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

[scaesare]

Nikola has released a video of a FC truck that MOVES!! That's far more than I was expecting.

Well that was embarrassing....

 

[smorgasbord]

I believe it wouldn't make a lot of sense for S&P to do anything but add TSLA as expected if and when they report profit that makes them eligible. Having said that, as an investor, I think I have to consider that ~5% chance that they deny or delay the addition. I pulled the ~5% out of my butt but it is based upon the following:

1) Tesla, due to it's market valuation and other factors, would not be a typical addition to the index - it might be more than a little disruptive.
2) a lot of powerful interests probably prefer it NOT be added at this point (or at all)
3) the fact that institutions in general appear less beholden to traditions.

Please note, I think it's basically a done deal, I'm just saying an investor might consider the slim chance that it doesn't happen (for whatever reason). This wouldn't be a factor for most buy/hold investors but those buying options expiring this year should probably factor in a small discount for a possible delay or rule change.

I would speculate that if the S&P committee doesn't want to add Tesla right now , it might be for one of the following reasons:

1. TSLA is volatile and they don't want volatility in their index.
2. They think TSLA is overvalued right now, and so they think it'll decline later, which will bring their index down.
3. @StealthP3D 's reason #2

As I posted upthread, the last time the committee didn't want to add a company, they literally changed the rules. This was for SNAP and the rule change was that the company couldn't have "multiple share classes." (Link yet again). This was a blatantly obvious dig against SNAP because of timing and because they didn't make the rule retroactive - there are a few stocks, such as GOOG, which have multiple share classes and they're not getting kicked out. So there.

As @StealthP3D says, there is a possibility that they'll change some rulesto try to exclude Tesla, or at least come up with some reason to delay adding Tesla for a quarter, perhaps on the hope that Q3 won't show a profit. It could be something related to corporate governance, or SEC investigations, or any number of things that a couple powerful organizations could get together on in a backroom somewhere. But, I agree that the odds are high they will add Tesla in Sep if Q2 shows a GAAP profit.

 

[ADP]

Confession time...

It's either write this post or perch myself on the window ledge. (Ground floor. Not much good there.) This is the only audience to whom I can bare my tortured soul.

Some years ago, I bought a bunch of TSLA at $200. (I'm not savvy enough to trade options. I'm more comfortable buying and holding long-term when I believe in the strength and vision of a company.)

Through it all I held fast and didn't sell. When TSLA went down to $150 and cries of 'bankrupt' were coming from every talking head on Wall Street, I just smiled and sat tight. I watched the reversal and held on, all smiles, until the pandemic hit. Until it was apparent that the pandemic was going to have a significant impact on the world and the Tesla factory closed.

At that point, I made the dumbest financial mistake of my life to date: I sold all my TSLA at around $750. Not because of any reduction in faith. I was trying to be clever. "There's going to be a dip back to $500-ish range due to the results of the plant closing and the general economic impact," my idiotic brain told myself. "I'll buy back in at that point and have even more shares."

And the downturn never happened.

My wife steadfastly shared my long-term faith in Tesla (which is still unwavering) but she, too, believed that the world's most volatile stock would dip and give us a chance to get back in. So we waited for a dip. And opportunity after opportunity passed us by as we waited for a dip that never happened.

So here we sit. Still sitting on cash that while missing every opportunity to reinvest in TSLA.

I'm absolutely tortured at the horrible decision I made by trying to be clever. My wife is far more zen about it. We locked in profit and she does a better job of focusing on that.

And, though it all, I can't stop beating myself up for exiting at $750. I'm so anguished over this that I can't let it go. I told my wife "I want to punch myself in the face until I'm unconscious, wake up, and do it again."

This is the only place who would possibly understand my pain. All of my friends and family would hear this and say "Oh, you didn't make enough on your TSLA stock and you're sad now. Boo hoo. Piss off."

So now we're faced with a decision: I want to just get back in now at market price and forget about the mistakes of the past and she wants to wait for a dip that may never happen before getting back in.

My belief is that long-term we're looking at $2500 - $3500 in the next three to five years and just jumping back in now is the best thing to do. Trying to be clever is what got us into this mess in the first place and I don't want to make that mistake again. My wife still believes that the world's most volatile stock won't disappoint and we'll see a dip again. Certainly not down to where we exited, but possibly nearer to $1000 or a tad lower.

That's my pain and our current struggle.

Thanks for listening.

I too have a story. I bought TSLA in 2014 and accumulated 1,809 shares. For a period of 3 years TSLA traded between say $170 to $240. It finally broke out a bit and I sold 1097 shares at $260 and was waiting for the dip. However, TSLA broke out to the $300s. Obviously, I kicked myself but bought back 854 shares at about $354. I have held 1565 shares since 2017 and I dare not move them.

I’m thankful that I swallowed my pride and got back in but l always think of the lost 244 TSLA shares.

Moral of the story. Do not try to time the market and have a long term investor mentality for this stock.

 

[Artful Dodger]

It's been a good year. TSLA is now ranked #18 #17 (sorry, NVDA) in Mkt Cap w. a 12-mth growth rate that is 3x the next-best Top-50 Equity:



... and the best is yet to come for TSLA.

Cheers!

 

[Artful Dodger]

And the options market with associated delta hedging complicates things.

The fact is, there is simply not enough data available (even to industry people like Ihor) to know how large the "true short interest" is.

Correct me if I'm wrong, but isn't 'delta hedging' mostly about the purchase of protective Put contracts to cover the value of the bond?

Put option contracts are not shares sold short. How is it that people are equating any delta hedging by long bond holders as contributing to the total short interest?

EDIT: Paging @FrankSG

 

[TSLAopt]

I believe it wouldn't make a lot of sense for S&P to do anything but add TSLA as expected if and when they report profit that makes them eligible. Having said that, as an investor, I think I have to consider that ~5% chance that they deny or delay the addition. I pulled the ~5% out of my butt but it is based upon the following:

1) Tesla, due to it's market valuation and other factors, would not be a typical addition to the index - it might be more than a little disruptive.
2) a lot of powerful interests probably prefer it NOT be added at this point (or at all)
3) the fact that institutions in general appear less beholden to traditions.

Please note, I think it's basically a done deal, I'm just saying an investor might consider the slim chance that it doesn't happen (for whatever reason). This wouldn't be a factor for most buy/hold investors but those buying options expiring this year should probably factor in a small discount for a possible delay or rule change.

Agree and handicap it at 20% instead of 5%…still a 4 in 5 chance though

 

[StealthP3D]

Then every time I wanted to buy again, he felt it was too expensive- so we never got back in. Think of what 300 shares from 2007 would be worth today.

That's easy. 300 AAPL shares from 13 years ago would be 2100 current shares with a value of $803,733.00 at the close of the regular session today. In the afterhours market they would be up slightly (0.20% or $1,596.00) to $805,329.00.

That's not counting dividends which would have been approximately $30-$40K (probably more than your initial investment in the original 300 shares).

I'm glad you finally took charge of the situation!

 

[S3XY]

Confession time...

It's either write this post or perch myself on the window ledge. (Ground floor. Not much good there.) This is the only audience to whom I can bare my tortured soul.

Some years ago, I bought a bunch of TSLA at $200. (I'm not savvy enough to trade options. I'm more comfortable buying and holding long-term when I believe in the strength and vision of a company.)

Through it all I held fast and didn't sell. When TSLA went down to $150 and cries of 'bankrupt' were coming from every talking head on Wall Street, I just smiled and sat tight. I watched the reversal and held on, all smiles, until the pandemic hit. Until it was apparent that the pandemic was going to have a significant impact on the world and the Tesla factory closed.

At that point, I made the dumbest financial mistake of my life to date: I sold all my TSLA at around $750. Not because of any reduction in faith. I was trying to be clever. "There's going to be a dip back to $500-ish range due to the results of the plant closing and the general economic impact," my idiotic brain told myself. "I'll buy back in at that point and have even more shares."

And the downturn never happened.

My wife steadfastly shared my long-term faith in Tesla (which is still unwavering) but she, too, believed that the world's most volatile stock would dip and give us a chance to get back in. So we waited for a dip. And opportunity after opportunity passed us by as we waited for a dip that never happened.

So here we sit. Still sitting on cash that while missing every opportunity to reinvest in TSLA.

I'm absolutely tortured at the horrible decision I made by trying to be clever. My wife is far more zen about it. We locked in profit and she does a better job of focusing on that.

And, though it all, I can't stop beating myself up for exiting at $750. I'm so anguished over this that I can't let it go. I told my wife "I want to punch myself in the face until I'm unconscious, wake up, and do it again."

This is the only place who would possibly understand my pain. All of my friends and family would hear this and say "Oh, you didn't make enough on your TSLA stock and you're sad now. Boo hoo. Piss off."

So now we're faced with a decision: I want to just get back in now at market price and forget about the mistakes of the past and she wants to wait for a dip that may never happen before getting back in.

My belief is that long-term we're looking at $2500 - $3500 in the next three to five years and just jumping back in now is the best thing to do. Trying to be clever is what got us into this mess in the first place and I don't want to make that mistake again. My wife still believes that the world's most volatile stock won't disappoint and we'll see a dip again. Certainly not down to where we exited, but possibly nearer to $1000 or a tad lower.

That's my pain and our current struggle.

Thanks for listening.

If you truly think that we're headed to $2,500 - $3,500 then why not jump in now and enjoy a 2 to 3 banger?

 

[StealthP3D]

Correct me if I'm wrong, but isn't 'delta hedging' mostly about the purchase of protective Put contracts to cover the value of the bond?

Put option contracts are not shares sold short. How is it that people are equating any delta hedging by long bond holders as contributing to the total short interest?

TIA.

There is more than one way to skin a cat!

 

[Krugerrand]

There is more than one way to skin a cat!

And the cat doesn’t care what the method is as the outcome is all the same: unappreciated.

 

[FrankSG]

Correct me if I'm wrong, but isn't 'delta hedging' mostly about the purchase of protective Put contracts to cover the value of the bond?

Put option contracts are not shares sold short. How is it that people are equating any delta hedging by long bond holders as contributing to the total short interest?

EDIT: Paging @FrankSG

I'll quote someone who understands this topic better than I do: @ReflexFunds

7) Some converts are held by investors who want the equity exposure to Tesla but most are bought by debt funds who delta hedge equity exposure. Assuming 80% of converts are delta hedged, this convert hedge is now 8.4m shares ($3.9bn) of the ~24m Tesla short position.

https://twitter.com/ReflexFunds/status/1214869632261218309

So yes, you can use the term delta hedging here, because they hedge (by shorting common stock) against the delta of the stock moving higher.

 

[Mike Smith]

Tasha thinks Tesla should start their ride hailing service now.

 

[StealthP3D]

I’m thankful that I swallowed my pride and got back in but l always think of the lost 244 TSLA shares.

Moral of the story. Do not try to time the market and have a long term investor mentality for this stock.

Thanks for being brave and sharing your story because I imagine for every brave person like yourself, there are at least 10 if not 100 that pretend like it never happened. I mean, as long as you're profitable, it's all good, right?

Just be glad you were confident and had enough conviction to buy back in at a 30% higher price. Those 244 "lost" shares represent $340,200.00 at todays prices that's not in your account but had you not bought the 854 shares back at $354, you would have missed out on an additional $888,399.00 in appreciation at today's price and who knows how much future capital appreciation!

This highlights the risk of trying to trade a high-growth stock! That was a valuable lesson you learned because it's not like there were not tempting times to sell between then and now! I'm curious what was going through your head last June when TSLA went down to $180?

 

[SOULPEDL]

I believe it wouldn't make a lot of sense for S&P to do anything but add TSLA as expected if and when they report profit that makes them eligible. Having said that, as an investor, I think I have to consider that ~5% chance that they deny or delay the addition. I pulled the ~5% out of my butt but it is based upon the following:

1) Tesla, due to it's market valuation and other factors, would not be a typical addition to the index - it might be more than a little disruptive.
2) a lot of powerful interests probably prefer it NOT be added at this point (or at all)
3) the fact that institutions in general appear less beholden to traditions.

Please note, I think it's basically a done deal, I'm just saying an investor might consider the slim chance that it doesn't happen (for whatever reason). This wouldn't be a factor for most buy/hold investors but those buying options expiring this year should probably factor in a small discount for a possible delay or rule change.

I give odds of non S&P inclusion 10%. It was 5% until I read your post. Points 1-3 are believable, hypothetically adding:

4) Wallstreet and the SEC have all but proven to be untrustworthy.
5) Excuse #1: It's so overvalued that, if included, it will drag down the S&P and your investment overall when it pops.
6) Excuse #2: Under CDC advisement, we have no choice but to postponed the Tesla vote until 2021 out of respect and safety for our members.

No timeline on this, so could be later than earlier. Maybe much later to argue it's seriously too high at $2,500 with potential to become a Tesla overly heavy Index.

I'm sure they're all trying to figure out a story that would stick and save face. Money obsessed people seem to also be quite creative with lots of time on their hands.

But if rejected, would it have any effect on the mission? IMO, No. Just a blip, followed by a lot of questions, and more free advertising.

 

[engle]

Great Reuters article on TSLA & S&P 500 maybe it can help move the price up tomorrow?

Tesla appears poised to electrify S&P 500

Howard Silverblatt, a senior index analyst at S&P Dow Jones, had to look back to the dot-com era to recall a comparable situation. In 1999, Yahoo surged 64% in five trading days between the announcement that it would be added to the index on Nov. 30 and its inclusion after the close of trading on Dec. 7. Yahoo's market capitalization at the time was about $56 billion.

The lesson learned from Yahoo was that when you have an up and coming issue that may possibly go into the index, you should already own a little of it," said Silverblatt. "If you had to get into that stock, you were paying a heck of a premium compared to owning it a week earlier.​

That would be $1,400 x 1.64 = $2,300/share if history repeats itself!

 

[StealthP3D]

I give odds of non S&P inclusion 10%. It was 5% until I read your post. Points 1-3 are believable, hypothetically adding:

4) Wallstreet and the SEC have all but proven to be untrustworthy.
5) Excuse #1: It's so overvalued that, if included, it will drag down the S&P and your investment overall when it pops.
6) Excuse #2: Under CDC advisement, we have no choice but to postponed the Tesla vote until 2021 out of respect and safety for our members.

That's fair enough - it could be a 10% chance as it's all just a WAG. No one that doesn't have inside information from the index committee can provide any more accuracy than a WAG. If you based it on past statistics I think it would be pretty close to 0% but there are certain unique factors here that should maybe be accounted for.

That said, I take exception to essentially all of the reasons you provided:

4) The SEC has nothing to do with it.
5) It's not the committee's job to value the company so they will not be using "overvaluation" as an excuse to not include it.
6) Obviously, the vote could happen without risking the health of the committee so they won't be using that as an excuse.

 

[SOULPEDL]

Tasha thinks Tesla should start their ride hailing service now.

I don't think they have the required # of drivers needed yet to provide a seamless customer experience. Unless maybe they pilot in the Bay area. My sense from Elon's recent statements (basically no change in the schedule) is that they are so close to full autonomy that the resources, as needed to set up and use the Tesla Network, would be short lived and therefore wasteful. (For some reason I've heard that before, so maybe Elon said this at one time?)

But... This is a very good example of the many areas Tesla could tap into for new revenue, and how unrealized its valuation is by dismissing something the size of an Uber or Lyft.

 

[SOULPEDL]

That's fair enough - it could be a 10% chance as it's all just a WAG. No one that doesn't have inside information from the index committee can provide any more accuracy than a WAG. If you based it on past statistics I think it would be pretty close to 0%. But there are certain unique factors here.

But I take exception to essentially all of the reasons you provided:

4) The SEC has nothing to do with it.
5) It's not the committee's job to value the company so they will not be using "overvaluation" as an excuse to not include it.
6) Obviously, the vote could happen without risking the health of the committee so they won't be using that as an excuse.

Likewise, fair enough. Just some free brainstorming. Whatever the excuse (and there would need to be something), I just have no faith in systems that high up the food chain.

 

[Big Time]

It’s a fat kid rodeo........whatever that means

 

[UkNorthampton]

I’ve done something similar. Decided to focus on the positives.
You’ve made some money already. And now you will likely make more by buying in again. Ignore what happened in between. There are millions of people who missed out on all the growth, and they will never see any in the future.
We really are in a lucky minority.

I'd say we have an information advantage. Nothing is certain but I feel I understand Tesla better than most people, most amateur investors, most professional analysts. That may be hubris and delusion and I check myself often by listening to contrary views outside of my beliefs.

I watch the talking heads on youtube/tv and I can see the inaccuracies. I talk to ordinary people (like the locksmith described many pages ago) who have complete disbelief in Tesla but are slowly acknowledging change - often with "When hydrogen..." which I now realise is just an attempt at sounding like they know but is really a parroting of nonsense in comments on tv/facebook etc.

Many years ago, I read the Economist which I enjoyed and trusted. Over time, they wrote about subjects that I knew well. They often got it very wrong. I cringed at some of the articles which I realised were aligned with a mainstream narrative rather than the objective truth.

Point is:- check your thoughts often, but if you DO KNOW better than others, you have an advantage. Past is gone, can you use your knowledge to make money today or in the future?