Thinking of selling some of my shares, undecided

[daniel]

I don't invest in individual stock issues, and I don't "trade." My investments are in mutual funds which I hold for the long term, and some diversified bond holdings for income. But when I really like what a company is doing I sometimes put a little bit of money in it so that I can feel like I'm a part of the company. This is what happened when I bought my Roadster in 2011. It was such an amazing car, and Tesla had just come along with this idea to say NO to gasoline (I hate gasoline) so I put a little bit of money into TSLA when it was around $30 to $35. I also bought some SCTY because I wanted to be a part of the solar revolution, and when Tesla bought Solar City my SCTY shares became a few more shares of TSLA.

Since I don't "trade," and since I bought my shares to "be a part of" the company I didn't look at the stock price. I never had any intention of selling my shares unless the company's philosophy changed or its management disappointed me. Imagine my surprise to see that it's now $1,500, something like 40 times what I paid! Suddenly my position in TSLA is nearly my biggest holding and I'm conflicted:

Maybe it will keep going up and up and up, or maybe the market will decide it's overvalued and it will go down to half. My financial advisor recommends selling some of the shares. Her angle is as an investor: take your profits and move on. I'll feel really bad if I hold and it collapses, but I'll also feel really bad if I sell and it skyrockets. I've never been in this position before because with mutual funds I just ride the market knowing that in the long run they'll give me income. But with an individual company there's risk and I've never been comfortable with risk.

I am experiencing very illogical sentiments: I would never put as much into an individual stock issue as I now have in TSLA, but I don't want to let go of a stock that has performed so well. Maybe the logical thing would be to sell half, and if it goes down, buy back in. But I would not buy back in because that's too big an investment for my very conservative style. I'm not asking an internet forum for advice. Just sharing a personal dilemma. Obviously a very good dilemma to have, but still one I seem unable to resolve.

Thanks for listening. All comments welcome.

 

[21miDay]

It sounds like you didn't buy it to make money. You bought it for philosophical reasons. So don't start thinking about the money now.

 

[HVM]

Uncle Sam (or is it Aunt Samantha with Lei) will be happy of the 1/3, sell only if you need it.

 

[daniel]

It sounds like you didn't buy it to make money. You bought it for philosophical reasons. So don't start thinking about the money now.

You are correct. I bought it for philosophical (and emotional) reasons. But it's really hard not to start thinking about the money now. At $800 I could just say "Wow." But at $1,500 it's more like, "Oh my gosh that's a f***-ton of money!"

 

[ggr]

Give half of it (as stock) to a tax-deductible charity. You won't pay capital gains tax, you'll reduce your holdings, you'll get the tax deduction (assuming the amount is large enough to itemize), you'll feel good, you'll make a difference to a cause you care about... how can you lose?

Not joking. We have donated... well, a lot. Only regret is that we gave away all of our IPO shares, so I don't have stock bought at $17 in the account any more.

 

[HVM]

I get my knowledge of Daniel's home-state from Lilo & Stitch and Pearl Harbor war documentaries, but still, if I calculate right, one half is more than one third. Ok at least you can select where your charity goes. State of Hawaii can use those in OP's namesake airport or railroad?! (HART).

 

[electricar]

Consider selling enough to get your initial investment back. I know all the reasons that does not make sense from an investment standpoint, but if the stock went to zero I would be able to ease my mind by rationalizing/pretending that the whole thing never happened in the first place. That is why I was considering doing just that but the posts from 21miDay and HMV helped me remember why I bought the stock in the first place and why I won't be selling any now.

 

[Silicon Desert]

I never decide to trade a stock. I use trailing stops and it has worked great for me for 30 years.

 

[EV forever]

I don't invest in individual stock issues, and I don't "trade." My investments are in mutual funds which I hold for the long term, and some diversified bond holdings for income. But when I really like what a company is doing I sometimes put a little bit of money in it so that I can feel like I'm a part of the company. This is what happened when I bought my Roadster in 2011. It was such an amazing car, and Tesla had just come along with this idea to say NO to gasoline (I hate gasoline) so I put a little bit of money into TSLA when it was around $30 to $35. I also bought some SCTY because I wanted to be a part of the solar revolution, and when Tesla bought Solar City my SCTY shares became a few more shares of TSLA.

Since I don't "trade," and since I bought my shares to "be a part of" the company I didn't look at the stock price. I never had any intention of selling my shares unless the company's philosophy changed or its management disappointed me. Imagine my surprise to see that it's now $1,500, something like 40 times what I paid! Suddenly my position in TSLA is nearly my biggest holding and I'm conflicted:

Maybe it will keep going up and up and up, or maybe the market will decide it's overvalued and it will go down to half. My financial advisor recommends selling some of the shares. Her angle is as an investor: take your profits and move on. I'll feel really bad if I hold and it collapses, but I'll also feel really bad if I sell and it skyrockets. I've never been in this position before because with mutual funds I just ride the market knowing that in the long run they'll give me income. But with an individual company there's risk and I've never been comfortable with risk.

I am experiencing very illogical sentiments: I would never put as much into an individual stock issue as I now have in TSLA, but I don't want to let go of a stock that has performed so well. Maybe the logical thing would be to sell half, and if it goes down, buy back in. But I would not buy back in because that's too big an investment for my very conservative style. I'm not asking an internet forum for advice. Just sharing a personal dilemma. Obviously a very good dilemma to have, but still one I seem unable to resolve.

Thanks for listening. All comments welcome.

Let me pinpoint the main problem here - you are facing a paradigm shift and it is taking you out of your comfort zone.

All our lives, the importance of diversification of assets in our investment is hammered into us. The standard formulas are almost force fed - in your 20s and 30s have a mix of 70% stock, 20% short term and 10% international. As you grow older, change these formulations to less stock to reduce risk. When you are near retirement - there is a formula. For your child's 529, there is a formula to follow. All of us have been there - My fidelity account gives me a warning every time I log in "your portfolio may be overweighted in certain investments" Our financial advisor (executive financial advisor, I should add, due to my grade level at work) tells me that every single time - "maybe you should consider trimming some of your asset concentration in TSLA"

• You invested in TSLA because you believed in the company. You invested with money you clearly didn't need or were planning to retire on. Have these facts changed?
• Based on your message above, it appears that you have other investments, likely in 401K or other accounts which are invested entirely in mutual funds. The only reason TSLA has become your largest investment is because Tesla has grown 40X in the last 9 years since you bought the stock, while your mutual funds have done what 2X or 3X or 4X? Why sell a winner in favor of lesser winners?
• In your mind and heart, you really don't want to sell the stock. No one here can tell you if the stock is going to skyrocket or plummet. All we can tell you is that the long term story is intact and looking even better than it did in 2011.

I have posted here before - mine and my husband's investment philosophies are diametrically opposite. He is completely risk averse and keeps his 401K and IRAs in conservative investments. My 401K is in growth focused mutual funds, but that is because we are not allowed to invest in anything other than mutual funds (other than our own company stock - which is not a great performer). We have maxed out our contributions every year for atleast the last 12 years plus getting employer match. But our largest investment - my rollover IRA from an previous employer which is now 90% in TSLA. That single account has grown to 3X of both our 401Ks combined. Once in a while, even I look at that wondering if I should take some profit, but for now have decided to continue holding till 2025. That being said, I may put a GTC order with a high limit price after the ER, just in case there is a short squeeze.

Good luck with your decision. My only advice would be to go with your gut feeling and never look back.

 

[daniel]

Give half of it (as stock) to a tax-deductible charity. You won't pay capital gains tax, you'll reduce your holdings, you'll get the tax deduction (assuming the amount is large enough to itemize), you'll feel good, you'll make a difference to a cause you care about... how can you lose?

I give to charities and causes. I don't give that much

Consider selling enough to get your initial investment back. I know all the reasons that does not make sense from an investment standpoint, but if the stock went to zero I would be able to ease my mind by rationalizing/pretending that the whole thing never happened in the first place. That is why I was considering doing just that but the posts from 21miDay and HMV helped me remember why I bought the stock in the first place and why I won't be selling any now.

My initial investment was so small that I could lose it and think nothing of it. Which was why it didn't bother me that at the time I bought my shares there was really some doubt whether Tesla would survive or not. The Model S had not yet come out (though it had been announced) and nobody knew whether Tesla could stay afloat that long.

I never decide to trade a stock. I use trailing stops and it has worked great for me for 30 years.

That's an investment strategy and I'm sure it's excellent advice for investing. But I'm not an investor. When I've attempted investing I've bought high and sold low. So there's something deep inside me whispering that whatever I do it will be the wrong thing. We all envy the guy who bought Bitcoin at $5. But what about the guy who bought Bitcoin at $5 and sold at $100 and then saw it hit $20,000 after he'd sold out?

My problem is that it's too much money to have in one stock, but the company is too promising to sell. Clearly I am privileged. It's a rich person's dilemma.

 

[Robertj]

People make a lot of money by concentrating their investments, not by diversification

Your shares have done well , Tesla is making 400,000 cars pa , but heading to 2 m plus

it has leadership in batteries, self driving and constant innovation

My suggestion , do nothing , when you are ready , realise some and make life easier , and leave the rest
to create wealth for you, your family and community

 

[Evoforce]

Don't listen to her. Don't sell your TSLA! When you picked a winner, stay with the winner. Don't feel guilty, just enjoy and stick with the good choice that you made. Why gamble on anything else.

 

[ZOE5IVE]

With Tesla it could crash to $400 or it could reach $2k a share in the near term. They are growing and if they reach FSD and are the 1st to do so than they will be over $10k a share. Look at their numbers there is so much demand they managed to muster out and sell almost 100k cars in this recession/pandemic. Take some time and see that they are truly on a mission see the bigger picture and you will see that there is so much more to come.... Considering that you bought at $30 you can sell some shares and get a Tesla or upgrade your home interior/whatever would make you happy.

 

[daniel]

People make a lot of money by concentrating their investments, not by diversification

True. And people also lose a lot of money by concentrating their investments. Diversification eliminates the chances of big gains and minimizes the chances of big losses.

In Pushkin's The Queen of Spades, Hermann the German says to his buddies who want him to join them in gambling, "I refuse to risk the necessary in pursuit of the superfluous." This philosophy will never make you rich, and will never make you a pauper.

Your shares have done well , Tesla is making 400,000 cars pa , but heading to 2 m plus

it has leadership in batteries, self driving and constant innovation

My suggestion , do nothing , when you are ready , realise some and make life easier , and leave the rest
to create wealth for you, your family and community

I have a very comfortable retirement. Life is good. Right now I don't need more money. But greed is an inherent human failing. I am not proud of it, but it's true that I am no better in this regard than the next person.

Don't listen to her. Don't sell your TSLA! When you picked a winner, stay with the winner. Don't feel guilty, just enjoy and stick with the good choice that you made. Why gamble on anything else.

I don't feel the least bit guilty. And the alternative to holding my TSLA shares is not to gamble on something else. The alternatives are conservative index funds and low-risk bonds. These will never increase much in value, but they are vanishingly unlikely to drop much in value, and will provide steady income. The dilemma is to continue gambling on Tesla or get out of the gambling. (I wouldn't get out entirely. I like Tesla too much for that.)

With Tesla it could crash to $400 or it could reach $2k a share in the near term. They are growing and if they reach FSD and are the 1st to do so than they will be over $10k a share. Look at their numbers there is so much demand they managed to muster out and sell almost 100k cars in this recession/pandemic. Take some time and see that they are truly on a mission see the bigger picture and you will see that there is so much more to come.... Considering that you bought at $30 you can sell some shares and get a Tesla or upgrade your home interior/whatever would make you happy.

Right now, TSLA is priced for its potential, not for its current value. By its current value it's way overpriced. It's potential rests largely on the fact that nobody else is making electric cars of the same quality and only Nissan among other car makers is serious at all about electric cars. Full autonomy would give it a boost, but I really don't think Tesla will be first to market with that. And in its current form, "FSD" appeals only to a niche market.

If there's another oil crunch and a couple other big auto makers move seriously into electric vehicles, the market could adjust its judgement on Tesla's potential and the stock price could drop. A six-fold rise in eight months is not a sustainable level of price rise. I have confidence that Tesla will succeed as a company. I have less confidence that the market will continue to put quite so much value on its potential. There's a connection between a company's actual success and its stock price, but its a very elastic connection. Besides, if I sell that guarantees the price will spike again, which will be good for the rest of you.

I support Tesla for the mission its on: the elimination of petroleum in transportation. I'm just thinking that my current position is a bit rich for my blood. TSLA might be at $20K in ten years, but my chances of living that long are probably around 50/50.

As for buying a Tesla, I drive a Model 3, and I cannot use two cars at once. More money right now won't make me any happier than I already am (I am in the best place I've ever been) but I also don't like the risk of having such a large position in one stock. Now if there were lifelike robots...

 

[N5329K]

I don't invest in individual stock issues, and I don't "trade." My investments are in mutual funds which I hold for the long term, and some diversified bond holdings for income. But when I really like what a company is doing I sometimes put a little bit of money in it so that I can feel like I'm a part of the company. This is what happened when I bought my Roadster in 2011. It was such an amazing car, and Tesla had just come along with this idea to say NO to gasoline (I hate gasoline) so I put a little bit of money into TSLA when it was around $30 to $35. I also bought some SCTY because I wanted to be a part of the solar revolution, and when Tesla bought Solar City my SCTY shares became a few more shares of TSLA.

Since I don't "trade," and since I bought my shares to "be a part of" the company I didn't look at the stock price. I never had any intention of selling my shares unless the company's philosophy changed or its management disappointed me. Imagine my surprise to see that it's now $1,500, something like 40 times what I paid! Suddenly my position in TSLA is nearly my biggest holding and I'm conflicted:

Maybe it will keep going up and up and up, or maybe the market will decide it's overvalued and it will go down to half. My financial advisor recommends selling some of the shares. Her angle is as an investor: take your profits and move on. I'll feel really bad if I hold and it collapses, but I'll also feel really bad if I sell and it skyrockets. I've never been in this position before because with mutual funds I just ride the market knowing that in the long run they'll give me income. But with an individual company there's risk and I've never been comfortable with risk.

I am experiencing very illogical sentiments: I would never put as much into an individual stock issue as I now have in TSLA, but I don't want to let go of a stock that has performed so well. Maybe the logical thing would be to sell half, and if it goes down, buy back in. But I would not buy back in because that's too big an investment for my very conservative style. I'm not asking an internet forum for advice. Just sharing a personal dilemma. Obviously a very good dilemma to have, but still one I seem unable to resolve.

Thanks for listening. All comments welcome.

Same here, minus the Solar City and Roadster parts (loved the story, hate gas, but drove a very early example and didn’t enjoy folding myself in and out of that car).
For me, it makes more sense to keep a certain comfortable percentage in, and lock away gains now and again to rebalance. Kind of like a gold ETF. No way would I want that to dominate. But I’m glad for the exposure (especially these days).
Nobody knows what’s going to happen, but you can cement your gains along the way for sure. That’s been our approach, anyway.
Robin

 

[TMThree]

Very common to rebalance investments. And if you think you'll be able to hold TSLA to $5000/share or something, I've got some coworkers who bought BTC at $16,000 and are still waiting for $100k bitcoin to appear.

Just zoom out on the chart. If it's going parabolic, you know a bubble has formed. It's hard to time the top, but bubbles never level off. If no one ever sold, we'd have seen 100k bitcoin. That's also why anyone holding TSLA is going to say not to sell either. Their investment is only good if no one runs for the exit.

Disclaimer: I bought 53 shares of TSLA when it was at $187. I don't have any shares now. I also made money off the crypto bubble.

 

[daniel]

... drove a very early example [of the Roadster] and didn’t enjoy folding myself in and out of that car).

I got a ride in a prototype when the Roadster was still under development. It was horribly uncomfortable. My 2.5 Roadster was awkward to get in and out of, and far less comfortable than even my Prius, but it was tolerable, and well worth it for the fun. Only my Zap Xebra was more uncomfortable (though easy to get in and out of) and I totally loved that car. The Roadster replaced the Xebra after 4 years, and I switched only because the Xebra was too under-powered and didn't have enough range.

I've been driving electric since 2006 or 2007.

 

[RED MDL3]

Daniel, I think your situation is shared by many who face the same pleasant. quandary. For myself, I sold 10% @1520 and gifted it to my adult children. I enjoyed watching early 40s “children” faces light up with excitement for their family. Sharing the Tesla gains makes them Tesla fans. This may not apply to you but works for me.I’ll hold the rest and consider what’s to do in the future.

 

[Robertj]

In February this year I took 50 % off the table and diversified, the other 50 % to cash

in March I redeployed the 50 % cash , half in stock , half in leaps

Now I am planning if the stock peaks , to convert leaps to stock

That’s the theory , plan your trade , trade your plan

 

[daniel]

In February this year I took 50 % off the table and diversified, the other 50 % to cash

in March I redeployed the 50 % cash , half in stock , half in leaps

Now I am planning if the stock peaks , to convert leaps to stock

That’s the theory , plan your trade , trade your plan

After reading the above I went to Investopedia to learn what leaps are. That's far too rich for my blood. Plus, the examples they gave always used a premium of 10% of the strike price. From the explanation, the premium will depend on the market expectations of the contract writer. The way it looks to me, buying leaps is gambling with the contract writer, who will try to set the premium to their own advantage. You're betting that you can anticipate the market movement better than they can. I'm confident that I cannot do that.

It's Sunday so I have until tomorrow morning to change my mind, but I'm probably going to sell some of my shares.

By doing this, I'm pretty much guaranteeing the price will rise, which is good for Tesla and my fellow TSLA investors, so I expect each of you to PayPal me a dollar when the stock hits $2,000. (Kind of like bringing an umbrella to a baseball game to insure it doesn't get rained out. )