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Thinking of selling some of my shares, undecided

daniel

Well-Known Member
May 7, 2009
5,190
4,444
Kihei, HI
Always factor in the value of the shares now, and what that would get you invested into another financial instrument. A lot of times, these lengthy options pay about what you'd get on interest. Not sure now since rates are so low.

There are closed-end bond funds paying upwards of 5% interest. It's just the banks that are paying virtually nothing.

The thing about those covered calls and other forms of options is that they are effectively gambling. For that matter, day-trading is gambling. There's always risk in the market but long-term investment tends to be much less risky, for much more modest gains.

I'm not sure you can compare those lengthy options to interest rates because the only risk with bonds is the default risk. The risk with a long-term covered call is that the stock might go way above the strike price. You can hedge in all sorts of ways, but that's just covering one bet with another.

Then there's your time horizon. If you're 25, you might want to sit on the shares through the ups and downs and if the company if as successful as we all think it will be, you'll retire rich. But if you're 72, you're probably spending your savings rather than trying to make them grow, and the long-term potential doesn't do you much good.

Every time the price goes down I regret not having sold some (or more) at the higher price, and every time it goes up I'm reluctant to sell because maybe it will go higher. That's why I'm a really terrible investor. Once I finally sell some more and get down to where I want to be with it, or the current bubble bursts and it comes down out of the nosebleed altitude, I'll go back to ignoring it. Greed makes for bad decision-making. But the thing is, I don't have enough shares that selling them all now would change my life, but I have too many to scoff at the price difference from the beginning of this year to now.
 
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Doggydogworld

Active Member
Mar 4, 2019
1,781
6,868
Texas
There are closed-end bond funds paying upwards of 5% interest.
A lot of higher yielding bond funds are scams. Part of their "yield" is actually return of principal. Not all, of course, but enough that people need to be very cautious with them. It can take more due diligence to figure out how some work than it would take to just investigate a portfolio of individual bonds.
 
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daniel

Well-Known Member
May 7, 2009
5,190
4,444
Kihei, HI
A lot of higher yielding bond funds are scams. Part of their "yield" is actually return of principal. Not all, of course, but enough that people need to be very cautious with them. It can take more due diligence to figure out how some work than it would take to just investigate a portfolio of individual bonds.

That's why I use a broker I trust at a Big Evil Bank that has the resources to do all the research. One of the numbers she gives me is where the dividends are coming from. I forget the term. Once the fund starts paying out principal as dividends they recommend selling, and she stays on top of that. There's a hefty fee for her service and it's worked out well in the long run. Her service is worth the fee. A significantly larger part of my portfolio is in Vanguard funds. I know some folks think that index funds have outlived their usefulness but they've done well for me.
 

daniel

Well-Known Member
May 7, 2009
5,190
4,444
Kihei, HI
As a follow-up, I have sold just under 1/3 of my shares for a s**t-ton of money. And now the stupid things are going even higher. I'm satisfied that I've taken a nice chunk out so if the bottom falls out I captured a bit (actually a lot) of profit. And if it keeps going up, well, I don't make as much but I still make a bundle. I don't feel the need to sell any more for now, though I may reconsider if it hits 2,000. Given that nobody can know what the heck the market will do, and my belief that as great as Tesla is, 1,800 is overpriced, I'm satisfied with my decision.

As an aside I was looking at some posts from the start of this year when folks were wondering if it would hit 460 and discussing incomprehensible (to me) options strategies. Somebody commented to somebody else that on one particular options strategy he'd lose money if it went over 490 or something. :cool: :D :eek:
 

dl003

Active Member
Nov 22, 2019
1,749
16,020
Texas
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. :)
I don't think the market is done deciding what TSLA should be trading at yet. HODL.
 
Mar 27, 2016
531
437
Melbourne fl
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. :)


Hang on! The only way to go is UP!!!! Split coming. 5 for 1!!!
 

TheTalkingMule

Distributed Energy Enthusiast
Oct 20, 2012
7,783
33,542
Philadelphia, PA
I can't sell before Battery Day, not one share. Just on principle being an energy guy.

That being said, there is a SP I would like to sell at prior to the elections and we're approaching it. No idea if I will have the guts to sell maybe 1/3 or 1/2 of shares with the hope of buying them back at $1069 in 2022.

As frothy as we are, there's also no chance I sell one single share before S&P inclusion. That squeeze possibility is real IMO. If we go parabolic from here, I'd be willing to sell it all and wait 3 years for the macro pullback to rebuy.

No stock has ever gone straight up and simply plateaued, right????
 

daniel

Well-Known Member
May 7, 2009
5,190
4,444
Kihei, HI
Hang on! The only way to go is UP!!!!

That's what everyone was saying about property values right up until the crash. And I'll bet that's what they were saying about tulips in Holland in January of 1637.

If you hold the stock until you die you get no benefit from it at all.

Nobody can know what the market will do. It might plunge after battery day or after the split because so many people were bidding it up in anticipation of a rise. Or it might skyrocket. It's gone up fifty-fold since I bought my shares. I could be greedy and wait for a hundred-fold or a thousand-fold. I still have 2/3 of my shares. In fact, IIRC I think I might have the number of shares I bought in the first place. The ones I sold (IIRC) are the number of shares I got when Tesla bought Solar City.

There are definitely people here who understand the market way better than I do. Since I'm not them, I think selling a few shares was a good move. But if it collapses any time soon I may buy back in.

I would be such a disaster as a day trader! I'd be a nervous wreck always wondering if I'd made the right decision, and I'd probably go broke.
 

juanmedina

Active Member
Mar 31, 2016
2,486
7,155
SC
I can't sell before Battery Day, not one share. Just on principle being an energy guy.

That being said, there is a SP I would like to sell at prior to the elections and we're approaching it. No idea if I will have the guts to sell maybe 1/3 or 1/2 of shares with the hope of buying them back at $1069 in 2022.

As frothy as we are, there's also no chance I sell one single share before S&P inclusion. That squeeze possibility is real IMO. If we go parabolic from here, I'd be willing to sell it all and wait 3 years for the macro pullback to rebuy.

No stock has ever gone straight up and simply plateaued, right????

What about instead of selling the shares sell LEAPs at the highest possible IV and strike against your shares if you think the stock is going to go down. Keep the premium in cash, invest in something else, buy more Tesla shares or sell puts. I am a noob at options but it's a strategy that I been thinking about.
 
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daniel

Well-Known Member
May 7, 2009
5,190
4,444
Kihei, HI
What about instead of selling the shares sell LEAPs at the highest possible IV and strike against your shares if you think the stock is going to go down. Keep the premium in cash, invest in something else, buy more Tesla shares or sell puts. I am a noob at options but it's a strategy that I been thinking about.

The key phrase there is "... if you think the stock is going to go down." Because what you think the stock is going to do might not be what it does. And options are a notoriously risky instrument. And if there were a foolproof method for making money on the stock market, other folks would have figured it out long ago. Another word for options and day-trading is gambling.
 
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juanmedina

Active Member
Mar 31, 2016
2,486
7,155
SC
The key phrase there is "... if you think the stock is going to go down." Because what you think the stock is going to do might not be what it does. And options are a notoriously risky instrument. And if there were a foolproof method for making money on the stock market, other folks would have figured it out long ago. Another word for options and day-trading is gambling.

Is buying and selling stock gambling? Is selling covered calls gambling?
 

daniel

Well-Known Member
May 7, 2009
5,190
4,444
Kihei, HI
Is buying and selling stock gambling? Is selling covered calls gambling?

Day-trading is gambling, because there's really no way to know what the market will do from one moment to the next. Investing in a company you have good reason to think will grow, and holding for the ling term, always has risk, but the element of gambling is not as large.

Options are far more risky than long-term investing, but can be a part of a calculated strategy to hedge your bets. So whether or not selling covered calls is gambling has a lot to do with how you're doing it. I would not touch options with a ten-foot pole.

There's risk any time you get into the stock market. In hindsight I "lost" a huge amount of money by selling my shares when I did rather than this morning when the price briefly broke 1,900. But at the time there was absolutely no way of knowing if it was at its high and about to drop. And in real terms I made a bundle by selling for about 50 times what I paid. Can't cry about the missed opportunity to sell for 53 times what I paid. And I have no way of knowing whether 1,900 was the high or whether it will hit 2,500.

Any time you buy or sell it's a gamble. If you buy and sell frequently it's a lot of gambling. If you buy and then wait 8 years and then sell, it's a small amount of gambling. Most of my investments are mutual funds that I hold for many years. Mutual funds spread out the risk, and holding for the long term also lowers risk, so I would not call this gambling even though there's always some risk.

Age is another factor. If you're young you may be saving for retirement. As an adult you may be saving for your kids. I'm an old man and have no dependents. If I don't sell my shares they'll have done me no good at all.
 
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daniel

Well-Known Member
May 7, 2009
5,190
4,444
Kihei, HI
you are right. buying mutual funds isn't gambling, it's losing

They provide me enough income to live comfortably in an expensive location, including health insurance and all my other necessities and some frivolities.

In Pushkin's short story The Queen of Spades the friends of the character Hermann the German are always trying to get him to join in their card games. Hermann has a small but comfortable income that allows him a good life. His response to his friends is always "I refuse to risk the necessary in pursuit of the superfluous."

You can get rich gambling in the stock market, or you can get wiped out. Mutual funds will give you a safe return on your money. I choose not to risk the necessary in pursuit of the superfluous. Though I did make a nice little packet selling some stocks that I bought, not as an investment, but just because I liked the company that made my car, and that I never expected to sell.
 

daniel

Well-Known Member
May 7, 2009
5,190
4,444
Kihei, HI
$2,050!?!?! For crying out loud, this is nuts! I imagine the shorts are crying in their beer. I had decided not to sell any more of my shares now that I'm down to what I originally bought (before SCTY converted to TSLA) and about 2/3 of what I had after the Solar-City buy-out. But it seems like it cannot keep going up forever and at some point I'll kick myself if I don't sell some at these ridiculously-high prices before the market comes to its senses and it goes back down. But right now I'm kicking myself for having sold as low as I did.

How high can this thing go before it falls again?
 

ammulder

3P, X ordered
Supporting Member
Apr 11, 2019
1,431
5,405
Philly area
$2,050!?!?! For crying out loud, this is nuts! [...]

How high can this thing go before it falls again?

If sales keep growing 50% per year? I guess it just depends on your time frame. It’s not obvious to me that the fundamentals have improved that much this year, but it does seem like there will be more improvements coming over the next few years... so even if there’s a pull back at some point I expect it too stay upward in the long term. (For what little one guy’s opinion is worth.)
 

daniel

Well-Known Member
May 7, 2009
5,190
4,444
Kihei, HI
If sales keep growing 50% per year? I guess it just depends on your time frame. It’s not obvious to me that the fundamentals have improved that much this year, but it does seem like there will be more improvements coming over the next few years... so even if there’s a pull back at some point I expect it too stay upward in the long term. (For what little one guy’s opinion is worth.)

My totally uneducated half-whacked opinion is that Tesla will continue to grow because it will continue to make the best cars on the planet. I think it will be hugely successful. But I also think that the market has already priced into the stock about the next ten years of growth of the company. And I suspect that the present price is a bubble driven by people who don't have the education to run the numbers.

But I thought that at $1,600 and I'm kicking myself now.
 

ammulder

3P, X ordered
Supporting Member
Apr 11, 2019
1,431
5,405
Philly area
But I also think that the market has already priced into the stock about the next ten years of growth of the company. And I suspect that the present price is a bubble driven by people who don't have the education to run the numbers.

Honestly, I think "the market has priced in [...]" is kind of bunk. Very few analysts or financial gurus have demonstrated much understanding of Tesla's business. Even those that seem to have a grasp of the auto business have generally discounted Energy and FSD, and don't distinguish the impact of working FSD with an attentive driver, from working FSD with a driver who may be able to pay less attention, from "robotaxis" (when to me, these are very distinct stages, each with benefits to TSLA). Certainly nobody is assigning value to the stock from products that don't exist yet, such as a lower-cost car or a van, just to mention the ones Elon called "the obvious," much less anything we don't expect yet (or things like a S/X refresh that could have a substantial impact depending on what they do with price and features but the time frame of which is not well-defined). And I can't say I've actually seen a single analyst who accepts Elon's claim of 50% CAGR through 2030. They may have reasons (can't identify what product would sell in that volume -- because it doesn't exist yet), but still, they can't have priced it in if they don't accept that it's going to happen.

So if the people doing the calculations haven't "priced in" things that we pretty much know are happening in the next 5 (or 10) years, then saying "the marked has priced it in" is suggesting that what, uneducated retail investors are driving the price? Or big institutional investors are just acting on their gut? In which case, their gut is going to keep sending them "this company is amazing" signals every time the delivery numbers go way up, which is just going to keep on happening as Shanghai, Berlin, and Austin ramp.

Honestly, to make the goal of 500K deliveries in 2020 (which they're allegedly on track for), they still need ~320k deliveries. The prior high is 112,000. So the next two quarters should be what, 140k and 180k? 130k and 190k? Whatever they are, they're both going to be pretty mind-blowing improvements over the past record, and this is still in the context of an ongoing pandemic. I can't see them beating their past delivery record by 20%+ in Q3 and "the market" not reacting positively. And then again in Q4. It can't be just "ho-hum, as we expected."

That's not to say it won't be a bit frothy, but if they keep delivering great vehicles and great solar and great grid storage and the numbers just keep going up up up... I can't see the stock just staying level for the next decade.
 
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daniel

Well-Known Member
May 7, 2009
5,190
4,444
Kihei, HI
You may very well be right. I'll reiterate that I don't know beans about the stock market. I do think that so-called "FSD" is one area where the Tesla fanboys are over-optimistic. (I'm a Tesla fanboy on every other aspect of the company. I just don't see them accomplishing what they're promising soon enough to grab the autonomous-car market share.)

My stock-picking record has been abysmal. My only good pick was the one company I just thought would be fun to own because the cars are so great. And when I did sell 1/3 of my holdings the stock shot up another $400.
 
Mar 27, 2016
531
437
Melbourne fl
That's what everyone was saying about property values right up until the crash. And I'll bet that's what they were saying about tulips in Holland in January of 1637.

If you hold the stock until you die you get no benefit from it at all.

Nobody can know what the market will do. It might plunge after battery day or after the split because so many people were bidding it up in anticipation of a rise. Or it might skyrocket. It's gone up fifty-fold since I bought my shares. I could be greedy and wait for a hundred-fold or a thousand-fold. I still have 2/3 of my shares. In fact, IIRC I think I might have the number of shares I bought in the first place. The ones I sold (IIRC) are the number of shares I got when Tesla bought Solar City.

There are definitely people here who understand the market way better than I do. Since I'm not them, I think selling a few shares was a good move. But if it collapses any time soon I may buy back in.

I would be such a disaster as a day trader! I'd be a nervous wreck always wondering if I'd made the right decision, and I'd probably go broke.

Simply put in STOP LOSSES that sell it off before it tanks. I set mine at 15% below my current value. Some people are lucky enough to have 'trailing' stop losses where you can set a % and it stays in effect at the stock increases. Takes away a lot of fear.
 

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