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

[mongo]

Anyone know if Twitter (NYSE: TWTR) was a constituent of any other S&P index (ie: MidCap S&P400) before being added to the S&P500 in Jun 2018? TIA.

Cheers!

They could not have been. Criteria for inclusion is the same for 400, 500, and 600 indexes (Composite 1500) other than market cap, of course.

 

[Intl Professor]

Those are the worst nags. When they are right they repeat the NAG for decades.

I've got that covered. I don't have a decade left. Also, she who cannot be denied, repeats only on recidivism.

 

[PeterJA]

@Fact Checking / Tesla Facts has tweeted detailed estimates for the volume of TSLA share purchases which will be triggered by an S&P announcement. This is a substantial portion of the float, and with continuous growth by Tesla, upward SP momentum and buying interest from these large funds will only CONTINUE in Q3/Q4 ie: for every doubling of TSLA's Mkt Cap, Funds will need to double the number of shares they hold. This is the virtuous cycle that many TSLA longs have been waiting for, IMHO...

I too was thinking this yesterday when I used the term virtuous cycle. Then I realized it applies only before the funds buy TSLA shares. After they own shares, a doubling of Tesla's market cap will double the TSLA value they hold without buying more shares, because the share price will have doubled.

Maybe you understand this. I just wanted to make it clear, because I didn't yesterday.

 

[keydiver]

Meanwhile, the global cooling brought on by industries shutting down has resulted in one of the coldest summer in Vancouver with rain all the time. What used to be months of smog filled burning days is now sunless rain.

Not here in Florida. I wish. Record heat, 105 to 110 with heat index. It's too hot to even go to the beach if you could.

 

[goinfraftw]

This isn’t solar-related, but my wife (who is a dietitian) started a non-profit foundation called Stargold’s Nutrition Foundation last year that is working towards providing healthy, nutritious meals to undernourished school-age children in Libreville, Gabon.

It is in the planning and organizing phase but she has 3 employees there already and a team here in Canada helping her push the project forward. They recently had a recipe contest to find the best recipe (nutritious and tasty) for a “pancake” style meal to use, and they are honing in on a property in Libreville to either buy or rent to set up the commercial kitchen. She intends to get solar (hopefully Tesla) and Powerwall eventually to run the kitchen when there is enough funding.

I’ve donated a lot of funds already (helped by TSLA!) but the fundraising gala event planned for this fall had to be cancelled due to COVID of course, which was too bad. The ultimate goal is to optimize the model in Gabon and then recreate it in other countries where there are children similarly in need.

This is the website: Stargold's Nutrition Foundation | Feeding Kids in Africa

Sounds good - will take a look!

 

[LN1_Casey]

I too was thinking this yesterday when I used the term virtuous cycle. Then I realized it applies only before the funds buy TSLA shares. After they own shares, a doubling of Tesla's market cap will double the TSLA value they hold without buying more shares, because the share price will have doubled.

Maybe you understand this. I just wanted to make it clear, because I didn't yesterday.

I don't think that's how it works. It's a weighted percentage of shares, not of share value. So, if 1% of the S&P 500 gives 10k shares, 2% would give 20k shares.

Because otherwise, a company at the bottom of the 500 would have the same amount of float taken out from the firs day they enter until they leave.

 

[printf42]

...
Now I'm short on companies which are impacted (long list to choose from)

This was...March 18th...

Nice gains these last few days, but no reason for dancing unless you sell. A large correction is coming across the entire market. The share price will go below 700 again. We’ll probably see 1500 before that happens, but in a few months, everything will come crashing down. There’s a lot of money being injected, but that won’t go on into eternity. Please be careful.

Hope your shorts are doing well.

 

[Beltsbear]

Is it a lot less disastrous if your shares are in an IRA? I have a 100 shares in a Roth that I was considering using to generate income as covered calls, but not sure how risky this is if I’m trying to stay long. Maybe I shouldn’t be asking this question in this thread? Is there a covered call thread that I should start reading?

Is there a Roth account that will let you do that?

 

[mongo]

Is there a Roth account that will let you do that?

Sure, Vanguard Brokerage for one.

 

[Right_Said_Fred]

I think you'll have to go a bit further to make your case that S&P500 inclusion is now baked in

That’s not exactly what I implied. I said a lot of good news is baked in, that doesn’t mean all of it. I can see SP run up to 1400 or 1500, but not to the outlandish heights I’ve heard over the last few days.

 

[juanmedina]

Is it a lot less disastrous if your shares are in an IRA? I have a 100 shares in a Roth that I was considering using to generate income as covered calls, but not sure how risky this is if I’m trying to stay long. Maybe I shouldn’t be asking this question in this thread? Is there a covered call thread that I should start reading?

Look at the "wheel thread" there is lots of people that sell covered calls in there. I done it a few times from my traditional IRA. I have sold way OTM weekly calls for tiny premiums but money is money. I might do it again after ER.

 

[CanadaEV]

To the US members of this board: happy 4th. Let’s celebrate our freedom.

To those members outside the US: don’t lose faith in the US. We have our problems, and some are getting worse. But none of us here need look any further than the story of Elon Musk to appreciate that innovators are still able to thrive and grow here.

For every protectionist here there is another seeking to make the entire world open, free, sustainable and healthy.

Let the fireworks we light the sky with tonight remind us that we seek liberty and justice for all.

As a Canadian, I wish you and all Americans the best.
I grew up in awe of your country, and always felt excitement to travel through it.
Musk chose Canada first, but really mainly as a pathway to the potential he saw in the USA.
Recent decades have been a saddening experience for those who have looked for the old reliable values there. Thanks for the reminder that the heart of the country remains positive and expansive.

 

[The Accountant]

Nice gains these last few days, but no reason for dancing unless you sell. A large correction is coming across the entire market. The share price will go below 700 again. We’ll probably see 1500 before that happens, but in a few months, everything will come crashing down. There’s a lot of money being injected, but that won’t go on into eternity. Please be careful.

I was long TSLA in shares until the return to 600. The US pandemic is bigger than everyone imagines, it will be equal or worse than Italy. Now I'm short on companies which are impacted (long list to choose from)

I see, you got out at $600 and now $1,200 makes you doubly worried.
If it goes down to $700....you would still be up $100 from where you sold at $600.

 

[Artful Dodger]

I too was thinking this yesterday when I used the term virtuous cycle. Then I realized it applies only before the funds buy TSLA shares. After they own shares, a doubling of Tesla's market cap will double the TSLA value they hold without buying more shares, because the share price will have doubled.

Maybe you understand this. I just wanted to make it clear, because I didn't yesterday.

Not only double the TSLA value they hold, but force them to buy more TSLA shares as the relative weight of TSLA rises in the NDX relative to other equities it contains. TSLA would be ranked #18 or so in the S&P500 and weighted around ~0.83% today.

If S&P500-based index fund hold $5T today, they will need to purchase about $41.5B in TSLA when it is added to the NDX. That's a substantial portion of the float which will have an exaggerated effect on the SP, triggering more forced buying, and greatly encouraging speculators who will further bid up the SP. See what I'm getting at?

S&P 500 Companies - S&P 500 Index Components by Market Cap

Even better, if TSLA's SP goes up faster than other components, those large Index funds must rebalance by SELLing underperformers and BUYing more TSLA.

Underperformers like NYSE:XOM (EXXON is now just 83.2% of TSLA's Mkt Cap). That's the virtuous cycle, one which accelerates after S&P500 inclusion

Even ARK is not fully pricing in Tesla Energy and robotaxis, maybe because nobody except some here would believe them.

Cathie Wood has been specific in her answer as to why ARK Invest does not include T.E. in their 5-yr estimates for TSLA. The reason is that NO ONE ELSE DOES. ARK Invest wants to produce an estimate that is strictly comparable to other analysts, and to NOT give them the easy out (when they are proven wrong) that ARK included revenue streams that the other did not. ARK wants to compare Apples to Apples, and be shown to be correct, years ahead of the analyst community.

Cheers!

 

[StealthP3D]

That all sounds swell but the macro situation, ranging from the vicissitudes of Individual-1 to the inevitabilities of COVID-19 suggest that the “party” which is the stock market could get “shut down” at any time, taking everything down with it.

In my experience in the market, the party can get shut down at any time. You don't need virus fears, unemployment or lack of consumer confidence for the market to crater. The key is to have an investment horizon that looks past the next shut down and to own companies that are not fragile to market disruptions.

Cathie Wood is intimately familiar with how markets work over the decades and, as an investor who is long equities, she is comforted when the market participants are climbing the "wall of worry" and becomes more cautious when investor sentiment is telegraphing little worry. Her returns are superior.

As a person, in life I am naturally inclined to worry about all the details and what could go wrong. If I let this transfer through to my investment activity, I wouldn't have made but 1/10th the gains I have over the previous 30 years. And there have been plenty of market disruptions. Yes, I have spent years out of the market and, while it has saved me from some downside pain, I would actually be wealthier if I had stayed in the market 100% of the time (and simply switched to a different stock at any point one of them was screaming "sell"). The secret is not to time the market but to own great companies over the long haul. At the moment the market does look very toppy but I can see no better risk/reward than Tesla over the next 5 year period.

Will TSLA go back into the three digits? No one knows. Personally, I think it would be very short-sighted for investors to sell at this point in time (and certainly not in a taxable account). Stories of people selling at the top and buying in at a lower price for 30% more shares are much more popular than those who sold and missed out on the next doubling. Do you know why? Because people love to share stories that make them appear smart and savvy. People who lose tend to slink away into the corner never to be heard from again. These tendencies create an unrealistic perception and it's important to be aware of that.

Having said all that, I don't give a flying frick if you sell your shares. It's not going to impact me in the slightest, not in any measurable way. The only reason I bother to write things like this is because I would rather see a small investor on TMC who probably actually cares about the mission become wealthy from holding TSLA tightly over the years than having those gains go to a faceless financial industry player. I've always rooted for the underdog.

Yes, TSLA will drop at some point, but who knows where that point is, it will have to go a lot higher than this for me to sell. This road is littered with those who sold at $400, $500, $600 and $800 because they thought they knew.

 

[SoGA Fan Club]

Indeed. “Conceived in liberty and dedicated to the proposition that all men are created equal.“

Lincoln recognized this was the goal. Unfortunately, 150 years later, it’s a goal we’re still fighting to reach.

Actually Lincoln didn't - it's just a common belief that he did. It's not terribly difficult to do some research on Lincoln and it's clear that he was not what most people think he was.

 

[StealthP3D]

I see, you got out at $600 and now $1,200 makes you doubly worried.
If it goes down to $700....you would still be up $100 from where you sold at $600.

Exactly! And every month that goes by TSLA has more intrinsic value, regardless of the share price, because they are growing their brand, their technology, their vertical integration, their production capacity and increasing production efficiency.

 

[ZsoZso]

I think you'll have to go a bit further to make your case that S&P500 inclusion is now baked in. Their is substantial evidence that from 2-5 business days public warning will come from the Committee announcing the imminent inclusion of TSLA. We are not there, and with TSLA also not being in the S&P1500 et.al those large Index Funds and ETFs are not able to build a TSLA separately then simply transfer the shares between the accounts.

@Fact Checking / Tesla Facts has tweeted detailed estimates for the volume of TSLA share purchases which will be triggered by an S&P announcement. This is a substantial portion of the float, and with continuous growth by Tesla, upward SP momentum and buying interest from these large funds will only CONTINUE in Q3/Q4 ie: for every doubling of TSLA's Mkt Cap, Funds will need to double the number of shares they hold. This is the virtuous cycle that many TSLA longs have been waiting for, IMHO.

Frankly, the only dark clouds I see on the horizon slowing a substantial runup is the MMs demonstrated willingness to participate in (dubiously-legal) naked short sellling, breaking the law of supply and demand for TSLA price discovery in the short term: SEC required 13-day period for "Failure to Deliver Reports (SEC Reg. SHO).

Otherwise, I see a crest of the wave for TSLA, followed by a permanent increase in sea level. A true tsnami is coming to wash away the shortzes position. TSLA has arrived. Best retreat from the beaches, unless you are a seller of medium height or above.

Cheers!

Good points! The forum name may need to change, although the acronym TMC is fine, the middle word "Motors" is not fully descriptive since Tesla is not just a car company. So I am thinking Tesla Millionaires Club might be a fitting new name.

 

[tinm]

In my experience in the market, the party can get shut down at any time. You don't need virus fears, unemployment or lack of consumer confidence for the market to crater. The key is to have an investment horizon that looks past the next shut down and to own companies that are not fragile to market disruptions.

Cathie Wood is intimately familiar with how markets work over the decades and, as an investor who is long equities, she is comforted when the market participants are climbing the "wall of worry" and becomes more cautious when investor sentiment is telegraphing little worry. Her returns are superior.

As a person, in life I am naturally inclined to worry about all the details and what could go wrong. If I let this transfer through to my investment activity, I wouldn't have made but 1/10th the gains I have over the previous 30 years. And there have been plenty of market disruptions. Yes, I have spent years out of the market and, while it has saved me from some downside pain, I would actually be wealthier if I had stayed in the market 100% of the time (and simply switched to a different stock at any point one of them was screaming "sell"). The secret is not to time the market but to own great companies over the long haul. At the moment the market does look very toppy but I can see no better risk/reward than Tesla over the next 5 year period.

Will TSLA go back into the three digits? No one knows. Personally, I think it would be very short-sighted for investors to sell at this point in time (and certainly not in a taxable account). Stories of people selling at the top and buying in at a lower price for 30% more shares are much more popular than those who sold and missed out on the next doubling. Do you know why? Because people love to share stories that make them appear smart and savvy. People who lose tend to slink away into the corner never to be heard from again. These tendencies create an unrealistic perception and it's important to be aware of that.

Having said all that, I don't give a flying frick if you sell your shares. It's not going to impact me in the slightest, not in any measurable way. The only reason I bother to write things like this is because I would rather see a small investor on TMC who probably actually cares about the mission become wealthy from holding TSLA tightly over the years than having those gains go to a faceless financial industry player. I've always rooted for the underdog.

Yes, TSLA will drop at some point, but who knows where that point is, it will have to go a lot higher than this for me to sell. This road is littered with those who sold at $400, $500, $600 and $800 because they thought they knew.

And that, too, all sounds swell and I generally have no disagreement except that none of us, not even Cathie Wood, have *ever* lived through the unpredictable, dire times we face now. The situation is unprecedented and makes sudden macro market changes all the more possible, imho.

And to be clear I was not advising selling at some point. On the contrary: I was advising having something in reserve so you can swoop in and buy more if the “opportunity” presents itself.

 

[StealthP3D]

The exuberance that has taken over this thread the last few days is a bit worrying. Predictions of $2000 to $3000 for the end of the month and even peaks of $10,000 are the kind of uberbullishness that can easily end in tears, like we've seen many times over the last ten years. Let's stay grounded. There's a lot that can go wrong, not necessarily for Tesla but in the world, so don't bet the farm on such predictions.

I'm a big believer in not being attached to money you have in the market. In other words, NEVER bet more than your willing to lose, even if it looks like a "sure thing". So I don't buy your argument that people should be more careful in the current climate. People should ALWAYS use reasonable care.

That said, being long Tesla is not like owning options, ie. Tesla is extremely unlikely to go to zero while it's very likely to continue to grow value over the current decade.