Prudent Portfolio Allocation % to TSLA?

Early 60s, grown children out of college (and college paid for, no debt there), fair sized retirement (have to work at least five more years), 85D coming in early March 2015.
No TSLA in non-retirement, 5% of our (my wife's and my) retirement is in TSLA. 200 share of SCTY, too.
Pretty set there; maybe 33% more share if TSLA drops a lot (say below $200).

CHGolferJim said:

This will range all over the map, no doubt, but what do you folks think?

I'm focused on my own case, of course, but it would be interesting to dialogue on different perspectives. Please indicate your general circumstances (mine are 57 y.o., married, retired, last child in college, good nest egg, plan to order an 85D in 2015). Thanks......

Our TSLA position: zero in taxable accounts (living expenses), 2014 purchase of ~4% of total Trad and Roth IRAs, and thinking I should go higher.

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mid-30s, married, 5yr old kid, 15% of individual stock portfolio in tsla, 5% of total investment money. Sometimes adding on dips to keep at that ratio give or take if it falls but not selling to maintain that ratio if it rises too fast.

90%+ of my portfolio is in Tesla right now as I think they will push out a new ATH in the coming months, would like to keep around 50% in Tesla though on average so I have funds to hedge and spread risk, which will also allow me to buy more when Tesla makes a large illogical drop like recently. I am 24 years old, finished high school, made some money playing poker and am now living off my investments.

ATH?

MSEV said:

ATH?

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all time high

30s, married, 9-month old kid. Can't afford a Model S yet, planning to turn some TSLA earnings into a downpayment on our first house in the near future. Then put solar on it and wait for Model 3

~70% in TSLA (40% jan '16 options, 25% short term options, 5% stock)
~25% cash and GLD
the rest is some solars and tech ETFs.

I'm around 20% of net worth in TSLA stock, though it certainly didn't start that way, with only intention to add to the position should a good opportunity arise.


My more interesting contribution though is that I commend this research paper to you: Is Portfolio Theory Harming Your Portfolio

I stumbled across this paper a couple of years ago and found it compelling for me, partly due to confirmation bias - it represents a view of the world that I agree with. The important point, to me, that comes from the paper is the idea that portfolio allocation / portfolio theory goes back to an academic paper and view that in order to incorporate risk into a model of financial performance, those authors used variance as a proxy for risk. The idea is that a stock that yo-yo's up and down in 25% moves regularly is more risky than a stock that only moves in 5% increments over a comparable period of time.

The real question to ask yourself though is "what is risk"? If your investment horizon is short enough, then variance becomes a very good proxy for risk (or at least, I can be easily persuaded that it is). But my investment horizon isn't short - today I'm only invested in common stock, and there isn't a single company I own today that I KNOW I won't own when I die. There's a good chance that we'll sell one or more of the companies along the way, but I'm also of the mindset that I'll own all of them for the next 50+ years. That includes Tesla.

With that holding horizon, variance in the stock price is NOT a good proxy for risk. On that time horizon, when I look at the auto market, the big auto makers today are ALL a riskier investment (in my humble opinion / view) than Tesla. Every auto maker that isn't selling out on EV development and battery technology & battery manufacturing development is a riskier investment than Tesla. For me, risk isn't how much the stock varies in price day to day - it's the likelihood that the company will stop being a going concern.

41, married, almost bought Model S a year ago and decided to wait for Gen 3.

At one point I had 100% of available cash in tsla and that paid off very well. Been doing more options trading the past 3-6 months with nothing in tsla. Currently have 50% of wife's IRA in tsla but with protective puts so only 5-8% at risk. I'll lose a little bit on the upside but I would prefer that over having it at risk. I'll take opportunities to use options on the position to pay for the deep ITM puts that are far out in time (already decreased risk 1% this week). I'll also wait for dips and use my cash account to trade shares/options. 2nd earnings that i've held puts with shares and it's way less stressful for the short term, not too much worry for long term.

Good thread...

Married, mid-30's with 6 year old kid. Started investing as a teenager with help from my father and grandfather. I was buying stocks with birthday money when I was 13 and built a sizable nest egg over the years.

Got my core position in TSLA at $22 and added smaller lots a few times on the way up. In the beginning I had 1% of net worth in TSLA. That 1% is now 10% mostly due to share price appreciation. I'm comfortable at 10%. I've seen how outsized positions can be devastating when your big bet tanks. I think TSLA may outperform the balance of my portfolio and become 25% by the end of the decade.

Semi-retired. Thanks for asking this question, you made me review the actual balance, as opposed to what I thought was the case. Not counting retirement funds and stuff like that which is invested somewhat more conservatively:

About 40% is TSLA stock.
About 55% is TSLA stock or options.
About 65% is stock or options related to TSLA somehow. This adds SCTY, CSIQ, JASO, KUKAF, MBLY, PCRFY, ONVO (thanks Bonnie!), AA.

I was already planning to diversify a bit more. In particular I think SCTY is jumping the shark on their (lack of) customer service, and I find this to be an indicator that it's time to get out... but that's a different thread.

PS: no, I don't consider this to be prudent, even for me...