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

[MTL_HABS1909]

Or Elon no longer tweets like that.... hmmmm... let see.... LOL

LOL. Now that was a good one. Thanks dude I needed a good laugh

 

[Sofie]

This event really meant a lot to many so therefore, it should have meant a lot to me... Nope. Nothing has changed (except that I will likely have to delete my trading app for a month).
Holding strong and long

 

[UnknownSoldier]

So when are we going to Bane the Standard & Poor's?

I'm ready when you guys are!

 

[MTL_HABS1909]

I don’t know if this was posted already, but even VW is acting strangely about Elon’s brief detour to meet Diess:

 

[Off Shore]

He's probably on a plane coming back from Germany...

One assumes his aircraft has a Starlink terminal.

Edit: late observation, as usual.

 

[elasalle]

Weekend OT...about to join you cool cats and adopt a kitten of my own. Now I have the ever important task of naming her and would love to pay homage to the company that has enriched my life so greatly. Any suggestions? To not clutter this thread with replies please shoot any suggestions to the thread I just created.

What should I name my cat?

Kruger

 

[insaneoctane]

I think it's time for me to return to my regular channel....

Now where is my new update with stop sign recognition damn it....

 

[SarahsDad]

Analyst Pierre Ferragu may me second only to Cathie Wood in his understanding of the Tesla story. "In 5 years Tesla will be the size of BMW with twice better margins".

(Tesla comments start at 5:00)

New Street's Pierre Ferragu on Apple, Tesla's sell-off

Tesla (TSLA) will soon be as big as BMW with "twice better margins," analyst says

 

[Nocturnal]

There’s gotta be more to this. We all know that it’s impossible to keep Elon quiet when he feels he’s been treated unfairly. The fact that the S&P additions were announced hours ago and he still hasn’t commented lends some credibility to the theory that they will only be added Monday afternoon to avoid a frenzy on the European stock exchange. We’ll see....

I’ve been pessimistic about inclusion but this idea is the most reassuring. Even if Elon didn’t care he would still be talking.

Elon doesn’t like bullies because he was bullied mercilessly. I can’t relate.

 

[Tachyon]

Weekend OT...about to join you cool cats and adopt a kitten of my own. Now I have the ever important task of naming her and would love to pay homage to the company that has enriched my life so greatly. Any suggestions? To not clutter this thread with replies please shoot any suggestions to the thread I just created.

What should I name my cat?

S3XY and pronounced as Strixy.

Wondering if his G650 has a custom starlink transceiver . . .

probably.

or may be he is drawing out plans for his ultra modern office on a napkin
That’s what one super stable genius did recently.

 

[Highway2Heel]

Chalk me down for a Tuesday afternoon inclusion.

Strawberry Fields Forever jokes aside, today never made sense because of the Labor Day holiday...

 

[elasalle]

Chalk me down for a Monday afternoon inclusion.

Strawberry Fields Forever jokes aside, today never made sense because of the Labor Day holiday...

Monday is labour day

 

[Highway2Heel]

Monday is labour day

Ha! I meant Tuesday! I’ll go change it! *prayer hands *

 

[StarFoxisDown!]

Monday is labour day

Which actually makes it a good time to do the announcement but who knows. Just because its a national holiday doesn't mean the S&P committee can't make the announcement. If anything, best way to announce under the radar

 

[Intl Professor]

Monday is labour day

Named after my mother on the fifth 84 years ago.

But spelled like an Amurican, as Kennedy used to say.

 

[Bet TSLA]

My guess is that this will become clear, and this coming week will see the last of this mystery rise, with only the last stragglers participating so fairly muted. And then the next week will be down, maybe one third of what the final split rise turns out to be after the coming week. Maybe even down hard on the 28th in anticipation.

So back to 1750 or so by September 4? Of course all bets are off if S&P 500 inclusion is announced. So that wild card will prevent the stock from falling too far. But I think the week starting August 31 is likely to be rather tricky for traders.

I expect I'll write a few puts for fun this coming week, and then not play the week after. And perhaps even turn some calls into a bull spread to protect my gains.

Well, my prediction isn't too far off the mark so far. After going up 49% in the previous eight trading sessions since the announcement of the split, this week we've gone up 9% in four trading sessions. So, as predicted, a continued rise, but comparatively muted. We'll have to see whether tomorrow and next week continue as predicted.

I did write 20 8/28 2130 puts on Monday for $105. Sadly, I called the dip all wrong and wrote them when TSLA was at 2106 rather than at its eventual low of 1927. C'est la vie. Put me rather quickly down over $200K on the trade. But I didn't close the position until this morning, for $17 when TSLA was at 2210, which was about $175K profit.

Doing a little better with catching the dip, later today I wrote 10 8/28 2180 puts for $58 when TSLA was at 2163 (missing the $2140 low by a fair amount). That's $58K potential profit, so far up $39K and we'll see how tomorrow goes. There's a chance I'll get to see them expire worthless, but we'll have to see how the day looks.

I still have my worry expressed above that TSLA may be down hard tomorrow, likely towards the end of the day. But the mood may end up being more anticipatory than worried. We shall see.

And yeah, this monstrous rise is all good for my core position, but short term trading around the edges is fun. And sometimes profitable.

Okay, now we know more. After going up 49% in the eight trading sessions after the announcement of the split, this week TSLA went up 8% in five trading sessions. I'd call that a win on my prediction of a continued rise, but comparatively muted.

As to my worry (not prediction) that TSLA may be down hard Friday towards the end of the day, I'd say it didn't really come to pass. It certainly hit an all-time high early and never regained those heights, and it ended down some, but at this level closing a little over 100 points below the high and only about 1% for the day can't be characterized as "down hard".

And one more prediction to go for next week. I wrote "And then the next week will be down, maybe one third of what the final split rise turns out to be after the coming week." The final rise in TSLA since the split is 1,374.39 -> 2,213.40, which is about 839 (more than I expected). One third of that is 280. Translating to our new post-split prices, my prediction was that TSLA will be down from 442.68 by maybe about 56, so down to around 390 (1950 currently) for the week.

Given that I have still heard no reason why a fundamentally meaningless split seemed to cause this massive stock price rise, I have to conclude that shorts got scared for some reason but that they'll be back in force. So yeah, I still think we'll be substantially down next week. But I suspect we'll be up first on Monday morning unless macros get in the way. And I don't plan to do any trading next week since I feel I don't understand things at all. This is not a strongly held belief, and I have done nothing to reduce or hedge my long calls. Maybe do some of that Monday if TSLA is indeed up some. If we are down that much next week it will certainly hurt. And it continues to be the case that "Of course all bets are off if S&P 500 inclusion is announced." But at this point I agree that it seems likely this won't happen until rebalancing happens, which is later.

So how did my predictions made two weeks ago turn out? I'd say they were amazingly accurate. If only I had listened to myself I would be significantly richer! Using current prices, then we were at 410, and now we're at 418 (or 391 after hours).

To recap my original prediction from 8/23 (see above for the literal version):
8/24-28: prediction -- continued rise, but less than earlier; actual -- 8% rise, compare to 49% since split announced
8/31-9/4: prediction -- down from 442.68 by maybe about 56, so down to around 390; actual -- closed at 418.32, 391 after hours
Additional prediction on 8/28:
8/31: prediction -- we'll be up first on Monday morning unless macros get in the way; actual -- up strongly in the morning, up more later

So, since I got it all so right, how did my portfolio do? Not bad, considering we're close to the same stock price (2% higher at the close) we were then and I'm up about 4%. However, since I peaked at up 35%, you would think I could have done better. But... my better judgment deserted me and I wrote puts this week despite saying I didn't think a weekly bet would be a good idea. So it proved. If it weren't for losses on that trade I would be up 11% instead of 4%.

The smart thing I did was turn two of my long call positions into spreads on Monday morning. This reduced my losses this week, such that I am up 4% rather than 2% compared to two weeks ago.

Anyway, my portfolio was much happier at close on Monday as opposed to today (as no doubt are most longs), but I'm also happy to head into the next month without reducing my current position. We have an awful lot of good news coming soon. But, in the name of sanity (and keeping my wife happy) I won't be increasing my exposure either.

New prediction: Down Tuesday morning due to no positive inclusion news (unless we get such before then). Within the coming week we will see S&P 500 inclusion, after many of the front-runners have sold out. Probably Wednesday or Thursday after hours. I think the tech sell-off has largely run its course and we'll see a bounce-back starting Tuesday.

So I suspect that (unless we get inclusion news before then) a short put written after the Tuesday dip will be quite profitable. I would write puts for 9/11 expiry and if inclusion hasn't been announced by Thursday I'd roll them to 9/18 expiry. I'd write them about 80 points above the current price, going for profit from the price rise rather than premium. I am hoping I have the discipline to not do this, as I'm sufficiently exposed as it is.

A warning: I pay no attention to technical analysis. So if you believe in that stuff, ignore my predictions (ignore them anyway if you like). I'm posting this mostly to publicly document my thoughts so that I can be held accountable. I continue to notice that those using TA are very happy to predict the past and say how it was all obvious, but the future not so much. Of course, we can all do that.

 

[CanadaEV]

I don't want to see anyone disappointed but personally, I'm a little relieved.

It's the whole essence of Tesla that they don't need validation from anything mainstream. If they don't take Tesla in, they can't throw Tesla out, which they would do gleefully, at the drop of a hat.

It seems that the blessing of mainstream investors is the kiss of death for a positive innovator. I trust Tesla to continue on its own path. The old school and all its poor values will wither away in time.

 

[Bet TSLA]

The supercharger permit process is going for Alta, Norway! This will be the northernmost supercharger in the world so far. Surely this must be a hint that the stock is headed up (North)! See supercharge.info for further details.

 

[FrankSG]

But isn't the dollar value the point? I don't think it much matter if a fund has to buy 1M shares of something or 5M shares of something... it matters what those shares cost and what their total cash outlay is going to be, especially compared to what they can expect to make from selling whatever gets booted out of the index. (Presumably something toward the bottom of the ranking is leaving, meaning they have to sell a position with a total value of "cheap" and buy into a position with a total value of "expensive" -- where's the money to cover the difference supposed to come from?)

So @FrankSG and Rob Mauer has shown that the weighting of Tesla when included won't change the number of shares needed to be bought significantly.

EXCEPT

It depends very much on whether Tesla is included at the quarterly rebalancing or not. If Tesla is included in the rebalancing on 9/18, which we should know tonight at 5:15) it will be at roughly those 160 million shares they have shown.

If Tesla is included at any other time however this applies. Taken from document at S&P website.

"When a company is added to an index in the middle of the quarter, it takes the weight of the company that it replaced."

So instead of getting their predicted weight of 1% or so they would get whatever the company leaving the index had. Presumably a lower weighting. There are 505 stocks so the average weighting is around 0.2%. For poorly performing companies that are likely to get kicked out it it's likely even lower. The funds would now have to buy only a fifth of the shares at the present share price. So instead of 160 million shares it would be 30-35 million or so. Or less.

If I'm doing the math above wrong please correct me. It is a bit confusing.

I don't really know if this would be a desirable outcome or not for the S&P.

If it is, they could delay until after the rebalancing. Not shure if that mean waiting until after 9/18 or just wait until after the 9/4 Proforma note is sent out in which case Tuesday instead of Friday would do it. If this is done the weighting for Tesla wouldn't change until December when the next rebalancing is.

If it's not a desirable outcome to have Tesla very underweighted for the next three months they will almost certainly have to include Tesla in the announcement today.

Granted, they don't have to do anything and could make up new rules at any time.

Not advice.

As @smorgasbord pointed out, this is in reference to the S&P 500 Equalweight index, which is a different index from the S&P 500 index:

It seems like people think that the S&P 500 committee will determine TSLA's weight in the index and fix it? This is not how the S&P 500 works. And the quarterly rebalancings are not to update index weights.

If the S&P 500 committee fixed the weight of companies every quarter, index funds would constantly have to buy and sell stocks in between rebalancings to keep the weight of each company steady. If a company goes up 100% after a blowout ER, index funds would suddenly have to sell off half their shares in that company to keep its weight in the index the same to what the S&P 500 index committee set it at during the last rebalancing. And then after rebalancing to account for price movements, index funds would have to double their stake in this company that went up 100% since the last rebalancing. This would create immense, unnecessary market volatility, and this is not how it works.

What quarterly rebalancings are for is to account for changes to the IWF (Investable Weight Factor), which basically accounts for changes to shares outstanding and changes to the public float:

In summary:

1. The S&P 500 does not fix weights, as this would create immense, unnecessary market volatility.
2. Weights of companies in the index change constantly as stock prices go up and down.
3. Quarterly rebalancings are not to update index weights. They are to account for changes to shares outstanding and changes to the public float of companies.
4. The stock price and market cap of a company have a negligible effect on how many shares index funds have to buy when it is included in the S&P 500.

The only difference between coming into the S&P 500 with a 0.5% weight or 1% weight is what % of their other holdings index funds have to sell off.

• If a new company comes in at 0.5% weight, index funds have to sell off 0.5% of each of their holdings to fund purchases of shares in the new company.
• If a new company comes in at 1% weight, index funds have to sell off 1% of each of their holdings to fund purchases of shares in the new company.

 

[Intl Professor]

Tesla does so well with the quality of the product, who cares about a boost from a trade affiliation? Color me old and feeble, but I haven't time for trivia. Do your job and ye shall be rewarded. Elon and his multitude are doing theirs. Praise and thanks to them.