Sell Tesla?

RandallFlagg

PToneControl said:

RandallFlagg said:

ToneControl said:

RandallFlagg said:

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Is that sustainable, long term? Statistically and according to researched historical data, no it's not.

And is that something you can leave your wife to manage after you've gone?

Your assertion is that it's not possible to successfully invest if you don't remain constantly 100% invested in equities

No, my assertion is that market timing as a strategy for building wealth long term will not be the most lucrative strategy for the overwhelming majority of investors, it's proven in historical data.

Let's assume you are correct, I wasn't fully convinced by our cheerful Canadian friend:
Are you content to be the same as "the majority of investors", and take no active part in your investments?

The people who make real fortunes in investment are above average intelligence people (but not geniuses) who put time and effort into choosing shares in companies at the right time (or use options and futures), not people who put money in managed funds.

What I can't understand is when people say "there's a pandemic, share prices will crash, sell now" which is clearly what experienced investors were doing, but you insist that the best thing is to ride it out and sell nothing. Believe me, if you sell at the top and buy at the bottom, you would be a lot better off, even if you slightly miss the bottom.

I don't need or expect to make a fortune, just enough. I have no plans to let investing become my job, I just want to continue to progress along the steps to financial independence that I am following and reach a point where my invested money will passively generate enough to live on without need for paid employment. There are a few aspects to this including becoming debt free, having a 2-3 year cash buffer, and a plan for what to do with my time. All of those aspects are progressing well, my wife retires at age 52 in April 2022 as soon as she reaches 35 years NI contributions, which coincides with the last mortgage payment and I will follow her 1-3 years after that depending on how long I can stomach the job I am currently in. I'm also looking at taking up a part time job, may be volunteering, rather than launching straight into retirement, doing something far more fulfilling and enjoyable that I don't rely on for income.

As for market timing, yes of course sell at the top buy at the bottom is the ideal but it's impossible to do reliably, consistently, month by month, year in year out. It's been easy to see this year due to a once in a decade catalyst event and it's easy to make money on a big crash rebound like we have seen after the February drop, it won't be so easy to spot going forward and I would say is a far higher risk strategy than holding some carefully selected US stocks in a diversified buy and hold portfolio or having a sensible percentage of a portfolio allocated to a US index.

RandallFlagg

RaymondLin said:

That means my Index Fund now owns a TINY piece of Tesla.

Not yet. The S&P committee have set a date of 21st December but are discussing with investors on how to best incorporate Tesla and may do it in stages as there is an estimated $35BN of Tesla shares needed to be purchased by index tracker funds once they they are in the index, they will also need to sell off some of the rest of the companies in the index to rebalance.

ToneControl

RandallFlagg said:

PToneControl said:

RandallFlagg said:

ToneControl said:

RandallFlagg said:

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Is that sustainable, long term? Statistically and according to researched historical data, no it's not.

And is that something you can leave your wife to manage after you've gone?

Your assertion is that it's not possible to successfully invest if you don't remain constantly 100% invested in equities

No, my assertion is that market timing as a strategy for building wealth long term will not be the most lucrative strategy for the overwhelming majority of investors, it's proven in historical data.

Let's assume you are correct, I wasn't fully convinced by our cheerful Canadian friend:
Are you content to be the same as "the majority of investors", and take no active part in your investments?

The people who make real fortunes in investment are above average intelligence people (but not geniuses) who put time and effort into choosing shares in companies at the right time (or use options and futures), not people who put money in managed funds.

What I can't understand is when people say "there's a pandemic, share prices will crash, sell now" which is clearly what experienced investors were doing, but you insist that the best thing is to ride it out and sell nothing. Believe me, if you sell at the top and buy at the bottom, you would be a lot better off, even if you slightly miss the bottom.

I don't need or expect to make a fortune, just enough. I have no plans to let investing become my job, I just want to continue to progress along the steps to financial independence that I am following and reach a point where my invested money will passively generate enough to live on without need for paid employment. There are a few aspects to this including becoming debt free, having a 2-3 year cash buffer, and a plan for what to do with my time. All of those aspects are progressing well, my wife retires at age 52 in April 2022 as soon as she reaches 35 years NI contributions, which coincides with the last mortgage payment and I will follow her 1-3 years after that depending on how long I can stomach the job I am currently in. I'm also looking at taking up a part time job, may be volunteering, rather than launching straight into retirement, doing something far more fulfilling and enjoyable that I don't rely on for income.

As for market timing, yes of course sell at the top buy at the bottom is the ideal but it's impossible to do reliably, consistently, month by month, year in year out. It's been easy to see this year due to a once in a decade catalyst event and it's easy to make money on a big crash rebound like we have seen after the February drop, it won't be so easy to spot going forward and I would say is a far higher risk strategy than holding some carefully selected US stocks in a diversified buy and hold portfolio or having a sensible percentage of a portfolio allocated to a US index.

nah, my mate has done it consistently every year for 25 years
he's now living as a tax exile, sitting on a pile of cash

RandallFlagg

ToneControl said:

nah, my mate has done it consistently every year for 25 years
he's now living as a tax exile, sitting on a pile of cash

That doesn't mean you will be though does it?

ToneControl

RandallFlagg said:

ToneControl said:

nah, my mate has done it consistently every year for 25 years
he's now living as a tax exile, sitting on a pile of cash

That doesn't mean you will be though does it?

you said it was impossible

BBBlues

A really interesting note put out today by Morgan Stanley, who're now bullish on Tesla after being one of the short voices in the market. In their fundamental analysis they've decomposed the business into 6 segments (3 of which that don't even exist yet!), ran DCF models projected over 10-20 years and come up with new target share price of $540 (up from $360).

The take away quote, "its expensive on what we know, and cheap on what we don't".

RandallFlagg

BBBlues said:

A really interesting note put out today by Morgan Stanley, who're now bullish on Tesla after being one of the short voices in the market. In their fundamental analysis they've decomposed the business into 6 segments (3 of which that don't even exist yet!), ran DCF models projected over 10-20 years and come up with new target share price of $540 (up from $360).

The take away quote, "its expensive on what we know, and cheap on what we don't".

This is the line the Bulls are taking, look beyond EVs and see Tesla as a disruptive energy company with enormous future upside.

Stock price up another 12% today. 

I'm invested via my stake in the Baillie Gifford American fund who own a lot of Tesla stock and, since June this year, they they are also now 2% of Dow Jones Islamic Global Market Titans Index fund I hold.

The Tesla stock price isn't going to be boring for the next month or so that's for sure, I'm expecting some volatility!

RandallFlagg

On another note, I may be coming into a few spare quid in December and I'm thinking of buying into a China fund, this Baillie Gifford fund looks interesting:

https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F000002NAB&tab=13

ToneControl

OK, so I subscribe to an investment educational commentary by Professor Glen Arnold

http://newsletters.advfn.com/deepvalueshares/2020/09/02/james-montier-s-thoughts-on-the-rise-of-the-us-market

here's a quote from a recent one, called "James Montier’s thoughts on the rise of the US market

PUBLISHED:  02 Sep 2020 "

Montier thinks the US equity market has moved into “absurd” territory. It is close to its highest price ever relative to fundamentals such as earnings at exactly the time that it is facing one of the worst economic downturns. It is just not allowing for the possibility of there being a downside – everything is rosy – the market is priced for a perfect business future. The odds of perfection being attained are not good.

lots more to read, and to finish

Regarding my portfolio, my solution is to hold half my portfolio in cash and to purchase put options on the Dow Jones. The half of my portfolio invested in companies are in shares already priced low and the companies are likely to survive a recession in an good state ...

I expect to use my cash to pick up plenty of UK bargains after the US has led the worlds’ equity markets downward.

I tell you this stuff because when my pension funds dropped 50% in 2008, I felt very sick. I would not like anyone to have that happen.

RandallFlagg

ToneControl said:

I tell you this stuff because when my pension funds dropped 50% in 2008, I felt very sick. I would not like anyone to have that happen.

After it dropped 50% what did you do? and what happened to the fund it was invested in?

All funds holding stocks/equities went down up to 50% in the 2008 crash but the majority recovered in 12-24 months.

I was down £70K earlier this year but it's all back now, plus.

ToneControl

RandallFlagg said:

ToneControl said:

I tell you this stuff because when my pension funds dropped 50% in 2008, I felt very sick. I would not like anyone to have that happen.

After it dropped 50% what did you do? and what happened to the fund it was invested in?

All funds holding stocks/equities went down up to 50% in the 2008 crash but the majority recovered in 12-24 months.

I was down £70K earlier this year but it's all back now, plus.

what I'm trying to say is that there is no guarantee that it will recover again
your favourite Canadian thinks that the market "must" go up again. Why is 

One theory is that the US is becoming "Japanified"
This is a widely-held belief

https://seekingalpha.com/article/4375527-japanification-of-united-states-is-complete
https://www.bloomberg.com/news/articles/2020-03-12/summers-says-u-s-economy-now-confronts-japanification
https://www.capitalgroup.com/institutional/insights/articles/japanification.html
https://www.marketwatch.com/story/heres-what-a-japanification-of-the-us-would-look-like-2019-12-09

etc

so
take a look at this chart
The Nikkei peaked in 1990 at 39k
It gradually went down to below 8k in 2004, that's more than an 80% drop
now it's near 26k
So that's a 30 year wait to lose only 35% of your money
No gains, no averaging up

Tell me why that "can't happen" in the US

RandallFlagg

ToneControl said:

RandallFlagg said:

ToneControl said:

I tell you this stuff because when my pension funds dropped 50% in 2008, I felt very sick. I would not like anyone to have that happen.

After it dropped 50% what did you do? and what happened to the fund it was invested in?

All funds holding stocks/equities went down up to 50% in the 2008 crash but the majority recovered in 12-24 months.

I was down £70K earlier this year but it's all back now, plus.

what I'm trying to say is that there is no guarantee that it will recover again
your favourite Canadian thinks that the market "must" go up again. Why is 

One theory is that the US is becoming "Japanified"
This is a widely-held belief

https://seekingalpha.com/article/4375527-japanification-of-united-states-is-complete
https://www.bloomberg.com/news/articles/2020-03-12/summers-says-u-s-economy-now-confronts-japanification
https://www.capitalgroup.com/institutional/insights/articles/japanification.html
https://www.marketwatch.com/story/heres-what-a-japanification-of-the-us-would-look-like-2019-12-09

etc

so
take a look at this chart
The Nikkei peaked in 1990 at 39k
It gradually went down to below 8k in 2004, that's more than an 80% drop
now it's near 26k
So that's a 30 year wait to lose only 35% of your money
No gains, no averaging up

Tell me why that "can't happen" in the US

Guarantee? You invest in stocks and shares and expect guarantees? There are none. Don't you read the small print? 

Sounds to me like you bottled it and cashed out in the dip in 2008 and now live in fear. Millions and millions of people were invested in 2008 in mutual funds, as was I, and as I keep saying when the market crashes the best course of action is to do nothing and leave your portfolio alone, keep paying in regularly and get the benefit of dollar cost averaging.

Of course the US market can fall into slow decline but so can any market, anywhere. You have to take risk but being diversified in different sectors and markets helps limit the risk. It's not rocket surgery. It just adds to Ben Felix's assertion that investing in the Global Index is the best strategy.

Its not quite the way I invest but I am in 2 global funds, 1 small holding in a US only fund that holds 40 companies and a large chunk in UK small companies fund that holds about 50 companies. The global funds hold a sizeable percentage of US stocks as that's how the world market is shaped.

You clearly take a different path and strategy. That's your choice. I'm perfectly comfortable with mine, it's been road tested by millions of people worldwide.

ToneControl

https://seekingalpha.com/article/205192-learning-from-nikkei-monthly-moving-averages

ToneControl

RandallFlagg

BBBlues

In more recent months there seems to be a "rush to tech" as the safe haven, rather than the usual dash for cash (bond markets) as we've seen in the past during uncertain times (although this is still the case to a pretty high degree, also with gold markets). It's almost like the bet on emerging tech is being driven by future profits being so far away than it doesn't particularly matter that actual profits may be poor over the next 5 years... analysts are so keen to price in potential for 10yr+ (finding the next Apple, Microsoft, Amazon etc.) that tech prices run away from any form of EBIT and traditional quant/fundamental analysis. I guess the extra benefit of this rush to tech, is that when the market picks up again you don't have to then dump it like you'd do with value assets.

Another one to watch which is having a comeback based mainly on speculation is bitcoin. I think Paypal are now accepting transactions with bitcoin, as well as some other apps. The derivatives market for bitcoin is also growing.

ToneControl

https://morningporridge.com/the-morning-porridge/f/blain’s-morning-porridge-–-nov-25-2020-rationally-irrational

crunchman

https://www.standard.co.uk/business/why-elon-musk-won-t-be-the-second-richest-man-in-the-world-for-long-b79216.html

RandallFlagg

crunchman said:

https://www.standard.co.uk/business/why-elon-musk-won-t-be-the-second-richest-man-in-the-world-for-long-b79216.html

I don't disagree with some of the sentiment in that report but with regards to this point:

"From a practical point of view, Tesla does not have enough European presence which means they are likely to run into all sorts of problems with transporting their wares and with tariffs.Moreover, if you have an accident in a BMW, the dealership up the road can get you the replacement parts you need very quickly. It might take Tesla months."

The author appears to have ignored the fact that construction of the Tesla Berlin Gigactory is steaming ahead at an incredibly  fast rate and it will service European production:

crunchman

I think a lot of the share price is based on their battery technology rather than the cars.

That could make it vulnerable if there is a move towards hydrogen fuel cells, or alternative forms of energy storage for the grid.

http://greenbarrel.com/2020/07/30/liquid-air-energy-storage/

That project won't need any lithium or cobalt, which are going to be scarce and expensive.  It will last longer than batteries as well.  I'm sure batteries on the grid will last longer than the 2 years that phone batteries do, but they will still need regular replacement.  Recyling them is unlikely to be simple or cheap.

On a system like that one, you might need to replace the bearings on the turbines, but apart from that, there is no reason that the parts couldn't last 5 times as long as batteries.

 

With hindsight, I wish I'd sold a couple of expensive guitars at the beginning of the year and bought Tesla shares.  There is no way I would buy in at the current price though, and I'd be cashing out if I did have some.