dandurston
Member
I'm a long term believer in Tesla and would very much like to simply buy and hold for years, but I also recognize that Tesla is an exceptionally volatile stock due to a lot of extrinsic factors including politics, short selling, exuberance etc. That's going to make it a much wilder ride - up and down - that it would be if the stock price was a calm, rational judgement of the companies execution.
That added volatility gives investors a few options, you can:
1) Buy and hold, knowing it's going to be a wild ride
2) Buy and hold while lowering risk with options, but those options have costs that drag on performance; or,
3) Aspire to buy and hold but adjust your position size when the stock price seems to be irrationally low (buying opportunities) or irrationally high (selling opportunities).
The first approach is great if you have the stomach and patience to see it through. The later approach can be called timing the market and is often dismissed, but yet I think here on TMC we do have a good idea of when the stock price is getting irrational. There were times in 2016 and early 2019 when the overall market sentiment was obviously much too negative, and we knew it. I think these past few weeks the stock has gotten too exuberant as identify-able by the same tools (e.g. media coverage swinging from "bankrupt" to "$5000 share"). $500 or $600 after some good ER's and years of price suppression by FUD was a reasonable move, but a 50% higher jump to $950 on little further news is getting carried away.
I think this forum does a pretty good job of identifying dips as buying opportunities and folks doing so are generally applauded for doing so, but I think we do a less good job of identifying spikes as selling opportunities. That's to be expected since this is a very pro-TSLA forum. TSLAQ on twitter would be the opposite - they don't realize when the stock is irrationally low since they think it's going to zero, but they can call it out when it's ridiculously high (but you need discretion here because they always think it's too high just like we always think it's too low).
Looking at the recent action, $950 may be lower than the price we expect in a few years, but it's still higher than what the generally accepted price is likely to be in the short-medium term (I think). Thus, while you can ride that out, there is money to be made by selling when the price is irrationally high, just like there is money to be made buying when the price is irrationally low. The challenge is using good discretion and staying calm so you aren't backing the truck up on every small dip nor clearing out on every modest spike. Only act when you're thinking "this move is getting ridiculous".
I starting buying TSLA in 2014 and then backed the truck up in late 2016 when the share price seemed irrationally low at below $200. The company seemed to be doing well, and yet the stock had again dove to sub $200 when I thought fair value was around $300.
Today I think the shares are worth $500 - $600. As such, over the recent run I sold 1/5th of my shares at each of $420 and $550 because the share price had returned to about where I valued the company, and thus my "irrationally low" shares I had overloaded on could be sold for a fair value. I would have happily held my remaining 3/5ths indefinitely, but the continued recent run seemed to be getting irrationally exuberant. $650 seemed high, $750 was getting crazy, and when I woke up yesterday and saw $900 I thought it was out of hand. Thus I sold a further 1/5th portion at each of those points, which cleared out my position yesterday.
I very much wanted to relax and hold, but I couldn't justify doing so through what seemed like a period of exuberance. Maybe I'm wrong, but I don't see a lot of positive catalysts until the second half of 2020. Thus, for now I am out but I'll be looking to get back in when the stock returns to what I assess as the fair present value of $500 - $600. I'll probably start buying at $600 and add in increments if we dip lower from there. If the stock doesn't hit those prices in the next few months but stabilizes higher then I may re-enter at those higher prices in the mid-year.
That added volatility gives investors a few options, you can:
1) Buy and hold, knowing it's going to be a wild ride
2) Buy and hold while lowering risk with options, but those options have costs that drag on performance; or,
3) Aspire to buy and hold but adjust your position size when the stock price seems to be irrationally low (buying opportunities) or irrationally high (selling opportunities).
The first approach is great if you have the stomach and patience to see it through. The later approach can be called timing the market and is often dismissed, but yet I think here on TMC we do have a good idea of when the stock price is getting irrational. There were times in 2016 and early 2019 when the overall market sentiment was obviously much too negative, and we knew it. I think these past few weeks the stock has gotten too exuberant as identify-able by the same tools (e.g. media coverage swinging from "bankrupt" to "$5000 share"). $500 or $600 after some good ER's and years of price suppression by FUD was a reasonable move, but a 50% higher jump to $950 on little further news is getting carried away.
I think this forum does a pretty good job of identifying dips as buying opportunities and folks doing so are generally applauded for doing so, but I think we do a less good job of identifying spikes as selling opportunities. That's to be expected since this is a very pro-TSLA forum. TSLAQ on twitter would be the opposite - they don't realize when the stock is irrationally low since they think it's going to zero, but they can call it out when it's ridiculously high (but you need discretion here because they always think it's too high just like we always think it's too low).
Looking at the recent action, $950 may be lower than the price we expect in a few years, but it's still higher than what the generally accepted price is likely to be in the short-medium term (I think). Thus, while you can ride that out, there is money to be made by selling when the price is irrationally high, just like there is money to be made buying when the price is irrationally low. The challenge is using good discretion and staying calm so you aren't backing the truck up on every small dip nor clearing out on every modest spike. Only act when you're thinking "this move is getting ridiculous".
I starting buying TSLA in 2014 and then backed the truck up in late 2016 when the share price seemed irrationally low at below $200. The company seemed to be doing well, and yet the stock had again dove to sub $200 when I thought fair value was around $300.
Today I think the shares are worth $500 - $600. As such, over the recent run I sold 1/5th of my shares at each of $420 and $550 because the share price had returned to about where I valued the company, and thus my "irrationally low" shares I had overloaded on could be sold for a fair value. I would have happily held my remaining 3/5ths indefinitely, but the continued recent run seemed to be getting irrationally exuberant. $650 seemed high, $750 was getting crazy, and when I woke up yesterday and saw $900 I thought it was out of hand. Thus I sold a further 1/5th portion at each of those points, which cleared out my position yesterday.
I very much wanted to relax and hold, but I couldn't justify doing so through what seemed like a period of exuberance. Maybe I'm wrong, but I don't see a lot of positive catalysts until the second half of 2020. Thus, for now I am out but I'll be looking to get back in when the stock returns to what I assess as the fair present value of $500 - $600. I'll probably start buying at $600 and add in increments if we dip lower from there. If the stock doesn't hit those prices in the next few months but stabilizes higher then I may re-enter at those higher prices in the mid-year.
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