TSLA Market Action: 2018 Investor Roundtable

[Tslynk67]

It is really annoying having to go in the right lane for many kilometers.

Not sure I ever went in the right, always the left. I have extensive experience with the roadworks north of Hamburg - I think there's something like 50kms worth there...

 

[22522]

A model 3 is a really good car.

 

[CHGolferJim]

Did Ron Baron just mention TSLA will triple in a few years, and 20x in 10-12 years?

The context suggests Baron was talking about sales. 50% growth over 3 years = 3.3x

 

[EVNow]

Per spouse. Also:
The Mega Backdoor Roth is similar to the Backdoor Roth but it allows you to potentially contribute an extra $36,000 to your Roth IRA every year. Here’s how it works:

1. In addition to your normal pre-tax 401(k) contributions, make additional after-tax contributions
2. Perform an in-service withdrawal and move your pre-tax contributions to a Traditional IRA and the after-tax contributions to a Roth IRA

Is the Mega Backdoor Roth IRA still possible with the new tax legislation? Verdict: Still Valid! This loophole has also survived!

Yes - but this is dependent on your 401k. My 401k doesn't allow this.

 

[Electroman]

A model 3 is a really good car.

You think?

I have been scouring this forum for years and haven’t seen anyone say that.

 

[EVNow]

It's an exception mechanism that is very useful I believe, and it was nice to read @scaesare's anecdote and it's nice to see a CEO (who tries to be) grounded in reality.

I agree - but this can't be the only way Tesla is communicating with people on social media. You need a regular, scalable, reliable mechanism as well.

For eg. with the new software - the podcast episodes no longer show the dates (always just dashes). How do I get that fixed ? Tweeting at Musk has just a 1/10k chance of being looked at.

 

[jbih]

The context suggests Baron was talking about sales. 50% growth over 3 years = 3.3x

Please bring me down to earth if you have objections to my reasoning, but I see at least 80 % growth for revenue from cars alone, then there is a growing margin, and Tesla Energy, and (maybe, maybe not) self driving, and ... If market capitalization approximately linearly grows with revenue, the stock price might double each year which is of course 30x in five years or a stock price of 10000. (I already posted something similar in Super Bulls Only, but I think it is exciting enough to give it more visibility here...)

 

[dmunjal]

The same way you did it to pay off the WW2 debt. Raise the highest marginal rates to 90% and beef up the inheritance and capital gains taxes.

This takes a level of political will that is not seen outside emergency situations.

I've pointed this out many times here. Those high marginal rates had no effect on tax revenues as a percent of GDP. Also, federal spending was drastically reduced after the war. I don't see this happening this time.

 

[dmunjal]

That's when you "pay off" the debt with newly-printed non-interest-bearing money. Which is why we should be doing that already, frankly. The only economic effect is that the government stops paying interest.

The interest payments are primarily a gift from the government to rich people who want risk-free assets which pay interest. It's very nice of our government to be so generous and give so much free money to rich people, but it's completely unnecessary, economically speaking. (It's sort of helpful to have some interest-bearing government debt to give the Federal Reserve an extra lever to control interest rates with, but there are other ways to do that; they have bigger levers, like the Federal Funds rate.)

For anyone gibbering about Greece, reminder, *Greece can't print euros*. (Well... not without Germany freaking out. Technically they do have printing presses.) They didn't have these problems when they were on the drachma. (They had different problems, which were much less problematic.)

And yes, there is a confidence issue. Replacing the interest-bearing money with non-interest-bearing money must be done by a government which looks like it knows what it's doing -- an FDR or Wilson or Clinton (or arguably even Reagan) government, not a Trump government.

Maybe we should have done this in 2008 and avoided all the problems associated with the Great Recession?

Maybe we should do this now to avoid raising taxes?

I still believe in TANSTAFFL.

Mod: please move these posts to the macro thread.

 

[Buckminster]

24 hrs since an Elon post.. Is it normal to have this level of withdrawal? I'm gonna need to take up smoking if he keeps this up!

 

[EVNow]

Totally depends upon your risk tolerance. Decide on your long term/permanent allocation to TSLA. Maybe that's 40% LEAPs and 60% shares. The shares become your dry powder on large dips. You sell the shares and buy more LEAPs or shorter term calls. The important thing is that you increase leverage on dips and come out ahead on recoveries, but you don't give up the long term compounding effect of the buy and hold strategy. The one thing you must not do is to buy calls that do not allow enough time for recovery where you get burned. You certainly don't need LEAPs for recoveries from dips, but you also don't want weeklies. The sweet spot seems to be about 2-3 months. With this type of an approach, you have to be able to tolerate your account going way down on the larger dips. Mine has dropped over 50% several times, but then you end up above where you started after the recovery. It's tempting to try to sell out to avoid the drops, but I think that is nearly impossible to get right consistently. Plus, what happens when you sold out and were wrong and the stock runs away from you. That does not happen with this approach, but you do have to be able to tolerate your account getting drained in a leveraged fashion when TSLA drops 30%. It gets quite ugly on those dips.

That's very useful. Thx.

I don't mind taking risks with my investments - I've seen the calls go down 75% last month. Thankfully I always had dry powder - so could continue to buy bringing my avg cost down

A modified strategy could be
- Have A% in stock, long term. For me this is the stock I bought in 2011. I may never sell this - will be inherited or gifted.
- Have B% in stock, short term. This is used for "swing trading". On dips buy medium term calls for leverage. Once the price comes back on track, convert back to stock. Apart from dips this can also be used before earnings to leverage during expected bull run.
- Have C% in LEAPS. These to be rolled - may be after a year to get into long term cap gains. ( note : Long term cap gains may not work if we are doing anything with the short term within 60 days - 30 days before or after - resulting in wash sales. 60 days is a long time to not do anything with TSLA given quarterly earnings, ever present dips etc. Prudent to assume short term gains).

Currently I have A in place. I've medium term B calls - which I could roll to stock + C.

 

[capster]

That's a good point, however what's missing is the average miles/year for those vehicles.
If 1 US ICE vehicle doing 40K miles/year is displaced with 1 EV, while on it's place come 2 Indian vehicles doing 10K/year each, then the result is still less oil consumption.
Furthermore, there are already reports about Tesla taxis beating ICE vehicles on purely economic basis, further leading to replacement of ICE cars traveling a lot of miles/year.

You’re way off on US average annual vehicle miles traveled. It’s 13,476.

Average Annual Miles per Driver by Age Group

 

[EVMeister]

Please bring me down to earth if you have objections to my reasoning, but I see at least 80 % growth for revenue from cars alone, then there is a growing margin, and Tesla Energy, and (maybe, maybe not) self driving, and ... If market capitalization approximately linearly grows with revenue, the stock price might double each year which is of course 30x in five years or a stock price of 10000. (I already posted something similar in Super Bulls Only, but I think it is exciting enough to give it more visibility here...)

I have no counter points to this and of course don't have a crystal ball (if only). My gut feeling is that the stock price won't rise at quite that pace. I'd be pleasantly surprised if the SP was even half of that in 5 years. I'd love to be wrong and could well be, but I'm trying to temper my expectations.

 

[X Fan]

I've pointed this out many times here. Those high marginal rates had no effect on tax revenues as a percent of GDP. Also, federal spending was drastically reduced after the war. I don't see this happening this time.

Some other articles of note:
The Myth of the 90 Percent Tax Rate

https://files.taxfoundation.org/legacy/docs/fed_individual_rate_history_adjusted.pdf

The Good Ol' Days: When Tax Rates Were 90 Percent | Andrew Syrios

The 90% Tax Rate Myth

FWIW: most folks don’t understand that the effective tax rate hasn’t changed much since the early days. As an example, “ In 1944, you could deduct business meals, all business travel, all forms of interest payments, and much more. You could even deduct spousal travel expenses on a business trip! (Why travel alone?) Companies could also "loan" or "provide" almost anything to an employee, from an apartment to standard benefits. It was possible to shelter tens of thousands of dollars from taxable income. Three-martini lunches and expense accounts were important realities, skewing tax calculations”.

USA has as much of a spending problem than a revenue issue. Having said that, I would in favor of enacting a VAT coupled with a spend reduction.

 

[lklundin]

That was a bailout by the EU. Who will bail out the US? We are TBTF.

Well, POTUS and others in the WH are pretty close with the head of state of Russia. Maybe they will work something out, POTUS is after all author of the book: 'Trump: The Art of the Deal'...

 

[AZRI11]

Good analysis, so far. I'm considering re-roofing our house with Tesla Energy (TE) tiles so, here are my thoughts currently.

Does supporting documentation exist that ranks the cost of materials (composite shingles + underlayment + fasteners + solar panels + mounting hardware) vs the cost of solar roof (tiles + cabling + inverter hardware + grid interconnect hardware)? All this is moot if the supporting building structure can't carry the additional weight at the roof (older 2x4 vs newer 2x10 rafters).

As I see it, the labor costs between the two choices are likely radically different. A good old-school roofing crew can install traditional roofing in a day (two, if re-roofing), while the solar roof option installation takes considerably longer, due to interconnecting tile cables, collector-cable routing and fastening, electrical hardware installation, testing, etc. Both options require County building inspections, but I suspect the traditional roof inspection fees would be much lower due to inexperience with new technology vs proven repetative methodologies.

Then consider that TE must first acquire Underwriters Laboratory (UL) certification ($$$$ + time).

I'd love to hear this discussion, but maybe it should be on a different thread (TSLA market direction WILL be impacted so...).

As others have said - open fire!

[oops, I think our moderator has *spoken* while I was composing this. Sorry ]

U.L. certification will not be a problem. I used to go on "rounds" with a U.L. field rep when taking samples from a wire & cable factory I was employed at, we did field testing together. It will cost money, but they are easy to work with. Certification secured.

 

[dmunjal]

Well, POTUS and others in the WH are pretty close with the head of state of Russia. Maybe they will work something out, POTUS is after all author of the book: 'Trump: The Art of the Deal'...

Do you really believe Russia has enough money to bail the US out?

Their GDP is less than the state of Texas.

 

[nursebee]

Discussions here really get wackadoodle sometimes

 

[Carl Raymond]

What would be the mechanism for that to happen "quickly"? Oil is a huge industry, with many of its customers being "inflexible": i.e. they cannot just suddenly stop buying oil, it's used for transportation and heating, which doesn't stop. There's also a lot of new oil demand coming from developing/emerging countries, which more than substitutes for the (slow) inroads renewables are making in richer economies.

Internal combustion engine demand might collapse, even without enough competing supply, because purchases of new cars can be deferred almost indefinitely. This has also happened in the past: by early 2009 new car sales halved (!), while obviously people still drove to work.

Crude oil production on the other hand showed only a minor blip: people were still forced to buy gas.

So I'm genuinely curious what specific mechanisms you can see for a demand shock in oil consumption that would create a transient on oil stock prices.

An overnight release of Full Self Driving in about 4 years would have a sudden impact. It could be like doing a 3x on the EV population. But how far can a sudden glut drop the price?

 

[22522]

You think?

I have been scouring this forum for years and haven’t seen anyone say that.

Lets see if I can add anything after an 1760 mile trip in a silver dual motor...

The reason this is here is that others will discover Tesla/this as they take test rides from friends over thanksgiving.

1) autopilot really is safer
2) superchargers are spaced so you can charge on the lower half of the battery for fast charging. No top off needed.
3) bug reports are spoken and bring context from the car. My favorite is “Car moves right into merge zones where other cars enter the highway”. Wide lane control positioning should be tied to ‘Mad Max’ mode. Holding offset off the left lane markers is the polite behavior I would like to see in doormat mode.

The service centers know how to make wheels round. Smooth as if riding on a billiard table.

The car is really good. None better in existence at this time. People who drive it this thanksgiving may notice.