Time for a confession. I used to be able to say that I have held all my Tesla shares, but this has been a tough year. Earlier in the year I tried writing covered calls with a strike of $1200 for Mar and Jun of 2021. My outlook at that time was that the stock price could break $1000, but had a very low chance of exceeding $1200 in 2021. I thought this was a clever way to raise a little cash to balance out other holdings in my portfolio, but the universe set out to confound me. My covered call blew up on me. IV was massive. Around $1600, I realized that I had to sell shares to stop the losses on my calls. While Tesla investors were enjoying the biggest rally ever, I was kicking myself in the ass. Fortunately, I was able to enjoy most of the appreciation in my Tesla shares, but this had proven to be one of the most expensive ways to get a little cash for diversification. I realized painfully that, had I simply sold a few shares to raise cash, I would have forfeited far fewer shares and enjoyed much more gain on my hoard of shares. It left the rest of my portfolio in disarray too.
Having learned this lesson, I set out to rebalance my portfolio by selling off a few shares at a time as price climbed higher. Tesla was more than 80% of my actively managed portfolio. I have managed to get this down to about 73%, but it is hard because the Tesla position is growing so fast. I've been trying to keep the position to a certain multiple of $1 million. I set up limit orders so that as the price goes up I sell off 5 to 20 shares to keep the position back to that target value. But even that is not working so well. This is generating so much capital gains that we've bumped up to the 20% long-term rate. So my wife wants my to hold back and spread the gains out to future years at the 15% tax rate. So I'm able to keep trimming my IRA Tesla position, but I'm allowing my taxable Tesla position to keep running.
So I'm not really complaining. This is all too much of a very good thing. This has been a transformative experience for our finances, and I'm quite confident about retiring in the next ten years when I find myself good and ready. Yes, I remain a buy-and-hold investor. That is my basic style. I like to accumulate a little at a time in anticipation of long-term appreciation. But I am also selling Tesla a little at a time. This is not because I am trying to trade for a profit or because I think the price will soon fall. It is simply because my Tesla position has become so large, and I want to accumulate other stocks too. The most conservative stock I'm rotating into is HASI. It is a REIT that invests in renewable energy farms and other sustainability infrastructure. It has a 3.5% dividend yield, and the stock price has appreciated about 25% annually over the last 5 years. This is a long-term dividend growth play. My other investments like SEDG and ARKK have the potential, I believe, to grow sustainably above 30% per year. In fact, SEDG has usually beat TSLA in any year, just not this year.
I'm grateful that my Tesla investment has paid off so well and can now fund new investments. Someday, it will fund my retirement too. Other investors seem eager to buy my shares, and I'm happy new Tesla investors are coming along. My hope is that they will be rewarded as richly as I have been and will continue to be.