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

[ggr]

An alternative, if your account allows, is selling calls against your shares. Either you get premium and keep the shares, or you get premium plus the extra stock price increase.
If all you need is 2.5% a year. That's 0.05% a week. With SP at 1200, a $0.60 premium per share (on all holdings) would give you that. July 10th 1780 calls are in that range. Very little chance of assignment.
Or, go for $6 on 1/10 your holdings. That would be 1480 calls, requiring a $260 rise in a week for assignment. (Which would also give you $26k per contract)

Not advice

If you sell covered calls that are in the money when you sell them, it restarts the long term gains clock on the underlying shares. If you actually have long-term stock this is a disaster. (In the US, taxable account, IANATL, not advice.) You can sell OTM calls though.

 

[Buckminster]

For funds tracking the S&P500 that makes sense, no? Can't buy a stock that's not in the S&P, even if you think it might be added, until it is added.

On this basis there's no doubt that at some point, between now and sometime in the not-too-distant future, there's going to be enormous buying of somewhat limited shares.

Any short seller with and ounce of brains (debatable) must know this and would surely look to exit now - unless they really think maybe, perhaps, there's no profit for Q2, which judging by Elon's Tweets yesterday I judge to be less than zero probability.

I sold a $1200 covered call Friday and allowed it to stay though close. Gives me around $200k cash on Monday, I'm buying more LEAPS with that - these seem to bring the best returns.

Now which LEAPS to buy for the best 6 month payback, that's more of a mystery, any suggestions welcome...

I went for 1500s - 12 and 18 months out. Seems fairly safe and nicely leveraged. Higher strikes and further out seem expensive to me.

 

[ggr]

Re: cannibalization. Been hearing this for years. Here's an alternative explanation. When the factory re-opened, Tesla didn't necessarily have full factory staffing. So which production lines would you focus on? I'd be prioritizing Y, 3, then the more expensive models, in that order.

Re: S&P. They'd be a laughing stock if they didn't include TSLA as soon as it met their written criteria. In fact I think it would behoove them to call Zack and say "Will we be embarrassed if we add you now?", and he would say "Of course I can't reply to that," and they would say "OK," and announce TSLA inclusion in S&P 100 and 500 (and by rights it should be in the DOW 30 "Industrials" as well.)

 

[ggr]

Indeed, on Tuesday, Todd Rosenbluth (CFRA head of ETF and mutual fund research) responded to my queries about announcements of S&P 500 additions. Todd held the identical position at S&P Global Market Intelligence before it was bought by CFRA. Below are his responses. The second one was after I asked for clarification that the announcement is published for everyone and not initially for only fund managers.

Happy to help. ETFs learn typically a week before a stock enters the index and will build a position in advance of it being added formally to cushion the impact.

Everyone at same time. Usually with 7 days notice.

Thank you Curt, your knowledge and rolodex are very valuable to us.

 

[jerry33]

Great post!

I know that nobody is giving investment advice (or shouldn't be), but based on your beautifully detailed view of this world we find ourselves in, what is one to conclude? Close one's eyes and just HODL for years, or is there a better strategy? Every time I have tried a 'better strategy', like some others here, it hasn't worked out well!

Time in the market is preferable to timing the market. I believe Warren Buffet said that. Buy and hold has worked well for me. The problem with other strategies is that if you play them too long, the house odds are against you--and there's a crooked dealer.

 

[Bet TSLA]

But how many of those S&P500 index funds lend their shares to get extra returns? So all of the shares won't necessarily be out of circulation.

What? They don't want "extra returns". They want to track the S&P 500. Extra returns are pointless. They don't actually care what they pay for TSLA, since market price is what they're after. But the powers that be don't (I think) want chaos, and they don't want S&P tracking fund inclusion in itself to cause a mess.

 

[Artful Dodger]

Cybertruck convoys to the Port of Houston, I’d guess. At least for a while.

Hmm, obviously MiC CT is best but wonder what the cost of a car carrier transit thru the Panama Canal is vs the cost of a Rail Shipment from Austin to the Port of Los Angles? Or it's just 1,390 road miles down I-10 from Austin to Los Angles. Many Cybertucks will be sold in L.A./California and will have to make this transit anyway.

Cheers!

 

[StealthP3D]

Per car they still generate more profit. Obviously the difference in production quantities means 3/Y will have more profits combined. Also they sell to a mainly different crowd.

While that is a fair point, as someone who believes in the mission, I care how many cars they sell. And as a shareholder, I care about total profit, not profit per car.

 

[Artful Dodger]

Will GF China be producing Tesla CyberTrucks before a foundation is poured in the Austin or Tulsa areas or any model product coming out of GF Berlin?

Lol, no China can build the shell fast enough all right, but it's Tesla, Inc and specifically Tesla Grohmann Engineering division which has to invent a production method first.

Nothing like CT has ever been made commercially before. The closest analogy is military AFVs due to the steel hull construction, but those are somewhat *spendy* for most civilians...

Tesla will sort out the production process at home, then export the machine that builds the machine overseas. I hope they build Cyber 'Johnny Cabs' too. Cheap like borscht.

Cheers!

 

[MP3Mike]

What? They don't want "extra returns". They want to track the S&P 500. Extra returns are pointless. They don't actually care what they pay for TSLA, since market price is what they're after. But the powers that be don't (I think) want chaos, and they don't want S&P tracking fund inclusion in itself to cause a mess.

OK, you're right, they don't make "extra returns" for the fund, they pocket the money for themselves: Elon Musk accuses BlackRock of helping short sellers

Older article: Securities lending boom sparks concerns on returns and voting

BlackRock Inc’s (BLK.N) securities lending revenue surged 14 percent to $338 million during the first half of the year, compared to the year-ago period. The company’s in-house securities lending agent keeps typically 20 percent to 30 percent of fees paid by borrowers. Investors in BlackRock’s largely passive funds receive the balance of the fees, though a lower percentage than at many other rival funds, U.S. regulatory filings show.

They do it at least partially to keep their management fees down.

 

[HG Wells]

Well, today I got withdrawal symptoms.
I tried watching the Frankfurt exchange but it just wasn't enough.
Itl be a long weekend.

 

[wipster]

Lol, no China can build the shell fast enough all right, but its Tesla, Inc and specifically Tesla Grohmann Engineering division which has to invent a production method first. Nothing like CT has ever been made commercially. The closest analogy is military AFV due to their steel hull construction, but those are somewhat *spendy* for most civilians...

Cheers!

Remember though the very reason Tesla is building 3's and Y's IN China, because they can sell them cheaper since import duties don't apply. One would think the same would apply to the Cybertruck as well. Granted, the manufacturing methodology needs to be developed, but once it's out there what's stopping them from building facilities in two (maybe 3) locations? Money of course, but we know how hard that is to get, as in not very.

 

[Words of HABIT]

Let’s say N is number of shares and N starts at a hypothetical 1000:

Year 1: .025*N = 25. Now N=975.
Year 2: .025*N = 24.375. Now N=950.625.
Year 3: .025*N = 23.765. Now N=926.86.
Year 4: .025*N = 23.17. Now N=903.69.
Year 5: .025*N = 22.59. Now N=881.10.
etc

So number of shares sold each year would gently drop per year, but one assumes the stock price will keep rising for a good long time, making this an interesting plan.

Question is, what would the starting value of N need to be for a given person to adopt this plan? It’d vary from person to person for sure. Given where TSLA is priced now, starting N=1000?

@tinm, yes in principal that's it, withdraw funds once annually until end of life. N=1000 may be sufficient for most within one to three years, with appreciating share price and no debt. Make minor tweaks each year, however essentially, keep my skin in the game and enjoy the ride.

 

[AlMc]

IMO, they will build the first 'few' Cybertrucks in USA, probably Cali, so that they can be tested near the home base. However, significant production will occur first in China, then US factory in TX or OK (either of which will be slower to build than China or Germany).

*Also why they will build their first few in Cali......Jerome likes the mission but he loves trucks.

 

[StealthP3D]

The above posts are from April Fool's Day.

Some things age well.

Some things don't (and I mean REALLY don't).

What do you mean? Gold has appreciated almost 10% since April 1! /s

Of course Tesla has appreciated about 13 times as much! Seriously though, I would be happy with 10% in three months (annualized that's a lot!).

 

[jerry33]

While that is a fair point, as someone who believes in the mission, I care how many cars they sell. And as a shareholder, I care about total profit, not profit per car.

Agreed, but there are folks who don't want a smaller car--regardless of how good it is. Both equals more total profit than just one.

 

[Motor Mouth]

IMO, they will build the first 'few' Cybertrucks in USA, probably Cali, so that they can be tested near the home base. However, significant production will occur first in China, then US factory in TX or OK (either of which will be slower to build than China or Germany).

*Also why they will build their first few in Cali......Jerome likes the mission but he loves trucks.

Is the market for pickup trucks as robust in China? Anecdotally at least, I would think not. Why wouldn't production start in the country that buys the most trucks?

 

[StealthP3D]

IMO, they will build the first 'few' Cybertrucks in USA, probably Cali, so that they can be tested near the home base. However, significant production will occur first in China, then US factory in TX or OK (either of which will be slower to build than China or Germany).

*Also why they will build their first few in Cali......Jerome likes the mission but he loves trucks.

Even if they only build one Cybertruck line in CA, TX or OK to begin with, it will automated and tuned as part of the production development. In other words, the first production line will be capable of cranking out significant volume of Cybertrucks and they will have it running and tuned before they replicate it in China.

I'm chomping at the bit to get my Cybertruck so I'm counting on it!

 

[StealthP3D]

Maybe they've already had the meeting, and decided to add TSLA to the index the same day the earnings report comes out, assuming the numbers are good.

Anything's possible. They could also announce S&P inclusion between now and earnings based on nothing more than P&D numbers, likely profitability, and the size and importance of Tesla to the market.

 

[vwman111]

Is the China Cybertruck announcement a stock price mover on Monday?