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

[Tslynk67]

A good bottle of Scotch. Maybe.

Maybe a bottle or two of Pappy Van Winkle Bourbon.

Feels like a little celebration is called for, no?

Hookers and cocaine, no?

 

[vikings123]

I've already stated a non-risky, logical reason for the $550k in calls purchased on Thursday. The purchaser knew they were going to buy a large number of stocks on Friday Afternoon. And determined the minimum amount that the stock would move upwards considering that sum being purchased. They just made back some of the increase they caused in the stocks they created when they purchased those stocks.

There’s a lot of gamblers in today’s market. That unusual call buying happens on a daily/weekly basis. Just because it worked this time does not mean the call buyers knew what was going to happen. Is it possible? Definitely.

 

[PeterJA]

I've already stated a non-risky, logical reason for the $550k in calls purchased on Thursday. The purchaser knew they were going to buy a large number of stocks on Friday Afternoon. And determined the minimum amount that the stock would move upwards considering that sum being purchased. They just made back some of the increase they caused in the stocks they created when they purchased those stocks.

This sounds like an argument against your hypothesis of insider news causing the run-up. Could the call buyers make enough profit on the run-up for that to be their motivation for causing the run-up?

 

[capster]

Almost everyone got a lot richer yesterday... on paper. But paper doesn’t buy you a house, a car, food or an island. It only can if you sell shares. So almost everyone is still as rich or poor as they were the day before. Which brings me to my question: when are most of us planning to really get rich? Because if you want to be rich there will have to be a day when the HODL’ing ends.

Huh? By that logic, you don’t have money till you spend it.

If you move out of TSLA and put it into some other ‘paper’ has anything changed — besides losing money to the tax persons?

Where to put money is an existential question Soros says: You have to put it somewhere.

When it comes time for me to want to employ my TSLA — turn potential energy into kinetic energy as it were — I may borrow against it or use options (didn’t @Fact Checking mention something about that?) rather than sell. I’ll hold on to each and every share as long as possible.

Wait and you’ll see, IMHO, there hasn’t been anything like Tesla in the market since Standard Oil.

 

[lafrisbee]

This sounds like an argument against your hypothesis of insider news causing the run-up. Could the call buyers make enough profit on the run-up for that to be their motivation for causing the run-up?

No they could not. And that was not their intent.
The Buying Entity had already made the decision before thursday to buy the shares on Friday for two reasons. The first was the fear of what they knew would get to other powerful buying groups before they could get all the stock they wanted/needed. And the second was to get the maximum assistance of the MM's to depress the SP while they bought in hyper mode. On Friday the MM's coordinate their effort to keep the SP at Max Pain, or as close as they can. And Friday is the only day that really matters so MM's are vigilant and focused Friday afternoon.
The Buyer figured out how much the SP would move if they purchased the number of stocks they needed on that Friday. They could have figured it out at anytime before the purchase on Thursday. But by NOT buying the calls till Thursday they gave the rest of us the least amount of time to consider what was going to happen. (I remember a few months back something similar happened. An even greater amount of money bought calls and it made even more money for the purchaser..anyone remember the exact event?)
The primary goal was to purchase a large quantity of shares before what they knew would be known by anyone else so they could just have to deal with the increase in price they were creating. They used the MM's desire to manipulate the price lower while they started buying. They knew the MM's couldn't keep the price down against the sheer volume they were going to buy so they knew the price was going to be at least $1500 by the end of the day. And they did the intelligent thing with that information, and they bought calls at $1500. The calls were just a side dish. Sure they made a helluva lot of money on them. But their move was to buy millions of shares before anyone else moved the price based on what they knew. And by doing so they will make many times more money than they made on the $1500 calls in the near future.

EDIT: The move could have even been done by a front runner who will re-sell the stock once inclusion to the S&P 500 is announced.
But like I have posted. This is too bold a move to be done without concrete proof .

 

[Stretch2727]

I'm confused about this, and all the opinions shared here lately have been helpful but have not resolved it for me.

If post-addition TSLA outperforms the rest of the S&P 500 by 10% (let's say for simplicity TSLA is up 10% and everyone else is flat), so at the next rebalancing an index fund requires 10% more dollars in TSLA, don't they buy nothing because their existing TSLA shares appreciated 10% already? What could happen to actually require them to buy more shares?

(I guess I'm thinking, if companies on the index issue more shares, that might change the mathematics? But not if the share count stays the same and it's only the share price that adjusts?)

Stock price changes while in the index do not directly effect the rebalancing. The rebalancing is to account for issued stock and buybacks.

For example if TSLA issues 2M shares this week and the stock price stays the same this increases the weighting factor as now there is 2M more shares in the float at the same price. The market cap of the float has increased due to issuing stock.

It's highly dynamic where another companies actions could lower TSLA weight as well. If AMZN issues 10M shares and their stock price stays the same all the other stocks in the index would have lower weighting and would be sold during a rebalancing.

 

[Christine69420]

Almost everyone got a lot richer yesterday... on paper. But paper doesn’t buy you a house, a car, food or an island. It only can if you sell shares. So almost everyone is still as rich or poor as they were the day before. Which brings me to my question: when are most of us planning to really get rich? Because if you want to be rich there will have to be a day when the HODL’ing ends.

My plan has two steps. And is limited by the fact that I have my shares in an insurance account to avoid taxes. (Nordnet Zero). AFAIK the downside is that I cannot borrow against my shares.

Soonish I want to upgrade my home. Perhaps this fall - perhaps in a few years. Then I plan to sell enough to manage a larger downpayment. And borrow the rest. This is not a very significant part of my shares.

Later at some point I want to start using my investment to do fun stuff. Then I plan to sell monthly to dollar cost average selling down my investment. This over several decades.

The plan is not set in stone. I may learn about better ways to do things.

 

[capster]

I think SP will still go up a lot and do so soon, at least to 1800 (based on the TA pattern I describe in the TA thread). But I believe we are now passing the point of it being sustainable.

Yes, Tesla fundamentals are great and its growth potential is huge, and the market is becoming more and more aware of this. But that is not what is fueling the Falcon Heavy-like trajectory of the stock this week. It is mainly being driven by speculation about S&P 500 inclusion and short covering, along with MM hedging on some days.

These forces can (and probably will) drive it even higher over the next few weeks. But it is becoming more and more superficial. And there will, not too long from now, come a moment when the SP collapses and resets itself. I’m guessing to a level somewhere between 1000 and 1500.

For proof one can just look at what happened after comparable runups that were caused by artificial factors: VW a long time ago, BYND and SPCE recently.

Yes, TSLA has this year finally started to reflect Tesla’s bright future, after having not reflected it for three years. But anyone thinking that runups of 10% or more per day are based on fundamentals and are sustainable, is fooling himself.

Recall reading here (@StealthP3D?) and elsewhere that stocks often go up in these jumps. Seems to me to wander around quite a bit in between the jumps.

I’ll just hold, ‘cause I’m not one of those who thinks I can predict when the jumps (or drops) are going to happen.

Did we overshoot some moving average we can calculate in retrospect? I don’t know and I don’t particularly care. I certainly wouldn’t bet on it. Market timing has a lot to do with estimating other people’s knowledge, behavior and, yes, character; things upon which I’m not interested to spend much mental energy.

I keep my vision focused on the long view and that hasn’t changed.

 

[Big Time]

God damn weekend.....all this sitting around doing nothing with my feet up....gotta wait till Monday....how many hours away is the open.....god damn weekend

 

[The Accountant]

I'm confused about this, and all the opinions shared here lately have been helpful but have not resolved it for me.

If post-addition TSLA outperforms the rest of the S&P 500 by 10% (let's say for simplicity TSLA is up 10% and everyone else is flat), so at the next rebalancing an index fund requires 10% more dollars in TSLA, don't they buy nothing because their existing TSLA shares appreciated 10% already? What could happen to actually require them to buy more shares?

(I guess I'm thinking, if companies on the index issue more shares, that might change the mathematics? But not if the share count stays the same and it's only the share price that adjusts?)

Not addressing your question but here is a related thought.
New money comes into S&P 500 Index funds everyday (I contributed to an S&P500 fund for 25 years with paycheck deductions for my 401k). If Tesla grows faster than other S&P companies, Tesla gets a higher % of each new dollar.
But I am not sure if that means anything because the demand on the shares would be the same (as one TSLA share continues to have a higher value).
This is a bit of a mind puzzle

 

[ByeByeJohnny]

Is there a chance/risk/possibility that the S&P chooses to not include Tesla at 'full weight' on the inclusion date?

I assume their prime goals are to get the index go up as much as possibly so more funds/investor use it as well as every fund being able to follow the index. If would not be good if many of the funds perform poorly because they can't get enough shares at Teslas full weight in the index.

If they think Teslas market cap is a bubble (for the short term) they might also want to limit the damage to the index if they think there is a big risk it will fall post inclusion. Their worst outcome would be something like including Tesla at 1% weight when it has a $1600 stock price. It then runs up to $3000 while the funds are buying for an average price of say $2200. Then it falls back to $1200. NOt only would the index go down in itself but most funds would then under perform against the index which would be double bad for the S&P.

So what if to lessen that risk they decided to only give Tesla say 50% of the expected weight when they included it? The funds would then only need to buy half the stocks to be able to follow the index. They could then raise that by 5 or 10% every quarter and in a year or two it would be correct and the buying would have been spread out making it easier for the funds following the index.

Might be overly complicated but some version of this would lessen the impact of Tesla being disruptive for the index from having to high a valuation when included. Since they seemingly can do whatever they want with their index they might come up with a new way to handle a new situation.

 

[smorgasbord]

Is there a chance/risk/possibility that the S&P chooses to not include Tesla at 'full weight' on the inclusion date?

I assume their prime goals are to get the index go up as much as possibly so more funds/investor use it as well as every fund being able to follow the index. If would not be good if many of the funds perform poorly because they can't get enough shares at Teslas full weight in the index.

If they think Teslas market cap is a bubble (for the short term) they might also want to limit the damage to the index if they think there is a big risk it will fall post inclusion. Their worst outcome would be something like including Tesla at 1% weight when it has a $1600 stock price. It then runs up to $3000 while the funds are buying for an average price of say $2200. Then it falls back to $1200. NOt only would the index go down in itself but most funds would then under perform against the index which would be double bad for the S&P.

So what if to lessen that risk they decided to only give Tesla say 50% of the expected weight when they included it? The funds would then only need to buy half the stocks to be able to follow the index. They could then raise that by 5 or 10% every quarter and in a year or two it would be correct and the buying would have been spread out making it easier for the funds following the index.

Might be overly complicated but some version of this would lessen the impact of Tesla being disruptive for the index from having to high a valuation when included. Since they seemingly can do whatever they want with their index they might come up with a new way to handle a new situation.

The short answer appears to be that, indeed, the S&P Index Committee headed by Philip Murphy, can do whatever they want. They're US Congress, President, and Supreme Court rolled up into one. When a case comes before the Committee, if they don't like what the rules say they should do they can - and have - literally rewritten the rules on the spot. AND, they have even not made rules retroactive - that is they've changed the criteria to get in, but don't kick out any companies that don't meet that new criteria.

We've talked about them delaying inclusion, writing a new rule on something like corporate governance or current/previous SEC investigations, and yes, even one based on the size of the company being added. They could easily say any company that would be added within the top 25 (or 50 or 100) will be added at a reduce weighting that is increased every quarter for 4 quarters. This would not only reduce the initial hit, but allow time (in their minds) for TSLA prices to come back to earth.

This is the best article I could find on the Committee: The art and science of stewarding the S&P 500

BTW, I've poured through many of the recent S&P 500 addition announcements and didn't see one where they said what the company weighting was. That seems to be proprietary information, maybe S&P sells it?

 

[floydboy]

Hot hamit! Fidelity says IRS won't allow loans against IRA accounts! Guess I'll just have to sit tight and wait for the climb.

 

[PeterJA]

No they could not. And that was not their intent.
The Buying Entity had already made the decision before thursday to buy the shares on Friday for two reasons. The first was the fear of what they knew would get to other powerful buying groups before they could get all the stock they wanted/needed. And the second was to get the maximum assistance of the MM's to depress the SP while they bought in hyper mode. On Friday the MM's coordinate their effort to keep the SP at Max Pain, or as close as they can. And Friday is the only day that really matters so MM's are vigilant and focused Friday afternoon.
The Buyer figured out how much the SP would move if they purchased the number of stocks they needed on that Friday. They could have figured it out at anytime before the purchase on Thursday. But by NOT buying the calls till Thursday they gave the rest of us the least amount of time to consider what was going to happen. (I remember a few months back something similar happened. An even greater amount of money bought calls and it made even more money for the purchaser..anyone remember the exact event?)
The primary goal was to purchase a large quantity of shares before what they knew would be known by anyone else so they could just have to deal with the increase in price they were creating. They used the MM's desire to manipulate the price lower while they started buying. They knew the MM's couldn't keep the price down against the sheer volume they were going to buy so they knew the price was going to be at least $1500 by the end of the day. And they did the intelligent thing with that information, and they bought calls at $1500. The calls were just a side dish. Sure they made a helluva lot of money on them. But their move was to buy millions of shares before anyone else moved the price based on what they knew. And by doing so they will make many times more money than they made on the $1500 calls in the near future.

EDIT: The move could have even been done by a front runner who will re-sell the stock once inclusion to the S&P 500 is announced.
But like I have posted. This is too bold a move to be done without concrete proof .

Okay, let's separate facts from hypotheses.

Facts:
1) Somebody wanted lots of TSLA shares sooner rather than later.
2) Such desire for shares is typically caused by good news.

Your hypothesis:
The good news in this case is not yet public.

Alternative hypothesis
The good news is already public, but slowly sinking into the minds of buyers.

Evidence for the alternative:
1) Tesla released their satin Short Shorts on Sunday July 5. This event was the crowning clue on a series of clues that Q2 will be profitable, which makes S&P 500 inclusion likely.
2) On Monday July 6, TSLA jumped up 13% from the previous close. Somebody figured out something.
3) TSLA then stayed fairly flat from Tuesday through Thursday, but on Wednesday a massive FUD attack was ignored and a massive short attack was instantly bought up. Clearly shorts and market makers were working hard to hold down the stock while the max pain number for Friday was firming up.
4) Some folks are slower than others. For example, I didn't get confident (with the help of this thread) about the meaning of the clues until Wednesday after hours, and I bought more shares on Thursday.
5) Whoever bought big on Friday (and presumably bought 1500 calls on Thursday) could've formulated their plan earlier in the week, based on the same clues, but planned to strike on Friday to take advantage of the market makers' maximum selling on that day.

Whichever hypothesis is correct, the implications are similar: more buying incoming. If the good news is not yet public, the buying may be more intense, but if the news is still sinking in, there will be more buying as it does.

 

[Johnny Ma]

You’re not thinking big enough. You’re trying to talk yourself out of becoming stupid rich for a whole myriad of reasons, which I won’t go into. And so are a whole bunch of other people here. Y’all just can not accept your good fortune and go with it. But I get it, trying to wrap Tesla’s march to world dominance is tough. What’s happening right now, before your very eyes, has never happened before it human history and we’ve got a front row seat.

Think MUCH bigger and stop trying to neatly wrap up TSLA SP in a box based on past knowledge and data and how you think it needs to be to make sense.

Hold the bloody shares people, like your life depends on it. It’s time for the little guy to hold the wealth of the world and try our hand at doing better.

Thank you. This makes me feel a tiny bit less crazy because it's exactly how I feel and I'm glad I'm not the only one.

Side note: getting another Tesla, thanks to TSLA. By 2022 we should be on our fourth. Hope the ones we sell go to good homes and last forever.

 

[Off Shore]

So, aquatic CYBRTRCK confirmed? Or, you’re building a bridge between your islands?

We hates bridges. When you're an Islander you will too. Ferries to the mainland, then the Pan American Tunnel.

 

[geometro]

That's true, which is why the shares are appreciating so quickly now - that's the market starting to see the growth. The market is always forward looking with appropriate discounts for the growth being slower than expected or not happening at all. It all depends on much faith the market has that Tesla will continue growing at a fast pace and be able to grow margins and maintain them while continuing to grow.

Yes, agreed on this— market is now starting to account for future growth and good execution.

 

[TheTalkingMule]

To me this feels far more like short covering than some mad scramble to front-run the S&P inclusion or big news that's not public. All the big institutions have known for a while that there's a very big chance of inclusion this calendar year. 1Q made it very very likely. No need for them to get crazy on one particular Friday afternoon at an ATH.

This smells like forced buying at gunpoint by shorts about to get margin called Monday or Tuesday. If that's the case, Monday should be yet another hilarious leg up.

 

[StealthP3D]

I respect your understanding of the market, but I can't see how what you said happened. Could you help me?

I am spending so much time keeping this in the forefront because I feel it is extremely telling and has already changed the game.

First, I am not sure it was "collusion." It is just that from what I have learned from this thread, is that often there is often collusion by one set against another. I am not suggesting the collusion was illegal, and not even whether the FACT was discovered/figured out/given/acquired in an illegal manner. I don't care. I just fel as though some more good is coming because of what happened.
I do believe that so much money was dumped in such an irrational manner that there was a level of desperation to get a certain amount of stock bought before something else changed (like another sector of buyers found out the "FACT," and raised the price even higher.).
And the behavior was such that it feels the impetus is a FACT, not a guess, not a belief...a fact. Something beyond reproach that was going to force all those involved to buy. Like an overwhelmingly good Profit Report, or the voting for inclusion in the S&P 500.
I think when the price broke away from the ability of the MM to suppress it the big Buyer(s) would have backed off, and judiciously purchased at a less dynamic point in time if the fact wasn't likely to reach other buyers soon. I am not saying it would be released to the public, just that other groups of buyers might have access through their networks soon.
So no, something forced the Buyer to keep running the price up AFTER the MM's had been destroyed. They needed those stocks so bad they went ahead and drove it up and kept buying. They needed them to the point that price wasn't the barrier. And the purchase of the HUGE block of calls the day before has me believing the (block of) Buyers developed the plan of "just keep buying till we have the number we need before the news spreads to other segments that will buy once they know it too. Not that it will be released to the public very soon, just "known" to other purchasing segments of the market regardless of how it disseminates.
AND there was nothing out there that caused this sudden movement of a quiet morning where it had been accepted since the middle of the week that the MM's were going to keep the price between $1380-$1400 to cause Max pain. And then the lid was blown off. It didn't matter, a certain number of stocks were going to be bought. And the day before a huge block ($550k worth) were bought just the day before because the buyer(s) knew they were going to have to buy so much it would definitely raise the price over $1500, which was going to be an increase of around $120 over where the MM's would try to keep it. This action shows it was NOT Robinhood retail investing type of purchases. It was someone that has been successfully playing the game for a long time.
And ya know what
I am spending so much time keeping this in the forefront because I feel it is extremely telling, and has already changed the game. First it has at the very least given the MM's a concussion, if not weakened it to the point it can't effectively manipulate TSLA like it has. Or perhaps convinced the MM's to go play somewhere else. And that would be great. Not likely, but such a strong loss by the MM's warmed all our hearts at the possibility... almost as much as the nice bump to the SP.
Secondly is the FACT that one powerful entity within the market is aware of a FACT, and we are not. Most of us "know" that Q2 has been profitable, and that S&P 500 inclusion is almost certain. But we do not have a cold hard document of the Profits, nor the inclusion. We are just riding along, doing our HODL or our little options' stuff. I feel that the behavior demonstrated in this BULL Raid shows how solid the information was, how big a fact it is, and how the information will have a huge impact on the stock price as soon as it is released to the public.
And that means good things are definitely coming.
HODL with a smile.

I don't have time for a lengthy comprehensive answer but I think what you might be missing is that price discovery in a marketplace is an on-going process and is more like a living breathing animal (with all all of it's organs and muscles) than it is like a Swiss watch or a digital camera taking a picture.

One part affects the other. Market participants are all looking for clues as to what they should do to make the most money or to reduce the risk of a potential purchase to a level that suits their needs. At some point in time it's not unusual for everything to line up and for market participants of different stripes to all start doing the same thing. It's not necessary for one participant or a team of participants to continually prop up some pre-defined strategy for the price to continue to climb. A climb can be self-sustaining for a surprising amount of time and distance. "The trend is your friend" is a popular market cliche.

I also take issue with the assumption that a move like this requires inside, non-public information (or ANY news for that matter). This was only a move of less than 11% going into some well known positive catalysts. This is just how markets behave and trying to explain everything is not only non-productive, IMO, it is counter-productive. The less you think you know, the better you will perform.

 

[Christine69420]

The Wolfpack Berlin has a new video from Grüneheide: