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

[humbaba]

My understanding is that S&P Index tracking funds don't add a stock until it is actually part of the appropriate S&P group. That step function will create additional buying pressure and stock price increase. There would also be run up as part of expected inclusion (and resulting bump)

Does Inclusion in an Index Increase the Price of a Stock?

I found this part interesting: "Going forward, the stock likely will have increased volatility due to so many transactions being index-related and not because of intrinsic expectations about the company itself."

So what about when the stock is already volatile? According to this source anyway, we should not expect volatility to decrease with inclusion.

 

[ggr]

BMW recalling 1.4M 3 series vehicles due to a new issue with air bags.....bad timing with Tesla's Model 3 eating their lunch.

Takata recalls 1.4 million BMW 3-Series cars over air bag defect

This is also a bad kind of recall. It comes with a statement that you should stop driving the car. Mind you, most of those cars already have a recall that states "By the way, stop driving it and don't park it indoors in case it catches fire."

 

[KarenRei]

Ryan Mac ran into Musk at the courthouse; looks like he'll be there for the verdict.

Ryan Mac on Twitter

 

[Chocochip]

Slightly off-topic (or is it?): Elon showed up for the trial today, he is probably going to be in court until the verdict is given. Too bad he got tied up yesterday, you know, with that pesky launch for the resupply mission to the ISS, I'm sure he hates it when that happens.

Edit: and of course Karen beat me to it, not even S&P inclusion talk keeps her distracted that long!

 

[KarenRei]

I found this part interesting: "Going forward, the stock likely will have increased volatility due to so many transactions being index-related and not because of intrinsic expectations about the company itself."

So what about when the stock is already volatile? According to this source anyway, we should not expect volatility to decrease with inclusion.

Meh, I'd think that index-related volatility would be dwarfed by Tesla's intrinsic volatility

That said, I do expect Tesla's intrinsic volatility to go down once it's proven that it can consistently return profits.

 

[KarenRei]

Slightly off-topic (or is it?): Elon showed up for the trial today, he is probably going to be in court until the verdict is given. Too bad he got tied up yesterday, you know, with that pesky launch for the resupply mission to the ISS, I'm sure he hates it when that happens.

Edit: and of course Karen beat me to it, not even S&P inclusion talk keeps her distracted that long!

From yesterday:

Nafnlaus on Twitter

 

[ggr]

Yes! When I read that GF4 parking areas are now filling up with cars ready to deliver, it seemed to me that several thousand MIC deliveries are now nearly guaranteed by end of Q4. The Shanghai and national leaders are not going to want pictures published of thousands of M3s sitting waiting for delivery because Chinese bureaucracy is holding up the final permit. That would detract from their huge PR win showing that in China a huge, complex factory can be built from scratch in 11 months. Whatever mid level dept. issues this sales permit is going to get stepped on hard if they don't grant the permit in the next week or two. Every day that 800 more cars join the ones already parked is going to increase pressure on them to get off the dime.

Wow, that's quick! They haven't even cleared the trees from GF4 yet, but they've filled the parking lot in Germany with cars from China?

 

[Tim S]

Speaking of German incentives, what ever happened to the limit on vehicle length designed to exclude Model 3? Was that ever a real thing, or just a rumor? If anyone could share a link about it or a search term I could use to find articles it would be greatly appreciated.

I believe that was proposed but never implemented. I don't have a link, sorry. I read it on this forum.

 

[humbaba]

with respect to oil quotas and prices

My guess is that once the shift is truly happening they will seek to limit production enough to increase price even more. At a certain point anything still running on oil will either be impractical to move to electricity, or sticking to oil for political reasons. Both of those groups are ripe for price gouging.

This also suggests that OPEC believes we are past the point where cheap oil can stop the transition.

While I agree that they would desire to increase the price I believe there will be a middle part where it declines precipitously low -- and this will have some definite consequences. When your economy depends on oil then you need a certain level of income to meet those needs. This can be achieved (to an extent) by agreeing to quotas and then not following them. This has the consequence of depressing prices, but can increase the absolute amount of revenue obtained by the violating country. If other countries follow suit then the price will drop even more.

Either way it remains to be seen that reducing production will raise prices enough to support the economies of those countries that depend on it. And if their economies are destabilized that will have a negative impact on commerce which can spill outside of their borders (e.g., if Russia goes ahead and openly takes the Ukraine).

I'm hoping for a peaceful transition, but I don't really expect it to be completely peaceful.

 

[mars_or_bust]

Seems this is finally it at GF3

Kelvin Yang on Twitter

 

[dww12]

Ryan Mac ran into Musk at the courthouse; looks like he'll be there for the verdict.

Ryan Mac on Twitter

Isn’t Ryan a she, not that it matters.

 

[JustMe]

I found this part interesting: "Going forward, the stock likely will have increased volatility due to so many transactions being index-related and not because of intrinsic expectations about the company itself."

So what about when the stock is already volatile? According to this source anyway, we should not expect volatility to decrease with inclusion.

Well if the volatilities are out of phase it could cancel out.

 

[KarenRei]

Isn’t Ryan a she, not that it matters.

No. Or if so, extremely butch.

Were you referring to this tweet?

Ryan Mac on Twitter

That's a joke. It's a screenshot from a Peloton ad that's gone viral.

 

[Tslynk67]

Elon arrived in court...

 

[dww12]

No.

Were you referring to this tweet?

Ryan Mac on Twitter

That's a joke. It's a screenshot from a Peloton ad that's gone viral.

Ok, yeah. That and some Le Creuset comment. Thanks for the clarification and meme update.

 

[Krugerrand]

The first two sentences were questions (asking whether he had sold based on his prediction that musk would lose the trial and the stock price would decline). This was more than clear by the two question marks.

No, he didn’t sell.

Actually the opposite. @JRP3 said his belief that jurors were emotional and irrational led him to conclude the outcome of the trial was predictable. I said if jurors were, in fact, emotional and irrational, that would make the outcome of the trial less predictable and less certain, not more. Because irrationality and emotionality are harder to predict than rationality.

You’re arguing with the wrong people here.

 

[Mike Smith]

TSLA's 5dma just crossed back above the 10dma. This is how pullbacks typically end.

 

[Curt Renz]

China approves Tesla subsidies.

Autoline - half hour ago:

 

[lklundin]

The Chinese regulator has reportedly issued the MIC Tesla Model 3 sales permit,
Kelvin Yang on Twitter

 

[ggr]

That's not how it works, at least in theory; any jump when inclusion is announced would just be the final step in an ongoing ramp in share price as the odds of S&P inclusion become increasingly likely. The jump in SP we've seen since the Q3 report would be, in part, because of an increase in people betting on S&P inclusion.

If nobody bet on S&P inclusion, then there would be a massive spike when it happened. But because there would be a massive spike, obviously people bet on it, proportional to the odds of it actually happening.

ISTM that there are two different scenarios possibly in play.

1. It's commonly assumed that q4'19 won't be big enough to allow inclusion, and Tesla have said Q1 will be tough. So in this scenario, inclusion after Q2 will be obvious and there will be a long, slow run-up.

2. I'm not so sure that Q4'19 won't be big enough to allow inclusion. I did the math in a post a couple of months ago but can't be bothered finding it. So, a jump in deliveries on Jan 3, and on Jan 22/29 an earnings report that will make it obvious, only gives a couple of weeks before announced inclusion. Still (from my personal experience when Qualcomm was included, back in '98-'99) it seems that it is a surprise to a lot of people, there was indeed quite a spike when the funds had to rebalance.