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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Virus triggered Work From Home
which increased the # of tradersLatest Dota patch notes are out. Crazy buff to VRU detection and recall.
Pretty much what I thought in terms of the left hand turns across high speed traffic. They had put artificial limits on its speed in those situations to try and avoid a early accident. Now it looks like they’re unlocking some of the abilities. Will be interested to see Chucks videos with this one
TheTalkingMule
Distributed Energy Enthusiast
When someone told me 2.5% on a cashout refi with very low fees I jumped all over it to 75% of my home's equity. And why wouldn't I? It's free money given the inflation we'll see over the next 30 years.
We've been printing money for more than a decade, taking on zero risk debt at 2.5% is a no-brainer. Now I'm sitting on a huge chunk of cash in case a good opportunity pops up. Woulda been nice to have had it in Tesla the last 6 months!
I'll likely do some crazy renovations when the mood and need strikes. Aversion to debt is a great baseline to work from, but some of this talk is completely irrational.
We've been printing money for more than a decade, taking on zero risk debt at 2.5% is a no-brainer. Now I'm sitting on a huge chunk of cash in case a good opportunity pops up. Woulda been nice to have had it in Tesla the last 6 months!
I'll likely do some crazy renovations when the mood and need strikes. Aversion to debt is a great baseline to work from, but some of this talk is completely irrational.
I don't understand the significance of half of these added details. But I just love the transparency in how they are approaching these upgrades. It goes a long way to dispelling concerns from NHTSA about not doing recalls when releasing improvements. And over time, it may give us a sense of how much progress is being made on FSD.
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Gigapress
Trying to be less wrong
I would argue that Bell Labs and the breakup of AT&T is something all long term Tesla investors ought to know about. Many draw parallels between Tesla and Apple or Amazon, but I think looking at the AT&T case study is even more important both because their MO was so similar to Tesla's and because of what the US Govt did to them (and deservedly so, because they broke the law by abusing their monopoly power).
By the way, Bell Labs definitely did deploy, not just design. Scaling took longer back then when civilization was at an earlier stage of technology.
The US Govt breakup of AT&T and subsequent demise of the heyday of Bell Labs is a fascinating and cautionary tale of what may happen to Tesla, greatly limiting the ultimate investment upside for this company. Like AT&T's phone service, Tesla is likely set up for natural monopoly position in numerous markets. Robotaxi fleet services and energy utility services being the big two. If Tesla starts gradually sliding into evil as AT&T did, I fear this may come someday.
I’m even more conservative. When I said my margin exposure was limited to 50% available, I noted that my spreads and options don’t count towards my available margin. The impact of that can’t be discounted to protect against margin calls.
Before anyone jumps the gun and starts judging prior to the facts, I’ll explain why margin does not need to be risky using my own trading portfolio. I’ll normalize it to roughly $1M because the quality of the donut should not be judged by its size. Numbers are rounded and approximate. All spreads are bull calls.
Trading Portfolio @ SP $1200
TSLA shares - $350k
Jan 2022 100c - $120k
Jan 2022 180/300 - $120k
Jan 2022 500/600 - $30k
Jan 2022 500c - $150k
Jun 2022 140c - $50k
Jun 2022 150c - $60k
Jan 2023 1400/1600 - $120k
Margin available: $350k
Margin used: $50k (prior to assignment last week), $25k currently
So where is the risk? Unless Tesla drops below $300, my $180/300 is as good as cash to cover. But what if TSLA does drop below $300? Although highly unlikely, it isn’t doing that in one day, so I have ample opportunity to close the spread within a few percent of full value to cover.
But what if the market is so bad that there is no liquidity for the DITM spreads for multiple days AND TSLA drops below $230 ? Yup, that could happen and I've seen something along those lines in 2008/2009. Fortunately, I have plenty of stock that I can sell to cover AND I am perfectly willing to take the risk that TSLA will not drop to those levels in a day AND I have the fortitude to liquidate quickly. For example, I closed most my options just before the big drop when Covid hit the markets, but held all my shares.
There are other DITM spreads too, and DITM calls. Of course, selling these when the stock drops is undesirable unless near expiration.
The question someone might ask is, why use margin at all? $50k seems pithy compared to the account value. Other than to defer closing positions early and pay taxes, 5% at the right time can turn into much more.
Someone else said that buy and hold is likely to outperform trading and margins. Well, that’s great for them, but that’s not my experience.
Without adding capital, my options have grown from 5% of the portfolio 3 years ago to > 50% today. They’ve outpaced TSLA shares 10x despite taxes on options gains and none on shares. That little 5% can juice returns a lot, and many others here have done better.
Sure, lots of this was luck, but not the level of margin risk. Those risks were never much more than what they are today for my portfolio. And that doesn’t count other liquid assets that I can use to cover.
Some people may still be concerned about TSLA dropping in value by 80% in one day. I respect that (not really but I’ll pretend to), but my opinion remains: margins can materially improve gains without substantial risk when used judiciously.
Notes:
1. I don’t believe in anecdotes, but everyone seems to have one. So why not
2. Not advice
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If Tesla ever reaches the level of power where it needs to be broken up, there are nice clear lines on which to do so... and as stockholders we'd all end up with shares of all of the resulting companies. I don't think it impairs the value of the company. It might impair the future value (ie: all of the things Bell Labs might have done, but never did because it got lost in the breakup), but not the value all the way up until a few years after the breakup.
I'd also like to think that with a strong central leader who believes in innovation, the innovation lab part of Tesla would continue, unlike what happened to Bell Labs.
Gigapress
Trying to be less wrong
I agree. To clarify, the investment value from a purely financial standpoint is the net present value of expected future cash flows. If their innovation were gutted im a similar way as AT&T's was, then that opportunity cost of loss of future innovation from then on affects my perception of today's fair share value.
I do hope if it did happen then the relentless pace of innovation would still keep going even in the smaller companies, like you said.
dhanson865
Well-Known Member
"Dota is a series of strategy video games by Valve. The series began in 2003 with the release of Defense of the Ancients (DotA)"
Not sure how Full Self Driving relates to a video game...
TheTalkingMule
Distributed Energy Enthusiast
Huh?
For one thing, there's literally zero chance of Tesla "turning evil". Maaàaaaaybe like a decade after an Elon departure, but that won't be as much of a surprise. So long as Elon's in charge, clearly not a worry.
Second, I'd love for this to begin literally right now. Automotive, from my perspective, is "done". Further scaling is relatively locked in and so long as the pace of innovation stays in place thru the "end" of FSD development, it's domination(and contribution to sustainable transition) is already guaranteed.
If I could have shares in Tesla Automotive and Tesla Energy tomorrow, I'd be overjoyed. That would give me a fresh entity that no one understands, but will so obviously 100x or more in short order.
It's a video game reference for those who play the game and understand how. Basically it seems like the coders are gamers because their patch notes read like one from Dota or League of legends. Commonly used terms from those game patches consist of the word "buff" and then a percentage to give players an idea of what had improved on a particular character. Fsd beta notes read as if the car is the AI character and its being "buffed". They literally used the word "buff" in the last note so we tongue and cheek calls it a Dota patch.
I would argue that Bell Labs and the breakup of AT&T is something all long term Tesla investors ought to know about. Many draw parallels between Tesla and Apple or Amazon, but I think looking at the AT&T case study is even more important both because their MO was so similar to Tesla's and because of what the US Govt did to them (and deservedly so, because they broke the law by abusing their monopoly power).
By the way, Bell Labs definitely did deploy, not just design. Scaling took longer back then when civilization was at an earlier stage of technology.
The US Govt breakup of AT&T and subsequent demise of the heyday of Bell Labs is a fascinating and cautionary tale of what may happen to Tesla, greatly limiting the ultimate investment upside for this company. Like AT&T's phone service, Tesla is likely set up for natural monopoly position in numerous markets. Robotaxi fleet services and energy utility services being the big two. If Tesla starts gradually sliding into evil as AT&T did, I fear this may come someday.
I would argue that is a long way away for TSLA
mltv
Member
mltv
Member
Well that’s a totally reasonable use of margin 25k on 350k. It’s not like YOLOing 100% of your margin to buy 1350 Calls expiring in one week like degenerates do on wallstreetbets.
I think the funniest video on the subject is
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Gigapress
Trying to be less wrong
I'm investing on a 40 year minimum time horizon.
mltv
Member
The video is really entertaining. It's time to take the hats off for ICE vehicles. I find myself reminiscing the good old days which all I know were ICE vehicle and how nice they were. Now any new ICE vehicle coming out now probably be its last.
mltv
Member
UPDATE 4-'Finally, infrastructure week!' Biden says, cheering $1 trillion bill
A giddy President Joe Biden on Saturday hailed congressional passage of a long-delayed $1 trillion infrastructure bill as a "once in a generation" investment and predicted a broader social safety net plan will be approved despite tense negotiations. Biden and Vice President Kamala Harris...
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