Isn’t the story very different, one is a diversified investment (just one asset class but still). The variance between that and a single stock bet is huge. (And still I personally don’t think most people can really handle being 100% invested in equities and might not take a proper down cycle that well)
Honestly it’s great this bet turned out well for you (similarly to the people who had good runs on crypto or other meme stocks).
But we also need to be realistic and keep in mind that it isn’t a rational investment strategy, it’s a gamble. If that’s your path to FIRE and it works out, that’s great, but we’re not alone on this forum and we have impact on others as well, FOMO can well lead other to life changing losses (doubling down on a bad bet) as equally (or more?) as life changing gains.
If people truly want to achieve FI(RE) with high likelyhood (rather than rely on luck), slow and steady will win (but yes it’s boring and won’t bring the nice dopamine)
Anyway, good job winning the stock picking lottery, hope you’ll figure out your path forward!
Yes, I’m aware of that. That’s why I have mixed feelings about sharing. I don’t want to encourage anyone, don’t want to set an example, I’m not saying this was a smart strategy. If Tesla reaches its goal, for which this valuation is a reflection of, it will be a different story. So far I think I’m satisfied with the rate of their progress.
What I liked with your share it’s the human behind it
You were convinced about your strategy and you wanted to set up maybe a bit of “gamble” on your investment road, who are we to judge or try to convinced you not to do it ? No one.
If I had the knowledge and maybe a better situation back in may 2020, I would have opened an IB account and invest in VT. However, I was a terrible newbie back then and I wanted to try the road investement with a robo-advisor. After this experiment, I’ve decided to open an IB account and to go in a DIY investment with VT. Did I regret not to do it before ? Yes. Would I did it ? No, because of lack of knowledge. Now I set up a personnal goal to have at least 100k invested in VT before trying to pick some stocks or another ETF. Of course, I’m always asking myself “why should I wait ?” but then I’m looking about myself and my current situation to have answer.
In your case, you believe that TESLA could go up and up and you don’t want to sold your gains. If you are confortable with that, just keep your money invested in TESLA, maybe in 5 years you will be wealthier
I once owned tesla shares bought for 175usd on a total of 5000usd. I was owning etf for 20x the amount and not worry about it.
I was not comfortable with it. I read many articles love their products but did not like the valuation of tesla. It was starting to disturb my sleep depending on the news I was reading.
This kind of tweet from Musk could have a crazy impact on me.
Will you let yourself and your investments get distracted (or dictated) by a couple of naysayers on an internet forum? Now that would be a problem - not your sharing in the first place.
VT is not only much more diversified.
It’s also backed by much more “substance” in terms of earnings.
I can spend 1100 CHF to buy stock that amounts to 60 CHF in a company’s earnings.
And receive a brand-new high-quality pyjama every year.
I can also spend them to buy one share of TSLA, that will have 1/10 these earnings.
And continue to be diluted at a rapid pace in the coming years.
Sure, growth prospects for electric vehicles may admittedly be higher than for luxury night- and nightwear. Or conventional combustion engine cars. But with TSLA a lot of future hopes and growth is priced into the stock.
Using another a different metric, Tesla’s sold half a million cars, whereas its 5 biggest competitors sold 28 million. Yet TSLA is valued about the size of these five competitors combined. Who are also investing in, developing and marketing electric cars.
Therefore it strikes me as prudent not to bet everything on the one horse that costs 20, 30 or 40 times as much as its peers.
Apple introduced the iPhone in early 2007. Their iPhone sales peaked in 2015 (though they’ve not only not increased their selling prices considerable but also steadily increased their revenue and earnings from App Store sales and other services since then).
During that period, Apple’s share price increased approximately tenfold. Their Price/Earnings ratio however barely surpassed 50 during that period. And even that was considered was and is considered very high. It dropped to as low as about - actually slightly below - a P/E ratio of 10 in 2013.
Tesla’s, in comparison has dropped from over 1000 to 400.
Its competitors are around 10 or 20.
I am curious (and as a stockholder would ask myself) how that disparity is going to be reconciled.
Keeping a cool head doesn’t mean you should do nothing.
Or just keep holding on to what you’ve currently got.
But in 2007 Apple was not exactly in the same position as Tesla. They had iPod, iMac and other products and a longer history behind them. They had an established position in consumer electronics.
If you only look at what Tesla can deliver with current 4 factories, if each can make 1 million cars per year within the next 3 years, and each car earns $10’000, that means $40 billion in earnings, which brings P/E down to 30 at current price.
So which of the incumbents would you have recommended to invest in 2007 instead of Apple? Nokia, Motorola, Siemens, Ericsson?
I like that you shared, thanks! Kudos for you for keeping up and not selling.
I last bought Tesla shares when they were 140 USD (pre-split!), sold them around 260, 4 days later, it was a helluva trade at that time, pulling 80%+ in a week… looking back, those 26 USD shares (post-split) are now at 1200+… oh well
I was contemplating to buy when they almost went bankrupt 2 yrs ago with the money I wanted to throw at a Model3, but I ended up doing neither (unfortunately).
To be honest, TSLA’s valuation made no sense then, doesn’t even remotely make sense now. Everything is off the charts but the momentum and redditers keep it high. The “Hertz deal” brings about $1bn extra profit to Tesla, while they scored the multitude of this in capitalization the next days.
At this point (cause I so want to live in Thalwil/Horgen :D) I would probably cash out a good chunk of the money. If you don’t want to spend money on property, just set a conveniently low stop loss order and go with the flow until it flies.
That Lunatic is the reason that Tesla (and Paypal, and SolarCity, and SpaceX) is and has been a winning bet all this time. I sometimes don’t believe him, he does overpromise and underdeliver in a consistent fashion, but I wouldn’t bet against Elon for the life of me.
Would you bet on the life of Elon, then? Nobody is immortal, if valuations depend deeply on him running the ship, then they could fall tomorrow as he chokes on a bit of food or gets run over by a truck. Not saying he’s likely to die in any near future but life insurances exist precisely because we are not able to predict when a specific individual is going to meet their final end.
You could say the same about BRK & Buffett. Or Apple & Jobs. Jobs is long dead, yet Apple is still reaping the benefits of the things he put in motion. Elon is a wildcard, I really didn’t like his latest Twitter poll and I brace for a shitfest on the stock market tomorrow, probably over 10% drops.
But that’s because the stock market overreacts on each news and overshoots the true impact, then it corrects itself. So this recent bump in price, nothing fundamental has changed, yes. But as long as I’m confident this stock can still double in the next 10 years, I stay the course.
One thing to add about the twitter poll. Elon has 170m shares and sth like 50m options. Since he has no money, he would have to borrow (using his shares as collateral) to execute these options. That would mean leveraging himself. Not even sure if anyone would take the risk and lend him multiple billions of dollars. And if the options expire by the end of the year, then his only option might be to sell them. And he may use this to spin the whole event into a debate on unrealized gains tax, and seriously rock the boat. I think this is stepping on thin ice, it’s really hard to tell which way the public discussion goes. The socialist may think that he succumbed under pressure, so it pays to complain about the rich not paying their taxes. Yeah, I’m not happy about it, but let’s see how it goes. So far the history has taught me there is always more FUD than real reason for concern.
I wouldn’t say just that - but what I rather meant is that I wouldn’t put a significant amount of money shorting and of his businesses (well, it’s only Tesla that’s available now).
Chances are, that Tesla is probably quicker to reach 3k (CW’s price target) than the other way around to 400-500 USD (which would still be too high for my taste).
So far they are on track to make, give or take, a 1 million cars in 2021. 4 million cars is four times that. If we assume every doubling in earnings will halve their current P/E ratio, that would lower their P/E from 400 to about 100, wouldn’t it? That’s still very high. And it remains to be seen if these margins are sustainable.
None. Nokia, Motorola, Siemens and Ericsson were making solid phones back then.
Apple was making a handheld computer and internet device - unrivaled by everyone except Google.
Other car manufacturers.
Cars drive and transport goods and people.
…that doesn’t earn any money, you mean?
Well, except the little they make on cars…
Musk had little to do with PayPal’s success - though he managed to cash in on it even after they quickly ousted him. SolarCity hasn’t and - within Tesla - doesn’t make money. And SpaceX… honestly, I don’t know enough about SpaceX to comment.
It just did on the purported Hertz deal.
Well, then you’ve made your decision, haven’t you?
I fully agree with the premise, by the way. I absolutely think can double within the next 10 years. No less than GME or AMC could. On the other hand, I’m no less confident that it can lose 80% of its value in that time.
“ …ordinary retail investors and day traders account for a large part of [Tesla’s] gains, with most professional money managers turned off by the cost of the stock relative to its profits….
…
… some fund managers see Tesla as the “original” meme stock, thanks to the fervent belief of its investors in Musk’s plans to revolutionise several industries beyond carmaking and even pioneer commercial space travel.”
The article implies the price of this stock is not being driven by professional investment funds like most stocks, but by social media similar to GameStop or Bitcoin. If the analysis is correct it will be interesting to see how it turns out.
Would it suggest that even if Tesla has bad results, the downside impact on the price may be limited for as long as Musk’s fans believe in him? Does Tesla stock become a kind of store of value for the foreseeable future - like Bitcoin with benefits? In which case Bojack’s downside may even be limited. Regardless he has played this trade very well so far, well done again
By the way, a person who buys a new $1’200 iPhone every two years, pays $50 x 24 months. A person who buys a new $48’000 car every five years, pays $800 x 60 months. From what I was able to find online, global annual smartphone revenue is $400 billion, and car sales over $2’000 billion. So obviously, car market is bigger.
Margins are small, but that applies to smartphones too, if you exclude the iPhone, right?
No it wouldn’t. Current investments will help up the production and the margins in the future. That’s why I calculate with profit per car and not just extrapolate the current EPS.
Guess what. Toyota, Ford, GM are making solid ICE cars. Tesla is making a battery-powered low-upkeep low-maintenance vehicle, that will be capable of self driving. If you don’t see how this changes the equation then it’s going to be difficult to understand Tesla’s valuation, just like for some people a “phone” that’s not just for calling didn’t make sense back then.
You think Toyota can just decide to start producing EVs and the natural resources, supply chain, know-how, will magically arrange themselves? How about not being able to make that much money off spare parts anymore? How about the redundancy of dealerships if you can just order the car online and don’t need to bring it in regularly for service? How about needing to scrap existing production lines for old cars that nobody wants to buy anymore?
I think it’s already happening, people don’t want to buy ICE cars. They wait until EVs become available.
that’s why Tesla is not a car manufacturing business.
There’s 2 values in Tesla
the neural network that is learning self driving. Reaching from 95% to 96% is as hard as reaching to 95% was alone, and the scale of improvement is logarithmic. They might be around 97% and the acceptable SAE3 probably starts at 99% or better, so still way to go. Others are pretty much nowhere in terms of engineering or miles driven - or even connectivity to their own cars.
battery tech, hence my statement before that Tesla is an energy company. Energy as in a holistic approach on how to decarbonize. Hot topic, good for the earth, good source of income for Tesla (CO2 credits, government subsidies). Every patent open sourced, I guess minus all the battery tech that everyone is working on. Plus they have this at scale, others are just building EV factories. VW just figured out they need to be a software house to own their cars’ control plane. Ridiculous.
Tesla itself makes lousy cars (Model3/Y is impossible to repair a single dent without replacing half of the chassis) that can not drive themselves reliably despite years of boasting the opposite, the paint job is a joke, the panel gaps are ridiculous, the cars are otherwise quite loud in the wind. What they do well is the engine, the battery tech and the in-car software that noone else does properly. A pure blue ocean, like the iPhone was in 2007. It was a lousy phone, but people were willing to buy it regardless for its other properties.
Just a quick note to say that I mostly agree with that. I was mostly just trying to point out that if weconsider that a factor helps our gains, it’s also good to understand what could affect its effectiveness and what would happen if that factor stopped working.
I find it quite amazing and amusing how someone could go so much against the grain and prevalent investment principles (and advice) held on this forum. And then come out on top like this.
I also have got to admire the protagonist’s and sheer equine balls of steel in doing so.
Now, I can somehow understand speculation for thrills. Stock trading as an intellectual challenge. Or even YOLOing what you have on that one rocket that will, *brrrr*, take you to the moon .
But…
You have, by your own admission and assessment, achieved financial independence and can afford early retirement. That’s a financial life goal that you’ve reached there.
Betting - or in your case leaving - such life-changing investable wealth, in such preposterously expensive a single meme stock? That even you yourself call…
…a “gamble”?
That’s just nuts.
Again, I get somehow get wanting to continue to “play this game” on one’s favourite stock. At least the “way-past” part of of your wealth. I can also understand the feeling or urge to “adjust” or downright change one’s goals in life. Either by disregarding them once they’ve been achieved or striving for something even higher or farther away.
But doing so with what basically amounts to your (early) "retirement savings”. That you set yourself as a goal to have? Rather than investing them in a reasonably diversified fund such as VT instead?
I am not quite sure what you’re pursuing or seeking there. Is it greed? The pursuit of more and more money? Seeking (further) confirmation for your theory or gamble? Just buying into the meme?
It’s reckless, IMO.
(Maybe it’s just my age and own investment history. How I’ve seen more than one of my own individual stock investments falling from top of the world to zero. Also, yes, I realise how this post may be, quite literally, “uncalled for” and not call for or deserve a reply)
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and sheer equine balls of steel in doing so.
that will, *brrrr*, take you to the moon 
.