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

[MXWing]

Here is the updated "build back better" EV modifications as presented by the UAW!

The bill should have included language like excludes the Tesla Model S, Tesla Model X.

With that said.. could Tesla:

Sell a $54,999 version of the Model S with 50 miles of range?

Remainder of the range can be unlocked with a 39,991 software unlock. Tesla can also find a partner to allow financing for that too.

 

[22522]

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.

History of AT&T - Wikipedia

en.m.wikipedia.org

Bell Labs

ethw.org

United States v. AT&T - Wikipedia

en.m.wikipedia.org

The gradual slide was real.

But many saw work as a service to society and did not want to charge for stuff Unix (except the books!).

But monopoly power turns things into political country clubs. AT&T Bell Labs then was like Apple/Google today. It started out as don't be evil...

 

[thesmokingman]

View attachment 729986


Here is the updated "build back better" EV modifications as presented by the UAW!

The bill should have included language like excludes the Tesla Model S, Tesla Model X and

With that said.. could Tesla:

Sell a $54,999 version of the Model S with 50 miles of range?

Remainder of the range can be unlocked with a 39,991 software unlock. Tesla can also find a partner to allow financing for that too.

Yeap, that 55K sedan cap really irks me.

 

[Causalien]

A classic contrary indicator?

Could be. The first time we saw something similar was when wallstreetbet closed down for a while due to investigation.

But the volume back then was about 100x more than now.

The ppl we are seeing joining are either investment professionals or complete newbies. They don't even have the basic yolo knowledge of wsb.

 

[mltv]

Yeap, that 55K sedan cap really irks me.

Does it make a difference though. 3 & Y (CT) sales is the measuring stick anyway

 

[Singuy]

Yeap, that 55K sedan cap really irks me.

I'm fine with it. Force car manufactures to stick to basics vs adding in gimmicks which add complexity and cost. This 55k limit pretty much banned all cars from luxury branded EVs and including high end Mach-Es. Tesla actually benefits the most because it widens the gap between a LR 3/Y vs the rest. Must suck to not get to economy of scale for the others.

 

[mrmage]

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.

That's a great rate. Can you say who's offering it?

 

[AudubonB]

This time you missed it. Gray and grey are both acceptable. Gray more common us grey more common uk, allegedly . BTW, I think a nice name for a gr*y car.

Never trust a Carioca to have a finely-tuned sense of humo(u)r.

 

[woodisgood]

Clarification: Are the MSRP limits on the EV credit based on the MSRP of the base model of the vehicle, or the sticker price with any options added but before taxes and fees?

Apologies if I missed this.

 

[mltv]

I'm fine with it. Force car manufactures to stick to basics vs adding in gimmicks which add complexity and cost. This 55k limit pretty much banned all cars from luxury branded EVs and including high end Mach-Es. Tesla actually benefits the most because it widens the gap between a LR 3/Y vs the rest. Must suck to not get to economy of scale for the others.

Hurts Lucid most. Would have fare better with the old incentives.

 

[StealthP3D]

All this talk about margin and big drops makes me think we will go even higher soon based on that famous "Be fearful when others are greedy, and greedy when others are fearful". Joking

I believe someone here posted moths ago that analysis of Berkshire’s investment strategy over the years and figured out that they had all this gains mostly because of one thing: always being leveraged/on margin to a maximum of 30% of their assets.

That strategy brought the most rewards on the long run, otherwise they would have had just “regular” gains in the market.

That strategy allowed them to profit and weather any downturns and any big drops without risking the core holdings.

So, its discipline and never going over 30% of your assets on margin that made the difference.

Did I got that wrong?

Buffet has always been a value investor. And you can bet any margin he uses cannot be called away as easily as with the retail brokerage customer. So, don't confuse the kind of debt Buffet uses to leverage with retail brokerage margin. Also, there is a world of difference using margin to invest in value priced companies that just need a little help to become strongly profitable and tech companies with valuations reflecting continued excellence.

People will make their decisions as to what's right for them but a more accurate view of the actual risks tends to result in better outcomes. And that is how I started this conversation on margin, by pointing out that people have a tendency to under-estimate the actual risks (both in number and magnitude). The results are often not pretty.

 

[StealthP3D]

Do you believe the same level of risk you describe for using margins equally applies to SBLOCs?

I do know that with SBLOCs if the value of the backing securities falls greatly the brokerage must notify you and give at least a few days for additional cash or securities to be added to the account. If the investor is unable to do so then brokerage has the right to sell enough of your securities to bring you back into having sufficient assets to back whatever amount you have borrowed against them. For that reason I think it wise to not go above a percentage of your LOC limit that seems very unlikely to ever trigger this requirement. Even in a severe crash to market or the primary stock supporting the LOC. Are you aware of additional caveats to judging LOC loan risk? Thanks.

I didn't try to assess the level of risk for using margin other than to say that I don't believe it's typically appropriate risk for the small retail investor to be taking on.

Obviously, SBLOCs have lower risk than margin debt since the money is not further leveraged into stocks but that doesn't mean it's a good idea. I advise against taking on ANY debt that could require the forced liquidation of stocks at inopportune times (and that includes SBLOCs). Nothing will shatter your market returns like forced selling at the bottom of the market.

Mortgage debt is in a whole other class because it is not recalled by the bank when markets falter.

 

[MP3Mike]

Here is a link to the updated article on the BBB bill 401k and Roth proposals @UncaNed along with an example from the article describing how this would effect the accounts of anyone with an earned income over $400k single/$450k married if you don't want to click on the article. If this is implemented, the plan kicks in on Dec 31, 2028. Tesla growing 50% YOY through the end of 2028 (7 years) might make TMC Long HODLers take a 2nd look at what the combined value of their 401k & Roth TSLA might be worth 7 years from now. But I guess one could always hurry up and get older than 59 1/2 years old before Dec 31, 2028 to make qualifying withdrawls from their Roth so it doesn't count as earned income.............? (/s)

It is not based on earned income, it is based on the MAGI. So that includes earned income, capital gains, IRA withdrawals, etc. (But not Roth IRA withdrawals.)

From: https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf

(4) APPLICABLE TAXPAYER.— 22 ‘‘(A) IN GENERAL.—The term ‘applicable 23 taxpayer’ means, with respect to any taxable 24 year, a taxpayer whose modified adjusted gross income for such taxable year exceeds the 2 amount determined under subparagraph (B). 3 ‘‘(B) DOLLAR LIMIT.—The amount determined under this subparagraph for any taxable 5 year is— 6 ‘‘(i) $400,000 for an individual who is 7 a taxpayer not described in clause (ii) or

 

[StealthP3D]

So where is the risk? Unless Tesla drops below $300, my $180/300 is as good as cash to cover.

One of the risks you didn't mention is that your brokerage could change the margin requirements and there would be nothing you could do about it. This happens all the time.

Such a simple change, combined with a falling stock value, can make things happen that you previously believed were impossible or not worth worrying about. It wouldn't be the first time a large number of shares were leveraged right out of the hands of small investors by force.

 

[astrotoy]

https://twitter.com/x/status/1457025754978455558

The fundamental key seems to me is the dominance Tesla has in building the machine that builds the machine. That allows them to build a superior car at a much lower cost and much faster rate. Capex investment in a new factory or line is so much smaller than anyone else. They also can modify their production faster and cheaper than anyone else.

This gives Tesla a huge advantage in operating margin (not even including their prowess in software, which makes crazy high margins). Diess understands this, but having the VW corporate bureaucracy and entrenched interests - both labor and management, makes it tough slogging for him. GM and Ford have additional burdens including huge pension debt. Given that currently Tesla has a $7500 price disadvantage in the US to all other EV manufacturers except for GM and that they still have 63% market share as well as a huge lead in manufacturing capacity, Tesla will only benefit from any new tax credit more than the other car makers (except GM).

My guess is that the OEMs are going to plunge into EV's as best they can, while at the same time facing plummeting ICE car sales, which will, at best, exchanging the loss of profitable ICE car sales with gains in much less profitable or even money losing EV sales. Tesla can adjust their selling prices to allow OEMs to sell EVs at a profit or not as Tesla wants, assuming OEMs need to be price competitive with Tesla.

At the end of the day, maybe the way for OEMs to stay in the EV business is to sell off their EV businesses to create new companies without the debt obligation (most likely Chinese owned or partly so, like Volvo-Geeley) and declare bankruptcy with the ICE portion of their business, cancelling their huge debt.

In the meantime, we will see a flood of top quality Chinese EV's around the world, much like Toyota, Honda, Nissan did in the 1980's. That will be the way Tesla will have enough partner/competitors to fill the needs of the world for new EVs in a reasonably timely way.

 

[AudubonB]

I commend @Gigapress for presenting the case of ATT. The demise of Bell Labs was truly unfortunate - and by no means merely for Ma Bell and her progeny - but for this country and for the world. As a generator and incubator for such a myriad of ideas and products its role in bringing and maintaining the United States as a developer of benefits was staggering.

As far as shareholder value? The breakup probably created more value. We cannot be sure, because although those who kept their splintered shares in the emergent Baby Bells saw that group smartly outpace the S&P 500 for many years, we still only can make suppositions at how a unified ATT might have done. Me? I believe it would not have performed so well. Regardless: to have ensured the extinction of Bell Labs - that was the unnecessary and societally destructive shame.

I also - as anyone who reads my missives well knows - am well in @Gigapress’s camp regarding just what long term investing is...although for me his “forty years” is just one step. Even I expect still to be investing in forty years. Say what you will - and I do encourage such discussion - about multi-generational investing and its benefits and drawbacks both for one’s descendants as well as for society - I champion it and encourage others at least to use it conceptually as a framework for fashioning their own investment strategies and time horizons.

By the way, ATT’s research lab was not the sole one created in the 20th century. One of the reasons I long held that Jack Welch neither was the savior of GE nor the CEO of the Century but the Rasputin who would destroy it from within was that, during his 1980s & ‘90s time at the helm he systematically turned the company effectively into a mere financial services organization, and away from its glorious tradition (begun by, yes, that Mr Edison whom we at TMC like to denigrate) of having been at the forefront of development and innovation in so many industrial sectors: electrical, electronic, chemical, broadcasting, and many others. A full-fledged research lab unto itself.

 

[thesmokingman]

I'm fine with it. Force car manufactures to stick to basics vs adding in gimmicks which add complexity and cost. This 55k limit pretty much banned all cars from luxury branded EVs and including high end Mach-Es. Tesla actually benefits the most because it widens the gap between a LR 3/Y vs the rest. Must suck to not get to economy of scale for the others.

I disagree. The credits promote big ass trucks and suvs. It should be the other way around really instead it's pushing ppl to get bigger and bigger.

 

[Knightshade]

I disagree. The credits promote big ass trucks and suvs. It should be the other way around really instead it's pushing ppl to get bigger and bigger.

BA trucks and SUVs are what people already are buying.

This encourages them to get electric ones instead (and encourages more car makers to offer more electrified ones too since they can charge more for them and still qualify)


Someone who wants an Escalade isn't gonna buy a sedan instead just to save a few grand on a credit.

 

[Pezpunk]

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.

terms like buff and nerf are far older than DOTA. cmon.

 

[astrotoy]

It is not based on earned income, it is based on the MAGI. So that includes earned income, capital gains, IRA withdrawals, etc. (But not Roth IRA withdrawals.)

From: https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf

Thanks for the clarification. So it will also include pensions, social security. Since I converted my entire IRA/401k,403b/457 from my almost 40 year career in teaching to a Roth back in 2011 and then invested the whole thing in TSLA in late 2013 to early 2015, I now have a 40 bagger and am very close to the limit. Fortunately, my regular MAGI is way below the proposed limits. By 2029, if this passes, I am certainly going to be way over the limit in my Roth. I need to make sure I don't have other income to push me over the MAGI limit. Watching the development of this bill with great interest.

It appears to me that these provisions are to prevent high net worth individuals from using Roth's to stash away large amounts of money (as did Romney) in private companies in their Roths or IRAs. It doesn't account for people who had much, much less money from a career of savings who made a great investment in a public company.