to be mostly worked out. I sold some on Wed and then early Thursday morning I sold 5 or 10 for just a few hundred dollars for Friday spread at 850, 860, 880 strikes.

I considered a 100 pt rise highly unlikely given the 5 for 1 split and I was seriously wrong.

By Friday morning at 5am I realized I was going to lose money and possibly thousands. After the market opened, I watched carefully for 20 minutes or so while resetting buy back limits and hoping for a pull back. I was over my reserve cash so moved to guess what my losses might be and set a limit sell for 50 shares of long term stock. The stock sold and I began buying to close at market as fast as I could all calls up to 1000 strike.

I ended up losing about $50k. This would be the definition of picking up pennies before a steam roller. This was the second time i have ever sold a Tesla share. First time was tax strategy selling.

All things considered by the end of the day, it was a very good day, perhaps one of the best as far as Tesla investing. Then I shared what I had done with my spouse - the bad and the good. Although the selling process may be ok, I need a better process for closing related to unexpected volatility if I am going to do #4.

I post here to share my mistakes so we can learn together a bit. What a week on so many levels!

 

[StealthP3D]

My impression is Elon loves this sort of thing. If the idea got back to him, it just might happen.

Not sure if someone still owns the trademark "Model Q" but here's a 1928 Plymouth Model Q:

 

[Bladerskb]

Hold up. That fsd computer is from Nvidia. Lol I really need to get more information straight before replying.

"and Nvidia processing chips that offer processing power greater than that of seven Tesla full self-driving computers, Li claimed."

Okay that's some credibility as for the technology. However anyone can have access to this and it's another money loser as Nvidia has a profit margin of over 60%. They certainly are not a charitable organization. Also Nvidia had higher TOP when Tesla released their fsd computer. The problem with Nvidia was always performance per watt, not performanc. Tesla did not want to hook up a system that uses 500watts of power because that requires a complex system of water cooling just to offset that power. So total all in would cost Tesla almost 1kw of power just use the thing. Hence they developed their own FSD which was 144tops using less than 100watts. So we don't know how much power this 1000top system Nvidia uses. I know they recently switched manufacturing nodes so it'll be better than their last gen stuff for sure.

Okay so Nio didn't design anything.

Rather than make another post with more errors and negative speculation.
Why not just do a few seconds of googling? By googling 'Nvidia Orin', this image popped up.
4x Orin = 260W, just about 2.5 more watts usage than FSD for 7x the power increase.