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...

fluxemag | January 24, 2013

Carl, that first paragraph sounds like Nassim Taleb. Well done.

RNB | January 24, 2013

In Tesla, is it not true that for every dollar spent buying into the company the same amount is taken out of the company? Zero sum!

You sell to me now for 37? I pay 37, you gain 37. I hold to 100 and sell back to you? I gain 100, you pay out 100. Zero sum.


There are several false notions about whether the stock market is a zero-sum game or not. I searched for the best arguments against this point, but there really aren't any. Different commentators argue different (sometimes contradictory) versions of these three points. I got these from The Motley Fool (the "fool" part of his name is accurate, judging from his analysis), who presents them with the least fluff.
"Zero-sum requires a fixed sum." This is easily seen to be false in the poker game. The pot that the winner takes can be any size, from slightly more than the players' antes, up to the total wallet of some player plus comparable bets from all the other players still in the game. In a Ponzi scheme the total pot keeps growing until you run out of players.

Some people try to argue that the value of the stocks reflects the net worth of the underlying companies -- which is often correlated -- while ignoring the fact that none of that stock price ever gets back into (nor out of) the company's bottom line. Other commentators agree that there is no connection while still arguing that it is not a zero-sum game. The fact is, the company profitability may go up or down, but the stock is still sold for whatever the next investor is willing to pay for it. The company net worth may figure in the buyer's thinking, but the money comes out of the investor's pocket, not the corporate bank account.

"The stock market creates wealth." This is obviously false. Unlike Social Security, no dollar ever comes out of the market into an investor's pocket that didn't go into the market from another investor's pocket. The underlying companies whose stock is being traded can create wealth, but none of that wealth ever shows up in the stock market -- unless the company buys back its own stock and goes private. As I pointed out above, this is a rare event. All the other transactions just move money from one investor to another. No wealth is created nor destroyed in the process. Except brokerage fees.

"Total market capitalization increases." This may be true, but it has nothing to do with whether it is a zero-sum game or not. That's like saying poker is not a zero-sum game because as the evening wears on there are more tables in the saloon playing poker, and the total of all the pots on all the tables is increasing. True, the slice through one instant of time, across all corporate stocks listed in the market might have a market capitalization greater than the last time you looked, but each company is a zero-sum game, and the sum of many zero-sum games is still a zero-sum game. The size of the pot on the table during one hand is irrelevant to the question of whether the winnings of the winners equals the losses of the losers.

In economic theory (this mainly applies to stocks), a zero-sum game is a mathematical representation of a situation in which a participant’s gain or loss is exactly balanced by the losses or gains of the other participant(s). If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero.

Good luck Carl

GoTeslaChicago | January 24, 2013


Such a long post, so little valid info.

OK, the stock market doesn't create wealth, it is a mechanism for valuing the wealth created by companies like Tesla.

Stock market a zero sum game? Then how can Elon sell part of his company to the public which makes money, and he is making money too? If it was a zero sum game he would lose a dollar for every dollar the public makes.

enough said. ( I hope)

Wayne3 | January 24, 2013

GTC, Brian H, Carl, +1

RNB, the key is that the value of Tesla as a whole increases as it becomes a capable entity that can convert aluminum, plastic, stock batteries, and circuit boards into something of greater value. Initially, there is great risk and the true value of the company is correspondingly uncertain. As Tesla reduces risk and succeeds in its goals, the company intrinsically has greater value. Divide by the number of shares and each share has greater value. That's why people are willing to pay a higher price per share -- they are buying a share in a more valuable company.

Recommended Reading: Graham and Dodd, Security Analysis. Warren Buffet has been particularly successful in this style of investing. He would not be the wealthy man he is today if the companies he invested in did not grow in value.

GoTeslaChicago | January 24, 2013

"Recommended Reading: Graham and Dodd, Security Analysis. Warren Buffet has been particularly successful in this style of investing. He would not be the wealthy man he is today if the companies he invested in did not grow in value."

+1 Wayne

Buffet made his money the old fashion way. Buy & Hold good companies. (And buy more when everyone is fearful.)

Brian H | January 24, 2013

It is false to equate buying a share with a stake in a poker pot. If the company leverages the funds it got from its IPO to go from $200m to $10bn valuation, with shares rising in lockstep, who got "taken" for the difference? The market didn't create the value, but it reflects it.

Share prices at any moment reflect expectations, but they are based on results and are eventually fulfilled or disappointed. As with any venture carrying risk.

dstiavnicky | January 25, 2013

Here's another simple way to invest with limited risk...

Tesla is a stock that is an ideal candidate for a new covered call today. Buying the stock for $36.00 while simultaneously selling the March $36.00 call will result in a new position with a target return of 5.4 %. Based on recent prices, this position will cost about $34.15, which is also the trade’s breakeven point. At that level, this covered call has 5.1 % downside protection, while still providing a 5.4 % return in 51 days as long as TSLA is above $36.00 on 3/16/2013. For comparison purposes only, this Tesla covered call aims for an annualized return rate of 38.7 %

sandman | January 25, 2013

OMG, mods please kill this thread...

dstiavnicky | January 28, 2013

The shorts are getting squeezed hard now.

Ya gotta ask... why would anyone bet against a high-profile company with disruptive technology who's break-even is 8,000 units, back orders of 20,000 in a factory that has produced 6,000 cars a week average in an industry where the competition sell approximately 10,000,000 units annually...

Of course this is a big winner. We are close to my $40 stock prediction already!

dstiavnicky | April 2, 2013

Ok, I was a little early. But now we'll see the upward movement...