mickificki
Member
At some point the other car makers will finally see the writing on the wall and get serious about electric cars and Tesla will finally face real competition and the stock price will reflect that.
You sound like Bob Lutz...
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At some point the other car makers will finally see the writing on the wall and get serious about electric cars and Tesla will finally face real competition and the stock price will reflect that.
Well duh, nobody knows what the market will do. This thread was started specifically so anyone could offer their best guess. So obviously nothing is "certain" and all statements are based on assumptions. You can't make future predictions without assumptions.You are assuming that when Tesla achieves true autonomy it will be with the current hardware, so that the press of a button uploads it to everyone who pays (or has paid) the price. That might indeed happen. But it is an assumption and we don't know for certain. I personally think it will not be the case. I personally think that the present computer is two generations shy of the needed computing power and that the current sensor suite is inadequate. I also think that the software for it is five to ten years away.
Like any relatively new company that produces such a great product, I expect TSLA to continue to out-perform the market. But also like any company that skyrockets in the years of its early success, the rate of return will eventually settle down. If noting else than because exponential growth is always limited by outside conditions. At some point the other car makers will finally see the writing on the wall and get serious about electric cars and Tesla will finally face real competition and the stock price will reflect that.
Bottom line: Nobody can know what the market will do.
You sound like Bob Lutz...
Ok, got it. Why not just limit Tesla to a certain fraction of your portfolio? Sell it down to 10%, 5% or whatever exposure seems prudent to you.But see, that's the thing. I am never going to put that much money into any single stock issue. If I sell some of my TSLA the money would not go into something that I expect to do better; it would go into something I consider to be less risky, which would be mutual funds or small positions in a variety of bond issues. I didn't buy TSLA because I expected it to go way up. I bought it because I wanted to support electric cars. Its very success has created this unexpected dilemma for this risk-averse investor. (I will not sell all my shares. At the most, I'd sell down to my original investment amount.)
Ok, got it. Why not just limit Tesla to a certain fraction of your portfolio? Sell it down to 10%, 5% or whatever exposure seems prudent to you.
Thanks for sharing your math. You arrive at $8100/sh in 2025. Just to probe a bit, would you be willing to pay as much as $2200 this summer in anticipation of $8100 in 2025? That would be just under 30% annual return. Would that still be acceptable return, or would you start considering other investments? How much would be too much to pay for Tesla right now?
But see, that's the thing. I am never going to put that much money into any single stock issue. If I sell some of my TSLA the money would not go into something that I expect to do better; it would go into something I consider to be less risky, which would be mutual funds or small positions in a variety of bond issues. I didn't buy TSLA because I expected it to go way up. I bought it because I wanted to support electric cars. Its very success has created this unexpected dilemma for this risk-averse investor. (I will not sell all my shares. At the most, I'd sell down to my original investment amount.)
Passive index fund investing is dead. It you look at the excluded 250 stocks, likely that is posting nearly zero appreciation. Their is too much corporate rot out there, that simply get by on inclusion in big index funds and passive investment.
You will always be able to find a few actively-managed funds that beat the indexes. But the funds that beat the indexes this year or this decade will not be the ones that beat the indexes the year or decade before or after. Hindsight is 20-20.
I'm more heavily invested in TSLA, but I've got some of the same dynamics at work. Also worth noting that I've been following the company (primarily) and the stock (secondarily) for 8 years, so I feel like I have an information edge on the analysts.
Anyway, I'm getting close to the point where I can cash out - of my TSLA as well as my job, and go sailing off into the sunset (or something like that).
But then I'm faced with a dilemma. I can cash out and leave everything in cash, but that's not a good approach to living in retirement. So then the question arises - what to invest in after cashing in the TSLA shares. <...snip...>
Investing in individual stocks is always risky because of Murphy's Law. Something always goes wrong. And Tesla doesn't pay dividends and Musk has said it never will, at least for the foreseeable future. So if you ever want to benefit from that investment you have to sell some of it.
It's a very personal decision at what point to cash out and enjoy the money, or diversify your risk, or step away from risk entirely and into something relatively secure that will make you no richer but also won't wipe you out. It's also a personal choice when (if at all) to switch from growth to income. If you're retired with no dependents and no kids you want to leave a fortune to, it makes no sense to hold the shares until you die. BTW, there are corporate bonds paying decent interest. And if you diversify sufficiently your risk is pretty low.
It's like buying a computer: If you wait a year you can get a better computer for less money. But by that reasoning you'd never buy a computer. At some point you just have to decide.
I believe that over the long term Tesla will be successful and continue to grow. But I'm at an age where I'm trying to spend my money and have fun with it, not trying to make it grow. I won't sell it all because I still love what the company is doing.
All very personal decisions.
All very true.
And, because it's hard to eat TSLA stock, or pay property taxes, I've begun experimenting with using the stock to sell covered calls (and cash I hold to sell cash secured puts). My focus is on a dividend scale strategy, with early results indicating 1% / month using TSLA call/put sales seeming to be pretty easy to achieve. It's more work than buy and hold a mutual fund, but I find that 'work' fun, and it appears to reward the effort.
And 12% / year, or heck - even 6% per year, makes for some good living on a portfolio that makes for good living at 4% / year (4% annual withdrawal rate, that would be achieved via sales of TSLA shares each year when it's time to get living money).
We chat more about that over in the Applying Options Strategy "The Wheel" thread (I forget the exact name, and I created it!).
Have you ever looked at HASI? It is a REIT that focuses on RE and sustainable infrastructure assets. Nice dividend yeild.I'm more heavily invested in TSLA, but I've got some of the same dynamics at work. Also worth noting that I've been following the company (primarily) and the stock (secondarily) for 8 years, so I feel like I have an information edge on the analysts.
Anyway, I'm getting close to the point where I can cash out - of my TSLA as well as my job, and go sailing off into the sunset (or something like that).
But then I'm faced with a dilemma. I can cash out and leave everything in cash, but that's not a good approach to living in retirement. So then the question arises - what to invest in after cashing in the TSLA shares. H'mm - I consider every other investment to be of lower quality than TSLA, at least as of today. Therefore, the thing to do is to reinvest in TSLA (or just stay invested in the first place of course).
The one exception I would consider today are 1 or more of the ARK ETFs. Something more biotech focused might provide me some diversification while gaining access to a collection of companies and a field that I consider to be equivalently disruptive to Tesla. And all without needing to do my own research to figure out which ones to be in, and which ones to avoid.
I definitely won't go back to an SP 500 index fund (though I do believe there are good reasons for many investors to be in such a thing). For me though, the problem with the SP 500 is that it's more like the SP 50 with 500 company names on the list. It's become so top heavy that the moves in the index are the result of a small # of companies. If/when TSLA is added to the index, it'll be one of the few companies at the top of the index that moves the index (along with many tech companies).
So if what I want to achieve is a broad tech index, then yeah - that'd be a good place for me to go. But as good as that range of tech companies are, I consider all of them to be of lower quality than Tesla. So why buy the nearly good enough stuff, when you can have the best? (These are all my opinions, from which I base my actual investments and portfolio composition - my financial manager thinks I'm hair on fire crazy )
I would conceded that investing in disruptive technology can face various risks of going after ill-conceived innovations (cough, Nikola), getting hyped up in fads (dot-coms), or getting the timing wrong (3D printers 7 years ago). So it is absolutely necessary to take a truly long-term view (10-15 years) and to do careful analysis of innovation. Another risk is that truly disruptive tech is going to make enemies among threatened incumbents, so disinformation and political attacks are likely challenges. But here, this information distortion is part of what makes the investment so good.Broadly true. I agree with @jhm on this one though - disruptive innovation is under priced by the market, and the old dead "safe" companies are over valued. Of course this is also my opinion about what will continue to be true 10, 20, 50 years from now as well; disruptive innovation companies have always been hard to value as early on, they look a lot like companies in the same field that fail at spectacular rates. It's much easier to value companies when they aren't growing all that fast, and they have 'real' financials with real earnings (what's left over there's no more growth / research to invest in). It's always important to look at financial, but when they are your primary source of evaluation, then TSLA has never been worth investing in (might just now be something to consider) as there's no profits to use in evaluating the company. Sort of like AMZN was
Anyway, if you agree with the premise that disruptive innovators are under valued (as the creators and operators of the ARK ETF's believe), then that's a good place to invest. More broadly, any mutual fund with a focus on finding and investing heavily in disruptive innovators will serve the purpose of gaining exposure to these types of companies.
If you don't agree with the premise that these companies are a path to systematic improvement to more generalized market indexes, then I happen to agree with you that the current winner is as much happenstance as not. In which case I go with something more passive and focus on the fees I'm paying (minimize fees and track the market = beat many professional analysts / active mutual funds).
I would conceded that investing in disruptive technology can face various risks of going after ill-conceived innovations (cough, Nikola), getting hyped up in fads (dot-coms), or getting the timing wrong (3D printers 7 years ago). So it is absolutely necessary to take a truly long-term view (10-15 years) and to do careful analysis of innovation. Another risk is that truly disruptive tech is going to make enemies among threatened incumbents, so disinformation and political attacks are likely challenges. But here, this information distortion is part of what makes the investment so good.
I find it amusing that TSLAQ folks want to hype up NKLA so much. One could invision an EV technology fund that indiscriminately invests in all companies that engage in the technology. I'm not so sure I want to blend NKLA in with my TSLA portfolio. One does well to discriminate between real disruptors and wannabes.
Have you ever looked at HASI? It is a REIT that focuses on RE and sustainable infrastructure assets. Nice dividend yeild.