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An easy way to pay for your new Tesla... buy stock

An easy way to pay for your new Tesla... buy stock

The stock dropped yesterday for no apparent reason. Now is the time to buy.
There is an inordinate number of people 'shorting' the stock* and when Tesla announces deliveries and production numbers the stock will jump. This will cause what is called a 'short-squeeze' and the stock will rise further. Then we'll get the subliminal celebrity-actual-daily-driver endorsements (like the Prius did).
I think we will easily break $40-42 (up $7) by end of January, $46-50 range by summer and once Model X starts getting reviews the sky's the limit.
I plan to buy enough stock to allow me to pay for the car in full within the first year of owning the vehicle. Now that's what I call car of the year!

* Clearly they haven't actually driven the car...

GoTeslaChicago | 14 December, 2012

Nothing is easy. But if you are patient, and have a longer term horizon, it should work out.

stevenmaifert | 14 December, 2012

If the President gets his proposed increase in the capital gains tax, it may take a little longer.

noel.smyth | 14 December, 2012

same strategy here - but a longer term view.

lph | 14 December, 2012

Same here too.

Gator | 14 December, 2012

Elections have consequences. This means all of our taxes are going up. So factor this into the equation. As mentioned, short-term cap gains and dividends are going to get hammered. Payroll tax increase as well. The regime is now eying ways to tax our 401ks. Best bet is to get the low rate loan at PenFed and find ways to survive these upcoming tax increases.

My fear is that the dems will force Tesla to hire Union workers. Then I would dump the stock asap.

KevinR.co.us | 14 December, 2012

@Gator I don't think your fears are supported by the facts (unless your a FOX news viewer). I think Tesla is a good bet in the long run & I am invested. The stock will, however, be a bumpy ride. I anticipate the short squeeze will be followed by profit taking. I also supect there will be some quality control issues to fix after the 2012 delivery push is over.

Mel. | 14 December, 2012

Kevin, could you tell us what the quality control issues are? I believe , and that is only by reading this forum, that Tesla has done a superb job of quality control. Only issues reported appear to be minor and fixed immediately.

KevinR.co.us | 14 December, 2012

Mel- I don't have any insight into quality control issues (other than the same forum we both read). This is new technology with a rapid ramp up in production (I get my car in about 10 days). Minor stuff caught & corrected at a lower production rate improves the car. I consider myself a beta tester, but not all of us see it that way. I have no worries about Tesla & the customer service. I do think in January you will see an accumulation of small issues that Tesla fixes post-delivery. The benefit of the ramped up production and delivery will likely have a PR cost in a bunch of articles on small issues in the investor articles. Long term very good. Next year or so bumpy in my opinion.

Captain_Kong | 14 December, 2012

I'm both a shareholder and a reservation holder of MS. I've invested approx. one MS equivalent into Tesla stocks, and so far my "savings" on the car is around 15% : )

I'm planning to continue to hold Tesla stocks after I take delivery of my MS.

Just test drove the MS yesterday (a PS85), there is nothing quite like it, it's AWESOME driving around in almost complete silence with the accleration of a M5 / E63 and in a car which weights as much as a RR! And the interior fit and finishing is excellent (certainly on par with BMW and Mercedes in the same category) and zen-like. I'm gladlly funding the development of MS and MX.

Go TSLA!!!

P.S. to the Tesla marketing folks reading this email, my X'mas wish is to get my P85 RHD very much sooner than later, and please please re-consider having electrical folding rear-view mirrors and front parking sensors on MS!

dborn @nsw.au | 14 December, 2012

@Dave_2013 +1 on the sensors and mirrors! Also rear sensors - even easier to fit.

GoTeslaChicago | 14 December, 2012

OK a how to do it guide titled: Easy Way to TESLA Wealth

1) Reserve a TESLA Model S

2) Withdraw $100,000 to pay cash for it. (of course you want a loaded 85 kWh performance!)

3) Finance the car for 1.49 to 1.99%.

4) Invest the $100,000 in TESLA stock.

5) When stock doubles, sell the stock & pay off the car loan.

Heck, Tesla is doing so well, why sell now, wait a while, maybe you can afford a second one for the wife!

PS to pay for the first Model S you need a 100% gain. To pay for the second Model S (or Model X) you only need an additional 50 % gain.

GoTeslaChicago | 14 December, 2012

P.S.

I forgot to add, this is like a chain letter. The more people who you can convince to buy a Model S, or Tesla stock, the faster the early investors can double their money!

Captain_Kong | 14 December, 2012

Given TSLA's future product pipeline, I heard a BMW 3-series competitor and a supercar are on the drawingboard beyond 2015, I was hoping to get X times of my initial investment. So don't sell TSLA too soon... they may turn out to be a pleasant surprise for your children (both the MS and the sotcks)!

Gator | 16 December, 2012

@KevinR Here is the factual basis of my union comment. http://www.reuters.com/article/2010/05/21/toyota-uaw-idUSN2113644620100521 I post facts to keep others aware that may own the stock.

jat | 16 December, 2012

Personally, I think investing heavily in a single stock is very risky, particularly an upstart trying to disrupt an industry. So, you might well make massive returns by putting everything in Tesla stock, but you might also wind up with massive losses.

Volker.Berlin | 16 December, 2012

jat, that's true of course, and it's good that you make it explicit. On the other hand, in case Tesla becomes a complete loss, you won't want to buy the car either, so you don't need the money, anyway...! ;-)

David70 | 16 December, 2012

VB. That's been my attitude. I put enough money into TSLA to have purchased the base model before tax credits. I want the 85kW-h version with quite a few options.

fluxemag | 17 December, 2012

That article on union workers is from May. The UAW said "Our union's hope is that this venture will give first hiring preference to former NUMMI employees who are already trained and highly skilled,"

I don't see anywhere in the article mentioning Democrats forcing anything.

I own the stock and have a reservation for a MS. I'm nervous about it because it a fairly expensive stock, but ultimately bought it anyways after learning about the short interest. I believe the company will succeed and begin turning profits, expand their product portfolio and ultimately become either a major car maker, or be bought by one for a premium. I could also see them selling the skateboard platform to other car makers extensively.

One other thing. I'm don't gamble, but this reminds me of my friends who say they never bet on games where their favorite team is playing. They say the emotion blinds them to facts. This could be a similar scenario.

ghillair | 17 December, 2012

@gator, @fluxemag Look again, that article is not from May, it is from May of 2010. Ancient history.

KevinR.co.us | 17 December, 2012

@fluxemag- Maybe we can get Nate Silver to advise us? He does well with baseball & elections...

Which is my way of agreeing with you....I have more than money invested in Tesla.

Mel. | 17 December, 2012

Ghillair, what are you inferring? Do you have info that unions do not want to control Tesla?

ghillair | 17 December, 2012

@mel No I am not inferring that. Unions would loved to get into any employer they possible can. I was simple pointing out that the original post sighting union activity sited an article that was published 30 months ago when Tesla first bought the NUMMI facility.

jbunn | 17 December, 2012

Gator, that article was 2-1/2 years old.

When Toyota and GM formed their joint venture NUMMI in that same plant back in 1984, they hired many of the the same union workers back from when GM closed it in 82. With the new sense of empowerment from the Toyota manufacturing proces, NUMMI went from a very bad GM plant to a very very productive precision operation (with the same union workers).

So it wasn't the presence of a union that produced crappy quality.

Besides, no one forces a union down anyone's throat. If the workers at a plant want to form a union, they can. They democraticaly elect their leaders. If the workers no longer feel they want or need a union, they can democraticaly vote to disolve it. It's the only democraticly run orginization that exists in modern business.

Why do you want to strip workers of their rights to organize?

Mel. | 17 December, 2012

Ghikliar, I did not think that tesla had a union problem yet, but if that changes?

jbunn | 17 December, 2012

Dstiavnicky,

I purchased Tesla stock about 11 months ago. Traded in and out a few times when the timing seemed good, and to date am up 50%. Tomorrow, I might be up to 55%. Or down to 30%.

Get some if you like. But realize you're playing a game not unlike poker, but your opponents are computers that are making decisions much faster than you can react, off of data that's much better and more timley than you can access. Can you win? Yeah. Can you loose? Whoh yeah... Big time. So be careful out there, trade with your head, and don't take stock tips and advice casualy, and that goes for what I'm saying now.

But if you want to make a small fortune, here's how. Start with a large fortune, and become a novice day trader.

Good luck. Be safe.

gagliardilou | 17 December, 2012

I too am planning to pay off my car within a year from the stock. I also got in and out and in again, problem is that cost me $3.00 a share in profit. No more jumping in and out. I'm in and way ahead and am willing to wait it out.

jat | 17 December, 2012

+1 @jbunn

jbunn | 17 December, 2012

Lgagliardi, yep ah been there. Ah well.

For Dstiavnicky, or just general advice I was told or learned a few things that seem to make sense. Everyone should ignore these.

Every dollar you make comes at the expense of someone that just lost one. That's the trading part. So remember there is no such thing as a free lunch. Your profit is someone's loss. Remember that on a bad day. Karma's not just a car.

You can't time the market. Well, OK, at the end of the day, you can time it, but it's way to late for that.

It's all about learning the market tricks. And no matter how many you know, the market always knows one you don't.

The market is ALWAYS right. Doesn't matter if panic set in and noobs paid 1,000 a share for facebook. That's what the market did. We may not like it, it may have been stupid, but that's what happened. Always right.

Don't get sweaty palms. If you ever start to think with the right trade you can get it all back, quit. Doesn't hurt to have balls of steel (or ovaries), but when it stops being cerebal, quit.

Stock is not voting. It's not a charity. We don't have favorites or causes. It's about the market. Period.

You don't have to win on every trade. In fact, you cannot ever completley win on any trade. You could have always bought in a bit cheaper, sold a bit higher, and tomorrow all the numbers will change. Today's dumb trade might be tomorrow's smart move. Or you might double down on the dumb. Who can say. Soooo... Don't worry about being right everytime. Be right say 3 our of 5, or 4 out of 5. Place your trades so your risked money is smaller than your gains. Long term you will profit.

Don't get greedy. Pigs get slaughterd (Jim Cramer I think on this one).

I can't remember if there are more, but like I said, I'd ignore any advice you get.

Vawlkus | 18 December, 2012

Here's a Star Wars stock rule for ya:
Never gamble what you're not prepared to loose.

Swiped from Roa's smuggling rules, but it's a good rule to use.

I bought into Tesla as a hedge against them becoming the next Ford Motor company, or one of the Big 4. I used some surplus cash, so if the unthinkable happens and Tesla doesn't make it, I'm not gonna loose my shirt on it.

stephen.kamichik | 18 December, 2012

+1....Vawikus

Brian H | 18 December, 2012

The market is not a strictly zero-sum game. It may be a negative or positive-sum game over any given stretch. Your gains may be "opportunity losses" rather than cash losses for someone else. Or everybody may be losing in a down market, or gaining in an up market. Some more at the "expense" of others' missed gains. Or, of course, actual gains at the expense of others' actual losses. Almost all combos are possible. The brokers really just care about volume, as they get a little slice on both sides of each trade.

A recent paper and study found that "bubbles" were inevitable; indeed, they are the essence of all market activity. It's just that some are bigger than others!

dstiavnicky | 18 December, 2012

I think some people are taking me too literally. Stock is always risky for sure, but can be fun.

Have I purchased Tesla, sure thing. I always buy strong brands who create products with pride to a loyal following (Apple, Lululemon, Tesla, etc).

Of course what I'm saying (for those who can't seem to read between the lines) is that I really like what I see.
- innovative product
- positive feedback from people who have the product
- ability to re-engineer quickly
- willingness to go above and beyond the call for service and delivery
- change the business model (unions, dealer network, etc)

These just read as very strong signs to me.

The only negative I've found to date is that when I went by the Toronto service center mid afternoon todayy it was dark and closed. I can only hope they are all out delivering vehicles...

Anyway, follow your own signs, I follow mine and so far.. so good.

Mel. | 18 December, 2012

Jbunn, every dollar you make comes at the expense of someone that lost one. Wow, I do not think you wanted to say that.... In 1983 the market was at 809. Well you know

Timo | 18 December, 2012

I agree with Mel, in order to make money with stocks doesn't automatically translate that somebody else just lost money. It's more a expectation game than actual value game. Anybody seen "Sneakers" (the one with Robert Redford, not the other one)?

benempt | 18 December, 2012

Agreed - I bought Apple at $70 just before the iPhone announcement in 2007. Tesla now looks like Apple did back then -- high promise with a great product launch from an existing company and an exciting pipeline into related but new markets (e.g. Model S:Model X or BlueStar::iPhone:iPad).

I think there is good potential in the next year for a shift in perception and upswell of less informed investors than those of us in this forum. Which stock will everyone want 12 months from now? When 20,000 Model Ss are on the road? TLSA.

Operations is the primary risk I see, but the biggest risk in any endeavor is the team. I expect that based on evidence at SpaceX and Tesla to date, over the next 5-10 years Tesla will get strong at operations.

jbunn | 18 December, 2012

I should be more specific. Im refering to day trading here, or working the short period churn. Thi is different than real value in my mind.

Carl Barlev | 19 December, 2012

jbunn,

I was writing the below when you replied and clarified your earlier comment, so less relevant now but I will post anyway :)

*******

I agree with all of your other points (other posts included), but have to make an exception for your comment about "zero-sum". I think you're correct in the cases of active trading or trading in derivatives, but I disagree for the case of long-term investing in stocks.

Some companies produce worthwhile products that increase the sum total of wealth in the world => their output is worth more than the sum of inputs. In supporting such companies as investors, we can make a profit without hurting other people (financially or otherwise).

Note that I say "can", as there are plenty of companies and industries that hurt other people in their pursuit of wealth (slave-labor, war industries, corruption support services... etc).

And then there's derivatives trading, which is ALWAYS a zero-sum game (or "negative-sum" if you deduct trading fees). Every time somebody makes a dollar in the derivatives market, somebody else has lost that dollar. Every time a bank needs bailing out, having lost hundreds of billions on a derivatives trade, there's some happy investor(s) and/or bank(s) somewhere with positions equal and opposite.

This is my understanding of the big picture anyway. I've been investing in stocks for about 15 years, but my experience with derivatives has been mostly as an observer.

And yes, I'm long TSLA :)

KevinR.co.us | 19 December, 2012
jbunn | 19 December, 2012

Carl,

Well said. Obviously, when the Bezerkistan prime minister passes solemn gas through his waffle bottom chair, companies round the world do not lose 5% of their real value. : )

dstiavnicky | 24 January, 2013

The short squeeze has started!
Those pessimists (who haven't driven an MS) will all bail out or double up soon...

RNB | 24 January, 2013

The market is zero sum.
Mel, if you sold me the market in 1983 at 809 and I still own it, I gained, you lost=zero sum.

If someone sells me TSLA at 38 later today and I hold until it reaches 100, I gained, they lose.

I am not buying at 38!

I love the idea of using stock gains to buy an ecar.

jat | 24 January, 2013

@RNB - it isn't entirely zero-sum, because companies go bust and new ones start up, plus additional stock offerings dilute existing stockholders for the benefit of the companies.

GoTeslaChicago | 24 January, 2013

Futures contracts are zero sum, because for every long, there must be an offsetting short. Just like betting, for every winner there must be a loser. Not hard to understand why trading commodities is considered gambling!

The stock market is fundamentally different. Companies sell stock to the public, invest the proceeds in a Tesla factory, for example, the factory makes products, sells them at a profit, Now the company is worth more (hopefully) than the initial capital raised. Over the long term as the US and world economy grows, wealth is created and the value of the world stock market reflects that.

It is NOT a zero sum game.

RNB | 24 January, 2013

Or the company could have kept the stock in house, not gone public, kept all profits and ownership benefits for themselves. If Tesla goes to 100, they lost on all the profit and stock owners gain.

It is zero sum.

Aren't futures negative sum due to transaction costs and risk premiums?

Aleksandyr | 24 January, 2013

Free Tesla plan:

buy 50 bullish Call Spreads Jan 2014 30-40
sell 25 puts at 20 to fund half of call spread.

sell short term calls covered by spread to fund other half. by 2014 spread is free and you keep the money from puts sold. profit 60k. almost free tesla!!

Risk reduced by options, worst case you buy shares at below 20!

dstiavnicky | 24 January, 2013

I hear your arguments but I think most are missing the point... Tesla is a disruptive stock. Period.

Disruptive in the luxury market is where you want to be, especially in a huge market like auto. Think Apple at early iPhone launch, or Lululemon going after yoga target... this is much bigger.

GoTeslaChicago | 24 January, 2013

RNB,

Futures are a zero sum game when you consider all the players. For every broker that takes a commission, there is the trader who pays it. The books must be balanced.

Your stock analogy is wrong however.

Take your example with round numbers thrown in for purposes of making the point clear.

Suppose Elon sells all of the company at $10 per share and realizes one billion dollars. A few years later the stock is worth $100 a share, or 10 billion dollars and the buyers have made nine billion dollars. If it was a zero sum game, Elon would be 8 billion in the hole because he would have lost the one billion he initially made plus eight billion more. i.e. buyers make 9 billion, Elon must lose 9 billion.

The company is worth 10 billion dollars, not because someone else lost 10 billion, but because the company created value.

Brian H | 24 January, 2013

GTC;
correct. Considering an "opportunity loss" as cash loss is false. E.g.; if a stock gains $10 from a start point, but you sold after $5 gain to someone who also gains $5 by selling at the $10 point, you both gained. You just split the proceeds. On the fundamentals, if the P/E of the company remained constant, the gains are a sharing, via shares, of the improved valuation of the firm -- which is an increase in the size of the pie, not a redistribution of fixed size/value/worth.

Carl Barlev | 24 January, 2013

RNB,

I think you are confusing the act of "not making money", with the quite different act of "losing money". For example, I would much rather have $100k and not make another $100k, than have $100k and lose it (in a hypothetical situation where those are the only two alternatives).

Surely you agree that the two cases are not the same?

Furthermore, in the example you give, had Tesla not gone public then it would have most likely never had a chance of going to 100 and so you can't even say that the owners miss out in such a case on the profit of the share they sold. More likely our beloved company (assuming we're all shareholders here) would have gone bust and the original owners would have lost their starting capital. Compared to that alternative, we are all winners.

You are correct that futures (and other derivatives) are negative sum. The trades themselves are always zero-sum and then you have to subtract trading fees and interest cost (if traded on margin). I don't think the risk premium can be "deducted" though, as this is built into the price the derivative is traded at... if one side charges the premium and the other party pays it, then it's just a part of the zero-sum.

Thanks for challenging my understanding and making me think :)

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