ifish
Member
I used CC and it helped with the accent
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Not advice:
There is no requirement in life to maximize assets. The type of hands people claim you to have will not make your life better. Money is a means to an end, not an end in itself. If paying off your mortgage makes your life better/ happier mentally, and does not impact future stability, do it.
Concider, if using some gains to pay off your house is "bad", then wouldn't it also be bad to not do a cash out refinance of your mortgage to buy more TSLA? For that matter, would it not be better (from a share count POV) to sell the house entirely?
There is something to be said for increasing stability and reducing future required expenses. It is difficult to balance risk/ reward. The only one who can make that call for you is you. Missing out on gains hurts, but so does missing out on assets during a drop.
Sorry for the longer posts, but here’s one example of the potential power of building unprecedented innovative competency:
Apple for decades underperformed in the market. The multi trillion dollar market cap we see today was only made possible by the iPhone, which itself was only made possible by the iPod, which itself was only made possible by the development of a pocket size hard drive. Like Musk, Jobs had vision, in this case an understanding that a pocket size music player would be very valuable, and that in order to achieve it, somebody had to build a pocket size hard drive. But unlike Musk, Jobs had not built that kind of innovation competency, so he instructed his deputies to search the Japanese tech markets to see if one existed. It took a few years until one of his deputies literally stumbled across one that Toshiba had designed, without an obvious immediate use for it so it was hard to find. That chance discovery ultimately led to $2T in shareholder value.
Today, if Musk needed a smaller hard drive than what existed commercially, he would assemble a small team of existing employees who would likely design it in months.
Tesla is not just the next Tesla. It’s the next Apple. Multiple Apples.
Apple for decades underperformed in the market. The multi trillion dollar market cap we see today was only made possible by the iPhone, which itself was only made possible by the iPod, which itself was only made possible by the development of a pocket size hard drive. Like Musk, Jobs had vision, in this case an understanding that a pocket size music player would be very valuable, and that in order to achieve it, somebody had to build a pocket size hard drive. But unlike Musk, Jobs had not built that kind of innovation competency, so he instructed his deputies to search the Japanese tech markets to see if one existed. It took a few years until one of his deputies literally stumbled across one that Toshiba had designed, without an obvious immediate use for it so it was hard to find. That chance discovery ultimately led to $2T in shareholder value.
Today, if Musk needed a smaller hard drive than what existed commercially, he would assemble a small team of existing employees who would likely design it in months.
Tesla is not just the next Tesla. It’s the next Apple. Multiple Apples.
⚡️ELECTROMAN⚡️
Village Idiot
Sounds like it to me, but I'm not the sharpest tool. What's your average yearly return on your TSLA stock been since you started investing in TSLA?
All this talk about margin and big drops makes me think we will go even higher soon based on that famous "Be fearful when others are greedy, and greedy when others are fearful". Joking 
I believe someone here posted moths ago that analysis of Berkshire’s investment strategy over the years and figured out that they had all this gains mostly because of one thing: always being leveraged/on margin to a maximum of 30% of their assets.
That strategy brought the most rewards on the long run, otherwise they would have had just “regular” gains in the market.
That strategy allowed them to profit and weather any downturns and any big drops without risking the core holdings.
So, its discipline and never going over 30% of your assets on margin that made the difference.
Did I got that wrong?
I believe someone here posted moths ago that analysis of Berkshire’s investment strategy over the years and figured out that they had all this gains mostly because of one thing: always being leveraged/on margin to a maximum of 30% of their assets.
That strategy brought the most rewards on the long run, otherwise they would have had just “regular” gains in the market.
That strategy allowed them to profit and weather any downturns and any big drops without risking the core holdings.
So, its discipline and never going over 30% of your assets on margin that made the difference.
Did I got that wrong?
Jetpad
Member
Paying off your mortgage will obviously give you a worse return if TSLA continues to go up BUT if it doesn't and something happens to causing it to drop, even temporarily, having your mortgage paid off will give you more confidence to hold and not sell at the low.
I paid off rental condo last year
And have requested loan payoff amount and will be paying off home with 2.85 interest rate. Looking forward to be debt free.(+wifey wants 3rd house with pool in better school district now
- and 2 rentals- will be couple of years for that)All thanks to Tesla calls bought/sold at opportune times.
If you still want to participate in market and want some money - consider selling some Jan 23 CCs in 1900-2000 strikes. They have gone up in value a lot. If stock moves sideways or volume/activity decreases they are going to go down quickly. Cheers!!
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⚡️ELECTROMAN⚡️
Village Idiot
All of this margin talk is very timely for me. I was planning on calling my broker this week to see how much margin they would give me. Now I'm thinking I probably don't need the temptation. I had to switch out of TMC dark mode to read this post. It looked like a blank screen to me. The setting is down on the bottom left of the this web page.
Ford CEO makes webcast addressing employees. Compares to Tesla and how they must learn from them to reduce complexity which drives down cost. Citing their dominance in EVs and the Hertz deal.
archive.md
Ford CEO warns employees to take Tesla, Rivian, VW seriously
archived 6 Nov 2021 11:43:19 UTC
1. That was actually the idea the Founding Fathers had. Make government so ineffective that it could rarely do anything. It worked for awhile until lawyers were allowed to hold office. (Lawyers are officers of the court. It's a conflict of interest to have those upholding the laws making the laws.) It became even worse when corporations became people and were allowed to make political contributiions.
2. Every other democratic country in the world uses the parliamentary system.
Knightshade
Well-Known Member
Combining replies to try and keep the weekend scroll manageable-
At least out east a ton of SC locations are things like gas stations and shopping centers, not sure sticking a cell tower and a starlink dish would work well at many of them.... that said I'm not entirely sure why they'd help even if you could.... the gas station type locations tend to be right off major highways where there's already normal cell coverage.... so the cell tower AT the SC doesn't add much does it? And it'd be simpler for them to run a cell->wifi router there if they want to offer wifi than to do starlink (which in denser areas will work poorly anyway, and especially in areas where clear view of the sky isn't available due to other stuff around).... out west in AZ these probably aren't major issues, but they would be on the coasts at least.
Point of order- parliamentary governments are even worse at this, just higher up the chain- to form that government in the first place if you didn't get an outright majority you need to form a government often pulling in some small/fringe groups that you have to keep happy or you lose power entirely, because getting 50.1% of the total vote in a many-party system is much more challenging.... Removing the filibuster would probably be a better "fix" for this issue.
The exact % will vary by investor of course- that said 30% also happens to be the tightest I've ever seen any broker snap their margin requirement to (versus the normal 50%) so it's not a bad starting place to consider running some numbers.
There's also plenty of other strategies that can mitigate margin impact in a downturn.... for example when I had some naked puts cause margin calls during the big dip early this year, instead of PANIC SELL AND COVER THE CALL I just bought some cheap garbage-value puts that turned them into spreads. Magically the calls went away for a tiny fraction of the profit I'd made selling the puts in the first place....
Which is why educating yourself to know various strategies to use when a trade goes against you is so important. All the folks I've personally seen get into deep margin trouble were some combo of:
Overextended themselves (using 100% margin for example which is nuts)
Had no idea how to manage positions or design positions that ARE reasonably manageable (a friend of mine insisted I was foolish for doing $100 wide spreads when doing $5 wide spreads let him sell 20x as many contracts with the same $ in margin.... my pointing out that means any more than a $2.50 stock move can cause serious problems for him while I'd need a >$50 stock move to do the same harm went unheeded. to nobody's shock he ended up broke since even a small price reversal became unsalvageable for him)
Most do, but certainly not all
Quite a few of the folks in the other thread are making solid $ being Mr. Market (selling the lotto tickets rather than buying them) and using some % of margin to do so. Paraphrasing the thread title- the house always wins, so why not be the house?
Mathematically? Yes. Especially during a time when inflation is >2%.... meaning your future mortgage payments are being payed with less valuable money.
Emotionally? That's a whole different animal. It's not a move I'd make, but if having any debt, even secured cheap debt, is keeping you up at night there's obviously significant value in addressing that even if financially it doesn't make a ton of sense.
At least out east a ton of SC locations are things like gas stations and shopping centers, not sure sticking a cell tower and a starlink dish would work well at many of them.... that said I'm not entirely sure why they'd help even if you could.... the gas station type locations tend to be right off major highways where there's already normal cell coverage.... so the cell tower AT the SC doesn't add much does it? And it'd be simpler for them to run a cell->wifi router there if they want to offer wifi than to do starlink (which in denser areas will work poorly anyway, and especially in areas where clear view of the sky isn't available due to other stuff around).... out west in AZ these probably aren't major issues, but they would be on the coasts at least.
Point of order- parliamentary governments are even worse at this, just higher up the chain- to form that government in the first place if you didn't get an outright majority you need to form a government often pulling in some small/fringe groups that you have to keep happy or you lose power entirely, because getting 50.1% of the total vote in a many-party system is much more challenging.... Removing the filibuster would probably be a better "fix" for this issue.
All this talk about margin and big drops makes me think we will go even higher soon based on that famous "Be fearful when others are greedy, and greedy when others are fearful". Joking
I believe someone here posted moths ago that analysis of Berkshire’s investment strategy over the years and figured out that they had all this gains mostly because of one thing: always being leveraged/on margin to a maximum of 30% of their assets.
That strategy brought the most rewards on the long run, otherwise they would have had just “regular” gains in the market.
That strategy allowed them to profit and weather any downturns and any big drops without risking the core holdings.
So, its discipline and never going over 30% of your assets on margin that made the difference.
Did I got that wrong?
The exact % will vary by investor of course- that said 30% also happens to be the tightest I've ever seen any broker snap their margin requirement to (versus the normal 50%) so it's not a bad starting place to consider running some numbers.
There's also plenty of other strategies that can mitigate margin impact in a downturn.... for example when I had some naked puts cause margin calls during the big dip early this year, instead of PANIC SELL AND COVER THE CALL I just bought some cheap garbage-value puts that turned them into spreads. Magically the calls went away for a tiny fraction of the profit I'd made selling the puts in the first place....
Which is why educating yourself to know various strategies to use when a trade goes against you is so important. All the folks I've personally seen get into deep margin trouble were some combo of:
Overextended themselves (using 100% margin for example which is nuts)
Had no idea how to manage positions or design positions that ARE reasonably manageable (a friend of mine insisted I was foolish for doing $100 wide spreads when doing $5 wide spreads let him sell 20x as many contracts with the same $ in margin.... my pointing out that means any more than a $2.50 stock move can cause serious problems for him while I'd need a >$50 stock move to do the same harm went unheeded. to nobody's shock he ended up broke since even a small price reversal became unsalvageable for him)
Most do, but certainly not all
Quite a few of the folks in the other thread are making solid $ being Mr. Market (selling the lotto tickets rather than buying them) and using some % of margin to do so. Paraphrasing the thread title- the house always wins, so why not be the house?
Mathematically? Yes. Especially during a time when inflation is >2%.... meaning your future mortgage payments are being payed with less valuable money.
Emotionally? That's a whole different animal. It's not a move I'd make, but if having any debt, even secured cheap debt, is keeping you up at night there's obviously significant value in addressing that even if financially it doesn't make a ton of sense.
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I suspect it also depends upon your life stage. If you're young you can start over again. If you're retirement age or older, a black swan event can leave you among the homeless.
hacer
Active Member
It's even worse than that. In the Senate, the filibuster requires just 41 senators to stop almost anything in its tracks. 41 senators can come from 21 states. If those 21 states happen to be the least populated states they represent just 11.7% of the U.S. population. So 11.7% of the population can hold the other 88.3% hostage because the 88.3% don't create a supermajority consensus! It's beyond absurd.
Yes, I listened to the podcast on the drive home, and it was very difficult at times to understand - and I plan on watching it with CC this weekend. One bright spot in the podcast was Rob summarizing the (lengthy!) segments from Pierre, or I would have given up.
Should anyone have stopped this?
"The bill provides a special tax cut for the media under the label of helping "local journalists" but eligible media companies will receive the funds for up to 1,500 reporters per company.
This provision would provide a refundable payroll tax credit equal to 50 percent of wages up to $12,500 per quarter per employee for the first four calendar quarters and a 30 percent credit for each calendar quarter thereafter."
Edit: Pravda?
Note to moderator. Elon has special meaning around Pravda. So including that edit should bring it back on topic.
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Thumper
Active Member
I think you just coined a needed word like Frunk. We will be needing Botler in the near future! I love this board.Did you mean: BOTler?
Do you believe the same level of risk you describe for using margins equally applies to SBLOCs?
I do know that with SBLOCs if the value of the backing securities falls greatly the brokerage must notify you and give at least a few days for additional cash or securities to be added to the account. If the investor is unable to do so then brokerage has the right to sell enough of your securities to bring you back into having sufficient assets to back whatever amount you have borrowed against them. For that reason I think it wise to not go above a percentage of your LOC limit that seems very unlikely to ever trigger this requirement. Even in a severe crash to market or the primary stock supporting the LOC. Are you aware of additional caveats to judging LOC loan risk? Thanks.
Coolio2000
Member
Which prevents "mob" rule.
The desire to be debt free is understandable. Many financial types would argue the opposite, that debt (OPM) properly allocated is how you become rich. In fact, only little people with their little dreams want to be debt free. To them, life is a continuous cycle of arbitrage - find the right interest rate and apply it to the right return. Wait a while. You’re rich! Have some champagne….
Of course over only the past three decades or so, you can find numerous examples of how brilliant it would have been to be debt free when TSHTF, and examples of how spectacular your returns would be with maximum debt.
Which tells you nothing
.Sounds to me like you are in pretty good place, where even doing nothing is a wise path.
Take the middle ground? Let’s say ten percent of your shares is 200. Jan 23 1700 calls are selling for around 180 per share. You could sell two calls and liberate 36K to do with as you please. If shares above 1700 come strike date, your shares will be sold at an effective price of 1880. If they are below 1700, you got free cash. Pay the tax man.
Live with the fact that TSLA might be at 3000 come that date.
Eh, flip a coin. NOT AN ADVICE!!!!!
Because it is a republic, NOT a democracy, again by design and working as intended. The filibuster is merely a Senate Rule, but it, as well as the senate in general, is meant specifically to keep the larger populated states from running over the less populated states. The house on the other hand allows a 51% majority to totally run amok - as we have seen happen. Checks and balances, that is what our government is based on. The Senate is a check on the House. If you don't have a consensus (of the states' representatives), you are not supposed to be able to do it. But again it all goes back to many not understanding how the government even works much less why. Or perhaps projecting how they want the government to work.
All this talk of getting things done easily is great as long as they are the things you want - beware when the other side gets power however. Look back over the last few decades for the swings from L to R and R to L it shouldn't be hard to imagine what could happen, and unhappen after the next election, and rehappen and .....
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