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Thinking of selling some of my shares, undecided
- Thread starter daniel
- Start date
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.
My understanding is that market makers price leaps based on the black schoolers pricing model, which has to do with ,time to expiry and past stock volatility, nothing in their pricing reflects the underlying business growth in sales volumes or margins
For example it does not price in going from 400,000 cars pa to $2m cars pa
So market makers are at distinct disadvantage
Happy to be corrected
As a wishy-washy half step, selling half of your shares now locks in a decent gain regardless of future pricing. And you still participate in company ownership and any future gains. I would expect a lot of volatility in September with all of the critical news to come, as Evoforce pointed out. Where you fall in the capital gains tax brackets might also be a small consideration, but possibly swamped out by TSLA volatility.
[Emphasis mine]
Which is why they've all gone broke.
Leaps (as I've just learned) are a type of options. And options are notoriously bad for inexperienced investors. If you know what you're doing and understand the risks, more power to you. I know enough to know that I don't know enough to trade in options.
The stock has just tripled in three months and nearly doubled in the last month. That looks like bubble territory to me. One web site said that the big jump was because it went viral on Robin Hood.
True story: around 55 years ago, as a teenager, and a coin collector, I managed to buy a bunch of newly-issued proof sets. There was a limit of one or two sets per person, but by getting family members to use their names for me, I think I bought 25 of them or something. They shot way up to something like five times the purchase price and I felt rich. I sold one to buy a gift for a girlfriend. And then I waited for them to go higher and higher. They dropped back down to a dollar or two over the issue price.
I'm not selling all my TSLA but I'm pretty sure that I'm going to sell some of it tomorrow morning. Meanwhile I just put in an order to buy some more of one of my Vanguard funds that's paying good dividends. Low-risk, dependable returns. Will never make me rich but will put steady money in my pocket.
Sounds like the scuba diver's advice: "Plan your dive and dive your plan." Excellent advice. My plan is: Buy safe investments and sit on them. And put just a little into companies doing things I like. My position in TSLA has gotten too big. My plan says reduce my position.
Stay safe everyone.
TheTalkingMule
Distributed Energy Enthusiast
This morning I sold just under 12% of my shares and set a stop order at $1,475 for about the same number. If that order executes I'll have sold almost 25%. I got a nice chunk of money that will probably go into Vanguard. Over the next few days or a week I'll see what happens and think whether or not I want to sell some more and maybe leave myself with half of what I had and money to either put into Vanguard or splurge on something if I can think of anything I want to splurge on. The fact is that my life is so good right now that I actually cannot think of anything I want at the moment other than to lose ten pounds, which involves spending less money (on food ) rather than more. Life is darn good when you can't think of anything you want to buy!
) rather than more. Life is darn good when you can't think of anything you want to buy!Selling them all was never on the table.
As long as Tesla is making great electric cars, I'm in for the long haul. I just never expected to have such a big position. I expect the stock to slide back down to around $1,000 once the people on Robin Hood find something else to go nuts about, and then continue its gradual upward climb. (But I'm not confident enough of that prediction to sell all my shares and wait for it to go down to buy back in. )So, you walked away from a lot of money today. You can lead a horse to water... I am sure you will justify it in some way... Ah well, it's your money. Your hands off approach before, seems like it worked better for you. I am wishing you good luck! I am kicking myself for not picking some up at its low today...
I am wishing you good luck! I am kicking myself for not picking some up at its low today...
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Yeah, about 2 or 3 hours after I sold almost 12% of my shares they jumped over $100. Well, it's water under the bridge. And this is the reason I'm not a day-trader. The fact is, I multiplied my money about 42 times. It would have been 47 times if I'd sold now. But I've still got about 88% of my former position.
And it's not a matter of justifying anything. As a conservative investor my position was uncomfortably large. I cashed in a small part of it at a 42 X profit. I can cry about losing $100 per share, or I can be happy about making $1,465 per share. I'll choose the latter. Life is good when you live in paradise.
And it's not a matter of justifying anything. As a conservative investor my position was uncomfortably large. I cashed in a small part of it at a 42 X profit. I can cry about losing $100 per share, or I can be happy about making $1,465 per share. I'll choose the latter. Life is good when you live in paradise.
adiggs
Well-Known Member
My contribution to how to think about it - I bought with a something similar sort of mindset; support the mission and maybe in a few years it'll like double or triple (was how I was thinking when my wife and I invested).
That was about 6 months before we found our used Roadster and about 6 months before the stock went from 30 to 180 in 6 months.
But even back then, the core investment thesis was:
1) the product matters. And OMG what good products Tesla had (and still has).
2) the strategy (build high priced, low volume cars to fund lower priced, higher volume cars, etc.. - the Secret Master Plan) made total sense
3) the execution was actually working; Model S was out, first unanimous Motor Trend car of the year, with other results that were out of this world. (For all other competition, their strategy is not yet working).
4) the markets being addressed had the potential of being huge. The company I work for is much bigger in most terms than Tesla, at least until recently. Our total addressable market is maybe 1/10th of what Tesla's is today. Tesla has so much room to grow in; far bigger than any other company I can think of except Amazon (maybe Wal Mart; both examples of retail companies).
With that investment thesis back in 2012, I figured 10+ years to see how it evolved. Now its 8 years later, and I still have a 10+ year investment horizon as all of these things are still true (except #3 which is even better now than then - there are more products out, and they're continuing to be dramatically better than anything we might call competition).
So - my take is that if your investment thesis hasn't changed, then there's no reason to change your investment. Why buy a lower quality investment using proceeds from a higher quality investment?
And related, the moment your investment thesis has been violated, drop the whole thing like a hot potato (in this field, probably because there's some other company that is out-Teslaing Tesla, so there will be somebody else to invest in to support the mission).
My original investment in the company and purchase of the car was strongly driven by the mission (at least somewhat like you). My feeling then, and is even stronger today, is that I was in a position financially to buy one of these amazing cars, and in so doing I could lower my personal carbon footprint in the world. There's a lot I really can't do, but I can at least reduce my personal contribution to the problem.
And if the people with the financial resources won't take the lead and reduce their personal contributions to the problem, then where are we going to find the people to take that lead?
Thus for me it's been easy - all the original shares are still held, some additional ones have been added along the way, and as a bonus I'll be able to retire from the need for a paycheck much earlier than I'd hoped, and have reasonable line of sight to wealth far beyond anything I'd otherwise have dreamed of. In which case I'll be following along in other's footsteps by making some charities very happy
That was about 6 months before we found our used Roadster and about 6 months before the stock went from 30 to 180 in 6 months.
But even back then, the core investment thesis was:
1) the product matters. And OMG what good products Tesla had (and still has).
2) the strategy (build high priced, low volume cars to fund lower priced, higher volume cars, etc.. - the Secret Master Plan) made total sense
3) the execution was actually working; Model S was out, first unanimous Motor Trend car of the year, with other results that were out of this world. (For all other competition, their strategy is not yet working).
4) the markets being addressed had the potential of being huge. The company I work for is much bigger in most terms than Tesla, at least until recently. Our total addressable market is maybe 1/10th of what Tesla's is today. Tesla has so much room to grow in; far bigger than any other company I can think of except Amazon (maybe Wal Mart; both examples of retail companies).
With that investment thesis back in 2012, I figured 10+ years to see how it evolved. Now its 8 years later, and I still have a 10+ year investment horizon as all of these things are still true (except #3 which is even better now than then - there are more products out, and they're continuing to be dramatically better than anything we might call competition).
So - my take is that if your investment thesis hasn't changed, then there's no reason to change your investment. Why buy a lower quality investment using proceeds from a higher quality investment?
And related, the moment your investment thesis has been violated, drop the whole thing like a hot potato (in this field, probably because there's some other company that is out-Teslaing Tesla, so there will be somebody else to invest in to support the mission).
My original investment in the company and purchase of the car was strongly driven by the mission (at least somewhat like you). My feeling then, and is even stronger today, is that I was in a position financially to buy one of these amazing cars, and in so doing I could lower my personal carbon footprint in the world. There's a lot I really can't do, but I can at least reduce my personal contribution to the problem.
And if the people with the financial resources won't take the lead and reduce their personal contributions to the problem, then where are we going to find the people to take that lead?
Thus for me it's been easy - all the original shares are still held, some additional ones have been added along the way, and as a bonus I'll be able to retire from the need for a paycheck much earlier than I'd hoped, and have reasonable line of sight to wealth far beyond anything I'd otherwise have dreamed of. In which case I'll be following along in other's footsteps by making some charities very happy
Perhaps this falls into your category of a change in investment thesis, but at some point you want to decide whether to enjoy the money you've made, or keep it until you die and leave it to somebody else.
I pretty much agree with everything you've written above. Except that diversification is a part of my investment thesis. No matter how strong a company is, nothing in life is certain. There's always more risk with an individual company than with a diversified portfolio. Sometimes you want to include a lower-quality lower-risk investment in your portfolio. And I'm at an age where income is becoming more important than growth.
Eggs and baskets.
adiggs
Well-Known Member
And as you've commented elsewhere, we're getting into the hyper personal choices, and where we're at in life, and so forth. Though I don't invest in Berkshire, I've been very influenced by many of Buffet's investment strategies. One of them being to put your short list of high quality investment "eggs" into the basket, and then watch them like a hawk
I have 1 really (I don't count cash as 1), or 2 if you count the option sales on TSLA as a second. And I watch that 1 like a hawk (which I enjoy doing anyway, so it's not work; if it WAS work, then I'd find something else to do).
That close eye on things, especially compared to how well I understand the company compared to the analysts (I could be wrong about this, but 8+ years of following the company has so far proved me right) means that I have an information advantage. As a result, if something changes - financials (something big here; not 90k vs 95k deliveries in a quarter), strategy, execution - then I'm out like a light.
The #1 issue I am personally tracking with Tesla and it's long term mission is service quality. I've personally received outstanding service over the years. I also am one of the very short list of people that brings a Roadster to the Portland service center for them to take care of, so maybe that has something to do with it
But I've read enough of other people having issues, that I'm tracking it as an investment risk. It doesn't invalidate the thesis today, as it needs a competitor that is really a competitor on the other fronts (product, charging infrastructure, cost, etc..) that can then differentiate themselves from Tesla via superior service quality and availability. I don't see this as a serious investment risk for at least 5 years and probably 10+. But if I were going to identify 1 thing today that could change my horizon, this is it. (Note that it isn't really on the list of things that the analysts track. Maybe because it's so minor, but I tend to think it's because they don't understand the company).
Doggydogworld
Active Member
You're wise to sell part of your holdings.
20 years ago I held stock in my employer, an internet company with good products, tremendous growth and actual profits. My cost was pennies per share. I was first able to sell in late 1999 at 50/share and sold more in early 2000, by which time it was almost 100. I'd planned to sell another chunk before the employee trading window closed at the end of February, but it suddenly dipped into the 70s and I got too cute for my own good. When the next trading window opened in April the stock was in the 30s on it's way to 3. The company is still in business today, but the stock never rose from the grave.
I sold less than half my shares and much less than half if you include my unvested options. I know people whose stock and options were worth tens of millions at the peak, but they never sold a single share.
electricar
Member
What with unconstrained money printing and the fact that the only thing left that both Republicans and Democrats can agree on is ever more grandiose deficit spending, it seems likely that taxes will go up one way or another. By selling some now you will might get to keep more of your profit. Me, I am old, so my stock will go to my heirs just so it isn't all taxed away. At least until the politicians revive estate taxes or eliminate the rule allowing cost basis to reset to market for the inheritors of securities.
... Though I don't invest in Berkshire, I've been very influenced by many of Buffet's investment strategies. One of them being to put your short list of high quality investment "eggs" into the basket, and then watch them like a hawk
When I was maybe 15, my mother had a friend who had in previous years made a very good income as a day-trader. He was very well off. He quit doing that and got a regular job because successful day-trading required so much work, analyzing and tracking and watching everything so closely that he had no time for anything else. When he married, he wanted to have time for his new family.
I don't have a family, but I would not want to have to be constantly watching the market like a hawk. Buffet made a successful career out of it and is a multi-billionaire, but has he had any time to play?
This morning I set a stop order at $1,600 and it executed and I sold another 5% of my shares. I've now sold 16 3/4% of my shares in two days, and I'll keep an eye on things for a while. At some point I'll go back to just forgetting about it. I don't know if that will be at 75% or 50% of what I had.
OFF TOPIC: I remember the former day-trader so well because he and his wife gave my mother the gift of a record (CDs would not exist for another two decades) of the Bach cantatas numbers 140 and 4. Neither of us had ever heard Bach's choral music before and it was love at first hearing. Those are still two of my favorites. I probably would not remember him were it not for that.
electricar
Member
It sure is nice to have rich-people problems!
Reading your posts in this thread I was struck by the fact that your investment strategy is almost exactly like mine - long term index funds, living below your means, buying what you believe in, etc. If the tax ramifications of your investments aren't part of it yet, they will be in the future. If you don't watch out you will become just another Capitalist Pig in Paradise with rich people problems.
I don't pay much attention to the tax ramifications because, except for TSLA, and SCTY when it became TSLA, and the occasional bond issue that matures or gets called, I hardly ever sell anything. I have to pay tax on my income and I have to take income so I can live and play. So I just pay the taxes.
I am not proud of it by any means, but that's basically what I am now. I do give money to charitable and progressive causes, and I vote for progressive candidates, and I converted to solar as soon as I had a house where I could do that, and I've been driving electric since 2006 or 2007, but I live off of investments, which is to say, other people's labor, and I have more than I need in a country and a world where people go hungry. Philosophically I am a socialist but I live the life of a capitalist pig. And when I have problems they are rich people's problems, though here in paradise I have darn few problems.
There was a cartoon in the New Yorker many decades ago, in which two kings are sitting on a park bench and one of them is saying that for all of monarchy's flaws and injustices, "... it works for me."
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