Author Topic: "Buy Tesla and Apple!" - amen  (Read 7328 times)

Sjalabais

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"Buy Tesla and Apple!" - amen
« on: December 22, 2015, 08:08:34 AM »
That's the headline for this article and I'm getting so tired of this same recommendation over and over again. The worst thing is: It might just be good advice, herd-thinking is how money appears to me made, and at least Apple is a rock-solid company. I'm just tired of hearing this advice and people asking me wether they should act on it...how is it with you guys? I tend to recommend index-investments, or if I need to cherrypick, maybe Alibaba (which I should have bought at 59$ this fall).

Heckler

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Re: "Buy Tesla and Apple!" - amen
« Reply #1 on: December 22, 2015, 08:43:45 AM »
I buy tesla, apple, GM, ford, toyota, nokia, samsung, .... Royal bank, CIBC, ... Birkshire Hathaway, telus, .... ... ...

Seems to be working for me.

Proud Foot

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Re: "Buy Tesla and Apple!" - amen
« Reply #2 on: December 22, 2015, 08:47:06 AM »
Why does he think Tesla will rise by more than 20% next year? Chrome translated the page into English so I could read it but I did not find any reasoning behind his thought.  Tesla is way too speculative for me.  I have no desire to invest in a company which has not had an operating profit, much less net income since 2010. I doubt they had any before then but 2010 is the earliest I could find since that is when they went public. 

Gordion

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Re: "Buy Tesla and Apple!" - amen
« Reply #3 on: December 22, 2015, 09:28:23 AM »
Both Tesla and Apple are great companies, but are they undervalued? I don't think so, and I can find very few undervalued stocks these days. I will therefore continue buying Vanguard Total Stockmarket :)

Sjalabais

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Re: "Buy Tesla and Apple!" - amen
« Reply #4 on: December 22, 2015, 03:52:54 PM »
@Proud Foot, you're right, there's no explanation given for the expected 20% rise at Tesla. I guess there might be a Norwegian bias here, too - the S has occasionally been the most sold car in the country. I agree it is very speculative, and people are just betting on Musk being the new Jobs.

aspiringnomad

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Re: "Buy Tesla and Apple!" - amen
« Reply #5 on: December 22, 2015, 06:40:52 PM »
Funny, this article also argues for those same two stocks in 2016: http://www.marketwatch.com/story/how-apple-telsa-could-blow-away-a-boring-stock-market-with-20-gains-2015-12-22

A multilingual echo chamber? They also happen to be two of a very small group of individual stocks that I own. Apple predates my MMM discovery and my plan is to hold it indefinitely rather than to realize any capital gains during my working years. I'm a more recent convert to Tesla, but I recognize it's a purely speculative, possibly binary play.

Jeremy E.

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Re: "Buy Tesla and Apple!" - amen
« Reply #6 on: December 22, 2015, 07:08:06 PM »
I agree, everyone should buy Tesla and Apple stock! They should do so by buying VTSAX. Although I think it's also okay to not buy Tesla, and instead buy an S&P 500 fund (Tesla is not in the S&P 500 since it's not quite big enough).

Proud Foot

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Re: "Buy Tesla and Apple!" - amen
« Reply #7 on: December 23, 2015, 10:14:55 AM »
@Sjalabais, the Norwegian bias does seem like a possible explanation.  Nothing wrong with speculation and betting on Musk being the new Jobs, in my opinion it is the only thing driving Tesla's stock performance.

thedayisbrave

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Re: "Buy Tesla and Apple!" - amen
« Reply #8 on: December 24, 2015, 07:51:32 AM »
Apple is (I believe) the largest holding in Vanguard Total Stock market, so no, I'm not going to buy even more Apple.. especially because I personally think market cap weighting is less than ideal, but invest in VTSAX for the diversification benefits..

Tesla, I own.  I certainly would not buy more now, though.  I bought back in 2013 when it was at $32.  I did so knowing that it was pure speculation, but I am a tech/car freak and figured if I lost the money I could just TLH it :)

dmn

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Re: "Buy Tesla and Apple!" - amen
« Reply #9 on: December 24, 2015, 09:11:42 AM »
Uh... buy Tesla and Apple... because it is always a good idea to overweight the hottest new tech stocks that everyone is getting crazy about? That worked so well in 1997-2000, let's all do it again.

bdbrooks

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Re: "Buy Tesla and Apple!" - amen
« Reply #10 on: December 24, 2015, 09:13:49 AM »
I personally think market cap weighting is less than ideal

You could invest in RSP. It is an equal weight S&P 500 etf. So it rebalances to own 0.2% of each company in the S&P 500. It is shown that equal weighting outperforms market cap weighted strategies over the long term. At least some argue that the added returns are based on taking more risk. While equal weighting does take on more risk, from what I have seen the added returns outweigh the added risk. As a side note, don't use stop loss or market orders on RSP. I would only use limit orders.

Personally I wish there were an inverse volatility, equal risk contribution, or minimum variance  weighted S&P 500 etf. I have seen 1 mutual fund that is inverse volatility weighted S&P 500 fund. However, the expense ratio was over 1.5% for a portfolio that is run by a computer. These strategies shouldn't cost more than .5%.

aspiringnomad

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Re: "Buy Tesla and Apple!" - amen
« Reply #11 on: December 24, 2015, 02:26:41 PM »
Uh... buy Tesla and Apple... because it is always a good idea to overweight the hottest new tech stocks that everyone is getting crazy about? That worked so well in 1997-2000, let's all do it again.

Not arguing with the conclusion that indexing is generally preferred, but Apple is not one of the "hottest new tech stocks." It has been booking more profit every quarter than any company ever has and has a P/E ratio of 11.75. It's a bit silly to compare it to 1997-2000 when the NASDAQ P/E ratio reached 175 and people were throwing money at companies that had never turned a profit.

Seppia

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Re: "Buy Tesla and Apple!" - amen
« Reply #12 on: December 24, 2015, 04:23:25 PM »
Apple might have a great P/E today, but they are a couple failed products away from losing ground.
They went on an amazing streak, completely inventing new markets with three product lines in a row (iPod, iPhone, iPad).
I don't know how the watch is doing, but it's hard to sustain that.

hodedofome

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Re: "Buy Tesla and Apple!" - amen
« Reply #13 on: December 25, 2015, 02:13:48 PM »
One way to buy stocks is to look at the innovative companies run by a visionary founder. A lot of companies are turned over to managers who aren't true innovators. There are only a few where the founders are still there in an involved role.

Facebook
Amazon
Netflix
Google
Tesla

These companies are creating their own markets and there's no way to accurately value them. There is the potential to grow like gangsters or go bust if they don't meet expectations. There will be extreme volatility but if the founder sticks around and continues to execute, they should be good plays to hold as a basket.


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Sjalabais

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Re: "Buy Tesla and Apple!" - amen
« Reply #14 on: December 25, 2015, 03:23:49 PM »
"Is the (preferably prodigious) founder involved?" is actually a good question to ask. Another one would be: "Do I want to use this product?", sort of assuming that if oneself manages to get hooked, others might, too. As such, I would have had invested in Amazon, Google, Facebook and Alibaba the second it became possible, if I had had the spare money then.

thedayisbrave

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Re: "Buy Tesla and Apple!" - amen
« Reply #15 on: December 25, 2015, 06:09:44 PM »
Another one would be: "Do I want to use this product?", sort of assuming that if oneself manages to get hooked, others might, too. As such, I would have had invested in Amazon, Google, Facebook and Alibaba the second it became possible, if I had had the spare money then.

True, "stick to what you know."  But I also hold a position in Diageo, even though I very, very rarely drink alcohol.. mostly because I know I'm not the norm.

nobodyspecial

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Re: "Buy Tesla and Apple!" - amen
« Reply #16 on: December 26, 2015, 05:47:23 PM »
Shouldn't a mustachian pick companies that they DON'T use?
I wouldn't want to own a company that relied on the sort of customers who take a pride in not spending any money !

arebelspy

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Re: "Buy Tesla and Apple!" - amen
« Reply #17 on: December 26, 2015, 07:28:32 PM »

Shouldn't a mustachian pick companies that they DON'T use?
I wouldn't want to own a company that relied on the sort of customers who take a pride in not spending any money !

Counter argument: If they're selling things that are staples, so important even Mustachians are buying, they might be a good investment.

Luxury items Mustachians don't buy could be good in an up economy, but suffer in a down one, versus a company like the above that should thrive in either.
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dmn

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Re: "Buy Tesla and Apple!" - amen
« Reply #18 on: December 27, 2015, 03:07:29 AM »
Two reasons for buying companies whose products you do not use:

(1) Companies with business clients: I do not use raw materials or factory robots, but these are essential parts of our economy. Why should I limit my investments to consumer products just because the necessary background steps are invisible to me?

(2) Diversification: If I only bought companies whose products I personally use, I would focus on very few sectors, which introduces extra risk because my portfolio would lack diversification.

I expect that even if other people eventually figured out that they do not need alcohol, smartphones, cars and all this other ridiculous stuff, it would be a gradual transition in which the old companies are gradually phased out without serious loss to their shareholders (just like sticking with old, dying technologies has not hurt shareholders historically).

Seppia

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Re: "Buy Tesla and Apple!" - amen
« Reply #19 on: December 27, 2015, 06:15:37 AM »


Shouldn't a mustachian pick companies that they DON'T use?
I wouldn't want to own a company that relied on the sort of customers who take a pride in not spending any money !

Counter argument: If they're selling things that are staples, so important even Mustachians are buying, they might be a good investment.

Luxury items Mustachians don't buy could be good in an up economy, but suffer in a down one, versus a company like the above that should thrive in either.

My understanding is that a large part of what classifies as luxury businesses are pretty anti cyclical (tobacco, wine and spirits, very high end brands...) but I obviously get your point (just being pedantic :) )

Sjalabais

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Re: "Buy Tesla and Apple!" - amen
« Reply #20 on: December 27, 2015, 01:45:21 PM »
Just think about Amazon: A pretty mustachian choice to buy stuff, with their miniscule profit margins. A true "disturber" in the market. As long as money matters, and size matters, Amazon stays in a good position. Bezos is one of these geniuses who is still investing in new markets.

Then there's the opposite: Luxury goods. LVMH has been a much talked-about, good stock. Now that China slows down (and cracks down - on corruption), it becomes wobbly. But if any trend is true on a societal level, I think polarization will continue. Idiots will aspire to luxury brands. So that's one I'd have an eye on, too, if it is a point to try to time and game the market.

browneyedgirl

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Re: "Buy Tesla and Apple!" - amen
« Reply #21 on: December 29, 2015, 07:01:56 PM »
I would not invest in Tesla. They're currently burning cash while they develop their Gigafactory and the Model 3. They have a consumer confidence issue because they were late bringing out the Moddle X and because of the longterm value issues brought up by consumer reports. They're going to go down before they go up--and there's no guarantee they go up.

arebelspy

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Re: "Buy Tesla and Apple!" - amen
« Reply #22 on: December 30, 2015, 12:56:06 AM »
I would not invest in Tesla. They're currently burning cash while they develop their Gigafactory and the Model 3. They have a consumer confidence issue because they were late bringing out the Moddle X and because of the longterm value issues brought up by consumer reports. They're going to go down before they go up--and there's no guarantee they go up.

I disagree with pretty much each of your individual points (in order: they're investing in their infrastructure and R&D for the future, that's a good thing, they're still way ahead of the competition, and everyone who owns one loves them), but I also don't think I know better than the market, or can see the future.  I think they're in a great position to make * loads of money, but that doesn't also mean their stock isn't fairly priced.
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Sjalabais

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Re: "Buy Tesla and Apple!" - amen
« Reply #23 on: December 30, 2015, 01:01:22 AM »
Here's a timely analysis of the Tesla as investment discussion by the half-serious car guys at Jalopnik:
http://jalopnik.com/what-are-investors-getting-wrong-about-tesla-1750211390

browneyedgirl

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Re: "Buy Tesla and Apple!" - amen
« Reply #24 on: December 30, 2015, 11:11:49 AM »
I would not invest in Tesla. They're currently burning cash while they develop their Gigafactory and the Model 3. They have a consumer confidence issue because they were late bringing out the Moddle X and because of the longterm value issues brought up by consumer reports. They're going to go down before they go up--and there's no guarantee they go up.

I disagree with pretty much each of your individual points (in order: they're investing in their infrastructure and R&D for the future, that's a good thing, they're still way ahead of the competition, and everyone who owns one loves them), but I also don't think I know better than the market, or can see the future.  I think they're in a great position to make * loads of money, but that doesn't also mean their stock isn't fairly priced.

The cash investments become a problem when they're having to do additional stock offerings to support growth (as they did earlier this year). The bigger issue is going to be the consumer confidence thing. Consumer Reports was their biggest cheerleader and has now turned against them because they have numerous ongoing problems in their vehicles. They can fix all these problems on a one to one basis for the Model S because it is a limited availability luxury product, but their methods won't scale for the Model 3. It's all part of a larger systemic problem Musk has mentioned several times where Tesla doesn't have relationships with established Tier 1 suppliers and so can't buy the number and quality of parts they want. They have always been proud of the fact that they are supply--not demand--limited, but what they don't talk about as much is that it's because of parts availability and quality. That's why the Model X took so long to develop, they had problem sourcing parts and ultimately chose to bring the rear seat inhouse. It's a huge issue for them, and it will just get bigger as they try to bring down cost of production while increasing number of units sold for the Model 3.

nobodyspecial

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Re: "Buy Tesla and Apple!" - amen
« Reply #25 on: December 30, 2015, 12:59:45 PM »
The only people who read Consumer Reports are living in retirement homes in florida and are keeping the 70s Cadilac they always owned.

They seem to have less issues and quicker fixes than those rank amateurs at Ford, Toyota and VW.
I think BMW, Porsche and Jaguar should be worried if Tesla stick to the high-end business.
Whether they can compete against Japanese and Korean manufacturers in the bulk market purely on price when the subsidies end ... although they migth make more money by simply selling batteries to them