Taking Gains

[Reepekg]

Generally I'm pretty Mustachian and invest in boring long term indexed things. However, 6 months ago instead of putting 5k down as a deposit on a desperately desired Model S I could afford (4% of 'stache) on a vehicle which I could not (70+k total), I bought 5k worth of TSLA instead. Wouldn't you know that it went ahead and gained 50% in no time.

I've never had a fast growing asset. I'm big on electric vehicles and their bright future, but all the optimism at the moment makes me cautious about a bubble. Are there any good emotionless strategies for how to maintain or exit a position like this? Should I just forget about it and hold it forever per the original plan? I'd love any references the community could throw my way.

[the fixer]

Don't consider its past performance when making your decision. You own shares of TSLA, and are trying to decide if you should sell it to put your money in some other investment. Do you have good reason to believe TSLA will provide a better risk/return than VTSAX over the short or long term? If so, keep it and perhaps buy more; if not, sell.

[brewer12345]

Usually when I buy something like this, I have an idea of what I think it is worth and this serves as a sales target.  When something I own gets close to my target sell price I re-evaluate the investment to see if I should move my price target.  Most of the time, I end up selling at least part of my position when it gets to the region of my target and if I think that the target price should be moved up, I hold the rest to wait for the eventual hitting of my target.

In this case, it sounds like you did not have a value in mind when you bought it.  So what do you think it is worth?

[daverobev]

Nothing wrong with taking some gains, and I would certainly feel better about doing so - maybe sell $5k and invest it in diversified stuff, then your remaining holding in TSLA is (kinda!) free.

If TSLA goes "to the moon" and your remaining 2.5k ends up as $70k - free car!

Just a thought!

[Freeyourchains]

I am actually in the same predicament. I bought a position in TSLA at $38.50. Watched the earnings report bounce a nice 10% mayhem gain in one day, next day it droped 6%, then the market dropped in general for a week, but then 2 weeks later is up another 25%, and climbing.

Seeking alpha has some great articles for long term holders of TSLA here:
http://seekingalpha.com/symbol/tsla?source=search_general&s=tsla
to help you with some research. Most are Long holders of the stock.

The company is about to turn profitable with first ever EPS, and has decent fundamentals with potential to grow into a new industry if they can sell products and services affordably and efficiently to the middle class.

Another new technology that will help EV revolutionize is called the electric wheel motor. Putting 4 electric motors next to all four wheels, to reduce the weight of a standard car by 75% and get rid of all those axii, transmissions, parts to replace, etc, and they are relatively cheap to manufacture and last longer with no moving parts. Kind of like the Solid State Drive Versus the Magnetic Hard Drives in computers now.

On a very off topic note: I am a huge Nichola Tesla Fan. Tesla Motors slightly discriminates his dreams of making power free for the world, as they sell luxury electric vehicles and use his name for pure profits and business, but... take a look at Nichola Tesla's 285 patents, of which 40 are still classified, and think of them being modernized with today's scientific understandings. Read his autobiography, "Tesla: A man out of Time" and be quite amazed to his technology and how ahead of it's time it was and still is.

Many Gas companies tried quite successfully to hush up his works, so the Gas Engine could become the next revolution for the car industry and make trillions of dollars for Companies and Foreign Countries to this day by the need to burn Oil.

[Freeyourchains]

Now TSLA is around $55.23.

Soon you will most likely double your investment. Patience plus frugal savings plus research plus buy low, sell high, keep emotions out of it, plus risk = very high rewards, for investing in Capital gains.

[Reepekg]

I was in at $33, and watching it grow has been great entertainment.  I'm taking Brewer's advice and setting a 3x price target, which matches Longboard's estimate of $100 within 2 years.

[brewer12345]

FWIW, it is also OK to set multiple price targets.  Something I have owned for a few years has become a bit of a concentration (nothing huge, but too much in a risky name for me these days), so while I ultimately think it is worth 18 to 20 a share, I had set a "reduce" value of 15.  It hit (and exceeded) 15 today so I sold a quarter of my shares at 15.  Since the stock is suddenly in favor, I looked at the options market and realized that I can almost (see if it goes through) sell covered calls that would deliver my next target reduce price of 18 if they get exercised.

[Freeyourchains]

I was in at $33, and watching it grow has been great entertainment.  I'm taking Brewer's advice and setting a 3x price target, which matches Longboard's estimate of $100 within 2 years.

Do you think TSLA will split it's stock anytime soon? Some solid fundamental newer high quality companies do with exponential stock price gains, and then their prices continue to rise with rising profits.

[Freeyourchains]

I was in at $33, and watching it grow has been great entertainment.  I'm taking Brewer's advice and setting a 3x price target, which matches Longboard's estimate of $100 within 2 years.

lol, more like 3x in 2 months! O.O with today's $70.71 High so far.

I am holding for 1 year. So no taxes on my 300%+ gain, potentially 2,000% gain after some stock splits and further stock prices rises in the best electric vehicle business manufacture this planet has ever seen before!

[Reepekg]

I was in at $33, and watching it grow has been great entertainment.  I'm taking Brewer's advice and setting a 3x price target, which matches Longboard's estimate of $100 within 2 years.

lol, more like 3x in 2 months! O.O with today's $70.71 High so far.

I am holding for 1 year. So no taxes on my 300%+ gain, potentially 2,000% gain after some stock splits and further stock prices rises in the best electric vehicle business manufacture this planet has ever seen before!

Reached $75 today before fading :-/. I actually bought again significantly today at $69.5/share. My new strategy is to just set a trailing stop to lock in 20% gain on the total amount invested and let it run until it gets tripped or hits $200.

I watched from the sidelines as Apple went exponential after the iPod came out because I was in high school and had no money. Won't miss out this time.

[Nords]

Since the stock is suddenly in favor, I looked at the options market and realized that I can almost (see if it goes through) sell covered calls that would deliver my next target reduce price of 18 if they get exercised.

I love it when the market pays you a premium to take all the emotions out of the rebalancing decision...

[brewer12345]

Since the stock is suddenly in favor, I looked at the options market and realized that I can almost (see if it goes through) sell covered calls that would deliver my next target reduce price of 18 if they get exercised.

I love it when the market pays you a premium to take all the emotions out of the rebalancing decision...

Of course, the downside of the covered call game is that you can miss the opportunity to sell on a spike and by the time the options expire the stock is a lot lower.  Not much of a worry if what you own is a stalwart, but a bigger deal with smaller and more volatile names.  That said, I have sold calls on portions of my stakes in 3 names.  Shot puts on 2 names, but I suspect I will not be put.

[smedleyb]

Since the stock is suddenly in favor, I looked at the options market and realized that I can almost (see if it goes through) sell covered calls that would deliver my next target reduce price of 18 if they get exercised.

I love it when the market pays you a premium to take all the emotions out of the rebalancing decision...

Of course, the downside of the covered call game is that you can miss the opportunity to sell on a spike and by the time the options expire the stock is a lot lower.  Not much of a worry if what you own is a stalwart, but a bigger deal with smaller and more volatile names.  That said, I have sold calls on portions of my stakes in 3 names.  Shot puts on 2 names, but I suspect I will not be put.

This is a smart, judicious use of options IMO.  I hope those calls go "poof" and the puts go deep in the money.  This is an incredibly difficult market to time and I personally watched over half my hard earned gains go "poof" the past couple weeks after I though the bottom was about to fall out.  I was dead wrong (even if my bearishness has intensified).  I personally find the mechanics and structure of an options trade to be entirely more fascinating than the profit/loss that results from it.  Good luck for sure. 

[brewer12345]

The puts I shorted are on names I already own and would be happy to own more of at the right price.  I only do this with cash on hand to buy the stuff I could be put and I do it in small size.  Most of the time, the puts either do not get exercised or I buy them back near expiration for a pittance.

The calls I have shorted are simply a way to goose returns on stuff I am happy to sell anyway.  In many cases I write covered calls on stuff I have owned for years and it is just a way to take gains.

In both cases I am expressing a view about valuation rather than where I expect prices to go in the immediate future.  I already know that I cannot guess where the crowd will push the market in the short term.  I think I can tell when something is unusually cheap or dear and so that is what I trade on.

[Nords]

The puts I shorted are on names I already own and would be happy to own more of at the right price.  I only do this with cash on hand to buy the stuff I could be put and I do it in small size.  Most of the time, the puts either do not get exercised or I buy them back near expiration for a pittance.
The calls I have shorted are simply a way to goose returns on stuff I am happy to sell anyway.  In many cases I write covered calls on stuff I have owned for years and it is just a way to take gains.

I enjoyed learning how to do this from you, and it's really helped my spouse and me with the perpetual rebalancing debates.

It's also a weird psychological phenomenon to get spun up about the idea of taking $50K off the table, but then instead to sell a call option for $1500 and feel all better having that cash in your pocket.  Of course we have yet to lose the unrealized $50K gain.  So far so good.

[Freeyourchains]

I was in at $33, and watching it grow has been great entertainment.  I'm taking Brewer's advice and setting a 3x price target, which matches Longboard's estimate of $100 within 2 years.

lol, more like 3x in 2 months! O.O with today's $70.71 High so far.

I am holding for 1 year. So no taxes on my 300%+ gain, potentially 2,000% gain after some stock splits and further stock prices rises in the best electric vehicle business manufacture this planet has ever seen before!

Reached $75 today before fading :-/. I actually bought again significantly today at $69.5/share. My new strategy is to just set a trailing stop to lock in 20% gain on the total amount invested and let it run until it gets tripped or hits $200.

I watched from the sidelines as Apple went exponential after the iPod came out because I was in high school and had no money. Won't miss out this time.

Great job! I bought more at the $80 downswing, plus bought some relative Solar City shares last week, that just jumped 25% in connection with Tesla Motors info and profit statements.

I have a feeling these two companies will be bundled together under one big umbrella of Elon Musk's Mastermind Goal. Kind of like Walt Disney business Genius, Steve jobs, Milton Hershey, etc.

Solar systems on every residence + Electric Vehicles = Doom of the Foreign Oil dependency?! == Free fuel for you vehicles?! (unless taxed by miles drive?, don't they tax us enough already, then just spend it foolishly?!)

[Reepekg]

Out at $91 for a $13,700 profit. This stock turned speculative in a hurry and completely lost touch with the underlying business. I thought it would take a couple of years to reach this level. It is almost a shame because I love the vision the company is painting for the future and want to own a piece/support them.

Time to go buy an index fund until everyone catches hold of their senses. Then we'll try again for a small long term investment.

[Freeyourchains]

Out at $91 for a $13,700 profit. This stock turned speculative in a hurry and completely lost touch with the underlying business. I thought it would take a couple of years to reach this level. It is almost a shame because I love the vision the company is painting for the future and want to own a piece/support them.

Time to go buy an index fund until everyone catches hold of their senses. Then we'll try again for a small long term investment.

Great Job! I agree that this has turned into a speculative short term frenzy in a hurry. So selling most of my position on the high.

Though I have been on the "Solar Tax credit " bullish band-wagon recently as well. Real Goods Solar and Solar City, are still having "hyped" stock price hikes, which helps make their future profits into a reality from the fresh capital and hype.

[SunshineGirl]

TSLA has large debt, no profit and no dividends. I would cash out.

[Khan]

I would also cash out, I would've done it on the pop to 55$. Understand that bubbles happen, and as an investor, one of your most important things to do, isn't to get "WTF AWESOMESAUCE PROFITS", but to, get this, AVOID LOSSES. Any loss incurred is something you have to make up for on a future return. at 90$ a share, ask yourself this honestly: it just rose ~300% in the span of what, 2 months? Do you honestly think the underlying business has improved?(it hasn't). This pop, from what I've read, might be due to heavy short covering. Short squeeze, look it up. And lastly, they are diluting outstanding shares with a secondary share offering at these levels.

Also, the 11 million dollars in profit they've made from this quarter, was due to regulatory rules, not actual profit off of their business(manufacturing or licensing). Though I agree, profit is profit, after so many quarters of their business, a one off 11 million dollar profit is AFAI care, just so much noise.

Disclosure: I'm not saying that I think Tesla is necessarily a bad business, just at valuation levels such as these.... You couldn't keep me in the stock. I'm not about to short it, there's no telling how long it'll take for this bubble to deflate, but is Tesla really worth 1/6 of Ford? 1/3 of GM? Slightly different business... but only slightly, and as a business, a 10 billion dollar valuation is extremely overvalued on any level I can find.

Edit: Didn't realize 2 of the main people in this topic had cashed out, congrats to you guys for your profits! My message still stands for anyone that hasn't realized their gains.

[Freeyourchains]

Great analysis Khanjar!

What is pushing solar companies right now are the "Solar Energy Alternative Credits" actively coming into affect June 1st for panel installations + the electric Vehicle Credits/loan assistances.

Small example that started last year, (after looking very closely at turbo tax and relative articles on this)

American Citizens can get a dollar for dollar tax credit for buying golf carts with electric motors inside of them, with slight modifications to be road worthy though doesn't need to be used on the road, for around $5,000 + a $2,000 solar panel system on top of it. All payed for from the tax payers for free. 1 per year per U.S. citizen limit.

Then just lease it to a golf course/college students for around $100/month or such for life. Get another one the following year. (probably as long as Obama is in office.)

This is just one example of the huge incentives to produce Solar, and it's self-sufficient clean energy for the country. (being taxed somehow, I am sure in a few years)

Electricity revolutionized the industrial business revolution. It will revolutionize vehicles dependent on oil as well. Just look closely at any suburban neighborhoods and you start seeing Solar Panel systems popping up everywhere. Hawaii and California especially started installing these around 4 years ago, because their Electric rates were skyhigh with no nuclear plants available to provide a constant supply because of seismic activity/volcano danger.

[Nords]

... with no nuclear plants available to provide a constant supply because of seismic activity/volcano danger.

Oh please.  There are more than a dozen nuclear plants operating in Pearl Harbor as I write this.  Oahu military commands stored nuclear warheads in volcanic caves for decades, although that was probably phased out in the 1990s (as far as I know). 

There are many more nuclear plants operating across the American Mainland (and around the world) in areas of greater seismic activity than Hawaii, and possibly greater volcanic activity too.

The root issue is money:  there are no nuclear power plants on any of Hawaii's islands because they cost too much up front to support too small a population.  I suspect that a few environmentalists might raise an issue or two as well.

[aj_yooper]

Since you decided to buy Tesla instead of a down payment on a leveraged declining asset, you are already better off.  What were you thinking!  If you sell as a short term capital gain, you lose a lot of your gains (decreased by your marginal income tax rate).  If you could match it to any short term stock losses, then you pay nil.   Hold it at least for a year and you have a lesser taxed capital gain.  If you can take a loss, just let it go and see.  Could be a Googleanza.

[Khan]

... with no nuclear plants available to provide a constant supply because of seismic activity/volcano danger.

Oh please.  There are more than a dozen nuclear plants operating in Pearl Harbor as I write this.  Oahu military commands stored nuclear warheads in volcanic caves for decades, although that was probably phased out in the 1990s (as far as I know). 

There are many more nuclear plants operating across the American Mainland (and around the world) in areas of greater seismic activity than Hawaii, and possibly greater volcanic activity too.

The root issue is money:  there are no nuclear power plants on any of Hawaii's islands because they cost too much up front to support too small a population.  I suspect that a few environmentalists might raise an issue or two as well.

Actually Nords, as a former operator on those submarines in Pearl Harbor... most of them aren't operating ;) , they're running on shore power. They almost never go critical unless they're going underway.

That said, yes I agree, nuclear is extremely safe. The problem with nuclear? Very, very old plants, and very old designs. I'd also warrant that environmentalists would have a field day if they tried to build a nuclear plant in Hawaii, even though there's plenty of talent to support it(casualty response from the nuke's on the submarines, plenty of talent to actually support the high skilled technician jobs that it demands) because of that worry that if it wasn't a terrible old design like Chernobyl, 3 Mile Island, or Fukashima, it would contaminate the entire island... but it wouldn't be a terrible old design...

****ing Environmentalists.