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

[engle]

A Thanksgiving riddle for my friends. I’m sure you are familiar with a Turducken. What do you call a short inside of a bear inside of Jim Chanos?

A hibernating homeless man.

 

[StealthP3D]

Picking up pennies: sold 12 CCs (11/27 $570) netting ~$5k. Not advice.

That's great. You probably have a better than 90% chance of walking away with your ~$5K unscathed. But if Tesla goes to 700 in the next week you will be leaving over $150K on the table.

How is the value of those CCs showing in your account right now?

 

[TheTalkingMule]

I'd just like to reiterate what a horrendous idea this was to give 36 days notice rather than the traditional 7.

We learn many lessons in trading and the value of simply remaining long from posters here, but let us not forget the lessons from the other side of the counter. Everything these idiots do just makes it worse. This is a master class and how not to get out of quicksand.

I feel like we get blamed for these crazy run-ups when in reality it's entirely on the market side! Don't want 700% appreciation in 1yr? Then don't hold a stock down for the previous 5!

 

[gabeincal]

That's great. You probably have a better than 90% chance of walking away with your ~$5K unscathed. But if Tesla goes to 700 in the next week you will be leaving over $150K on the table.

How is the value of those CCs showing in your account right now?

I know it was a risky one.. They show as such:

 

[Chunky Jr.]

I thought about dabbling in options, but after reading about them for a while, I decided it might be more productive to just set that money on fire so at least it could have some value keeping me warm. I admire those of you who know how to play that game - it looks way too complicated for my feeble burrito centric brain.

 

[Highway2Heel]

A hibernating homeless man.

A Turphukhim

 

[Tim S]

Picking up pennies: sold 12 CCs (11/27 $570) netting ~$5k. Not advice.

Hmm, that's bad timing. I have sold covered calls a few times (I sold some March 800s yesterday), but I would not be selling weekly calls in the middle of this S&P runup. I could easily see us closing near $600 Friday and then gapping up Monday. If I had sold $570 calls for Friday, I would seriously consider buying them back and taking a small loss.

Not advice. I am not an options expert.

 

[FS_FRA]

A Thanksgiving riddle for my friends. I’m sure you are familiar with a Turducken. What do you call a short inside of a bear inside of Jim Chanos?

Shobearnos

 

[Pezpunk]

I thought about dabbling in options, but after reading about them for a while, I decided it might be more productive to just set that money on fire so at least it could have some value keeping me warm. I admire those of you who know how to play that game - it looks way too complicated for my feeble burrito centric brain.

buy-and-hold has got me within spitting distance of 8 figures. why engage in complicated, risky behavior when a simple, safe strategy is making me rich already? not advice or criticism. just my own personal philosophy.

edit: i suppose i should acknowledge that "safe" is a relative term. anywhere other than this forum, investing so much money in a single stock would be considered insanely risky, haha.

 

[Robocop]

I gave up mostly on options after losing quite a bit in the 'TSLA trades sideways for 4 years' days. BUT, to not 'miss out' on the potential volatility here, I took a tiny bit and bought 2 lottery tickets at Dec 24 and Dec 31. $750 strike. If there's a crazy spike (like to $1000+), I have them set to sell. Rest is retirement shares, and some margin shares. They are obviously up already, but plan is to sell during a big run up, or lose most of it.

 

[generalenthu]

I'd just like to reiterate what a horrendous idea this was to give 36 days notice rather than the traditional 7.

We learn many lessons in trading and the value of simply remaining long from posters here, but let us not forget the lessons from the other side of the counter. Everything these idiots do just makes it worse. This is a master class and how not to get out of quicksand.

I feel like we get blamed for these crazy run-ups when in reality it's entirely on the market side! Don't want 700% appreciation in 1yr? Then don't hold a stock down for the previous 5!

Letting the news just sit out there was akin to shooting themselves in the foot. But the other option would have been total pandemonium if they just decided to add Tesla just like another stock.

No good options, and hence my feedback on their form, to use more rules based approach, which would have added Tesla earlier, or relax the rules when it makes sense, and they could have added Tesla even earlier, may be q1 this year.

Not sure why I was trying to drill some sense into them, but like Elon said, Some Mercy I guess.

 

[gabeincal]

buy-and-hold has got me within spitting distance of 8 figures. why engage in complicated, risky behavior when a simple, safe strategy is making me rich already? not advice or criticism. just my own personal philosophy.

Because some of us don't have the capital to have a portfolio of 8 figures even with multiple doublings?

 

[TravelFree]

Speaking as a former penny-chaser in front of the bulldozer (a great learning experience, however!), if I was @TravelFree, I'd buy a nice jan 2023, $900 strike LEAP and see what happens; it will likely change your perspective and my personal bullish leaning is that it's hard to go very wrong with a LEAP.

I agree about keeping cash for long in the trading account. Too many other stocks to hold the cash including those that don't grow but are about to grant exdividend. I have several REITS that pay monthly dividends.

On the LEAPS- the two depressors that I keep in mind for the long term is:
1. Musk leaves Tesla for a number of reasons; unlikely.
2. 2022 economic depression or deep recession that kills all new car sales, including Teslas. More likely than risk 1.

 

[StealthP3D]

I gave up mostly on options after losing quite a bit in the 'TSLA trades sideways for 4 years' days. BUT, to not 'miss out' on the potential volatility here, I took a tiny bit and bought 2 lottery tickets at Dec 24 and Dec 31. $750 strike. If there's a crazy spike (like to $1000+), I have them set to sell. Rest is retirement shares, and some margin shares. They are obviously up already, but plan is to sell during a big run up, or lose most of it.

You might want to sand the front edge of your chair into a more rounded profile.

Because that edge can get uncomfortable when you are sitting on the edge of your seat for days at a time.

 

[Brian121]

I learned from this forum that options do offer different level of risks.

From LEAP close to at the money, which has the lower risk from option point of view to short term weekly OTM, which has a higher risk.

Then deep ITM LEAP would be close to purchase stock itself.

So it is indeed an instrument with more ways to execute and different risk-reward profile that fits different people's taste.

 

[traxila]

Little surprised it turned again so soon. Looks like it can run. Crazy.

 

[TravelFree]

I thought about dabbling in options, but after reading about them for a while, I decided it might be more productive to just set that money on fire so at least it could have some value keeping me warm. I admire those of you who know how to play that game - it looks way too complicated for my feeble burrito centric brain.

Why I told TD Ameritrade to cancel my margin line of credit and I only do covered calls when the market for a stock is flat for weeks at a time. Plus I only sell those contracts when that stock is well in the money so if called away I only lose more gain but never lose my balance.

 

[Oil4AsphaultOnly]

A Thanksgiving riddle for my friends. I’m sure you are familiar with a Turducken. What do you call a short inside of a bear inside of Jim Chanos?

- A financial blackhole?
- A scubanos (short-cub-anos - if trying to keep in the spirit of a turducken)

 

[StealthP3D]

Because some of us don't have the capital to have a portfolio of 8 figures even with multiple doublings?

I think this says more to how much you understand about multiple doublings than it does about how much money you have.

This old fable is used to illustrate the power of compound growth:

The "back half of the chessboard" is a reference to the old story about the inventor of chess. As the story goes, when chess was presented to a great king, the king offered the inventor any reward that he wanted. The inventor asked that a single grain of rice be placed on the first square of the chessboard. Then two grains on the second square, four grains on the third, and so on. Doubling each time.

The king, baffled by such a small price for a wonderful game, immediately agreed, and ordered the treasurer to pay the agreed upon sum. A week later, the inventor went before the king and asked why he had not received his reward. The king, outraged that the treasurer had disobeyed him, immediately summoned him and demanded to know why the inventor had not been paid. The treasurer explained that the sum could not be paid - by the time you got even halfway through the chessboard, the amount of grain required was more than the entire kingdom possessed.

By the time you get to the last square on the chessboard there would be over 18 quintillion grains of rice. That is starting with only one grain. If you start with more than one, you will be unthinkably wealthy after many fewer doublings. People who are always counting "money" and trying to "get ahead" never get there.

 

[dc_h]

Well, off topic for this thread, but since we're talking about charitable donations, I'll remind everyone of the tax advantage of donating appreciated stock. The rest of this post is from a letter written to the board and large donors of a 501c3 charity I was involved in. It was written a few years ago, but after the last tax changes, so as far as I know it's still correct.

Suppose for a moment that you want to give some money to your favorite 501c3 (that is, tax deductible) charity. For sake of argument and easy calculation, let’s say $1000. Let’s also assume that you make enough money that you’re in the top tax bracket, live in California, and have some of it invested in stocks, and that you itemize your deductions. The IRS encourages people to give to charities, to the extent that they allow you to deduct that donation from your taxable income. So next year, when you file your taxes, the IRS/FTB will actually give you back about $505(*) of that money. They actually paid more to your charity than you did!

But that $1000 had to come from somewhere. If you take it out of your work pay cheque, the IRS already deducted the same amount, so really when the dust settles it just means you paid your tax to the charity instead of the IRS and California. A more worthy cause, anyway.

If you have stocks that you’ve held for more than one year, and sell them to raise the money, the profits from the sale are deemed Long Term Capital Gains, and are taxed at a lower rate (20%). At this point I need to use a concrete example. At the end of 2012 I bought some Intel stock for about $20 per share. Last week (2016 when I originally wrote this) Intel was about $33 per share. If I sell 30 of these shares of Intel, I raise $990 cash to give to AC… errr, ummm, charity. Of that money, some of it is just my own capital back, but $13 per share is profit: that’s $390 profit taxed at about 27%, call it $105 tax. So you’ve paid a lot less tax, but the IRS still lets you deduct the whole amount for the full benefit.

So far everything I have said about the tax you pay is just standard. But the IRS likes charities and has an even better benefit. If I just give the stock directly to the charity, without selling it first, the charity will send me a letter saying that the value of the stock was $990, and I still get to deduct that whole amount from next year’s income. But I never sold the stock, and don’t owe any capital gains tax! So I’m $105 better off than selling the stock and then donating the money. In case you’re wondering, this is perfectly legitimate and was the intent of the law. In fact, the 2017 tax law just increased the amount of charitable donations you’re allowed to deduct to 60% of your total income.

My example of Intel is fine enough, but if you happen to have some year old vintage TSLA in your portfolio, the advantage to you of giving the stock instead of cash becomes huge. Basically the more profit you are sitting on in the stock, the better off you are donating rather than selling. If you didn’t make a profit on the stock, though, you are conversely better off selling it to take the capital loss as a deduction too.

Donating stock is a little bit more of a hassle than just writing a cheque, but the development staff of the charity will happily help you with the numbers you need. Then just fax a form to your stockbroker, and it will happen. It usually takes a week or two, so don’t wait to do it at the end of December. Also don't forget to specify the stock with the greatest capital gain, and make sure that they transfer what you tell them (Looking at you, ETrade!). All stocks look alike to me, but not to the IRS.

*: Approximate numbers based on current (2017 after the Tax Cuts and Jobs Act) tax rates, including CA state tax. I am not an accountant.

Can you donate stock from an IRA?