Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[StealthP3D]

Don't look at these as raw rates....long term still gets taxed, so the hit is only like half of that.

One of the most powerful things about the long-term buy/hold strategy is that you can defer taxes on your gains indefinitely (until you sell). The biggest benefit of this is the taxes that you would have paid can remain invested, compounding every year. This is a huge benefit.

Compounded gains are the primary reason millionaires are minted and also why millionaires turn into multi-millionaires.

 

[mongo]

Actually, there is a very good reason why that might not work for most people.

If your TSLA shares were purchased less than 12 months previous they are short-term holdings and get taxed at whatever tax bracket you are in. For many here, that would be 37% (the other common rates are 35%, 32% and 24%).

Let's say you could have sold shares purchased in May 2019 for $240 for $950 yesterday and you would be in the 35% tax bracket. You can't really use all of your gains to buy back today at a lower price because you need to withhold $248.50 per share sold to cover the capital gains tax that will be due for 2020 taxes. You would need to be able to buy back in at $701.50 in order to get the same number of shares after paying tax on your profits.

If you were able to do this (sell at $950 and buy the same number of shares back at $701.50), you would be in exactly the same financial position as had you simply held with one small difference. You would have raised your cost basis from $240/share to $701.50/share. That's the only benefit you would realize. Furthermore, this is a benefit that doesn't compound. In fact, if you eventually sell the shares at $6000 in your retirement, when you are taxed at a lower rate, the savings will seem almost insignificant.

You're right, I should not have said 'no reason'.
Personally, I suck at timing trades and managing taxes. First time I've had any sort of profits to deal with. (And my basis was way over 240)

Spoiler: However...

, if someone is trading in their IRA, it's a win. If they bought in at 850 yesterday morning, it's a win. If they are already screwed on taxes because their account was set as FIFO and they did a lot of trading, it's a win. If it's only February, and they don't pay taxes on capital gains till April 15 of next year (110% of previous year), it's a potential short term win. If it was a couple years ago and they had a $7,500 tax rebate to utilize, it's a win.
If you want to do something with the funds in the near term, it's a win.

 

[Prunesquallor]

I

CNBC - hour ago:

I could listen to Cathie Wood for hours. She even mentioned the Giga-Texas rumor.

 

[azaz]

So this would be an interesting clip to view if it gets online.

Cramer said the brokerage houses (I think) knew on Monday about Ron Barron appearing on CNBC on Tuesday. He mentioned something about "natural buyers" being moved into the stock knowing that Barron would tell a compelling case for TSLA. He says they expected the results from Barron's appearance to move the stock up and then they cashed out.

It would be worth listening to the video because I mostly likely did not convey this perfectly.

what did Cramer say going forward?

I ask because like DaveT said I dont put any real weight in his analysis rather he's useful for figuring out the sentiment on the street

 

[MC3OZ]

Long term and short term are 2 very different things...

Long term I am confident based on informed opinions I have read / heard and 4 things...
1. Wrights Law - the future is EVs.
2. Competition is making glacial progress - Telsa is likely to be one of the biggest EV car makers..
3. EVs are supply constrained by batteries for the next 5-10 years - all EV production should sell..
4. The market for energy storage batteries will be huge and is just getting started...

Even if 2 changes and becomes slightly wrong, the future is still looking good for Tesla for the next 5-10 years...

But this long term view is only a minor input into the short term narrative and hence short term price movements...

My explanation for short term movements is also simple...
1. Those looking to push down Tesla temporarily lost control of the narrative...
2. They have now perhaps temporarily gained control of the narrative, but it is getting harder to control.

The discussion on Friday options expiry overlooks the fact that there are Call Options with longer dated expiry dates... hence some long term motivation... for now...

IMO 2 good things have come out of the run up to 900.....
1. Those on the other side of the bet have had a big scare , and are likely to reduce their risk level when they can...
2. It generated a lot of publicity for Tesla most of it positive, and a lot of it calling into question negative perceptions.....

Short term I never can guess where the price is going, I'm surprised more often than not....... long term I am confident I have a reasonable understanding....

 

[dakh]

It's always this analysis that keeps me from the allure of swing-trading, and it can certainly apply to LEAPs too.

Just to clarify, this tax situation only applies if your goal is to end up with more TSLA shares long-term. If you are trading to simply make money, it is different. You have some trading capital, you deploy it, make a profit, and get out. You will end up just paying income tax on how much you made trading that year (if you're in the green).

 

[SoGA Fan Club]

For those talking about selling in the 900s and buying back now - you don't want to go down that path. It seems obvious in hindsight, but when you're looking at it in real time, it's a hell of a lot more stressfull and way more difficult to make that decision.

I mean, what would have kept you from selling Monday at around $750 if you were playing that game? There's NO WAY anyone had any clue at that point that it would run up above $950 the next day. So, you sell at $750. What did that get you?

And heck, I'm sure a TON of people sold at $500, thinking that it was overbought and would correct - and have been kicking themselves since. It's not a game you want to play unless you are doing it with play money, and can handle the disappointment of making very bad decisions, very often - most people do.

Just to add to my own comment (is that allowed? Normal?)

Trying to time the market leads to bad decisions. Those bad decisions lead to more bad decisions. Reason is, you're trying super hard to make up for your last bad decision quickly (youre hoping your significant other doesn't find out!). You want to undo it. You aren't as patient as you should be. And so you're more apt to make a quick, bad decision. You see good trades where they don't exist - because you WANT it to be a good trade. And this problem just keeps multiplying. It gets VERY bad.

And I ain't guessing.

 

[kalefranz]

All this talk about Fidelity the last two days...

I use Fidelity too, and I’m concerned they’re loaning out my Tesla shares to shorts now. I just put sell limit orders on everything, but they’ll only let me go 50% above the last traded price. Right now that’s $1102, and I have to constantly be adjusting that.

So then I had another idea if I have to constantly be adjusting anyway... If I sell ridiculously out of the money calls against my shares, will that keep Fidelity from loaning them out?

I don't have enough shares for it to really make much of a difference to shorts, but I at least have enough to start writing covered calls against. So in reality it's just the principle; I just don't want to contribute to the problem.

 

[woodisgood]

Just to clarify, this tax situation only applies if your goal is to end up with more TSLA shares long-term. If you are trading to simply make money, it is different. You have some trading capital, you deploy it, make a profit, and get out. You will end up just paying income tax on how much you made trading that year (if you're in the green).

Right, for sure. It's my assumption most regulars here are the former camp.

Head over to stocktwits and it's a very different story. My what a cesspool.

 

[Mkorpal]

Since we are on the subject, your tax advantage retirement account is better for short term swing trading, if you are so inclined, while standard accounts are better for long term shares or options. It’s counter intuitive, but functional. That said, timing swing trades is such a crapshoot I tend not to bother.

edit* this is no guarantee. Cap gain taxes are not set in stone. Who knows what it will be if you are holding shares for a decade.

 

[Unpilot]

Source?

My Robinhood app showed it.

 

[Alphacrux]

CNBC - hour ago:

Thanks for posting.

My wife calls Cathie Wood, “The Smart Lady”

 

[lascavarian]

what did Cramer say going forward?

I ask because like DaveT said I dont put any real weight in his analysis rather he's useful for figuring out the sentiment on the street

Right, he was explaining the price movement and how the street did it. He remains solid in the TSLA corner as I heard it. He said some reassuring things about the price returning to upward movement but gave no time frames. I took it as a "hang in there" comment backed up by his explanation of how the street had over pumped the stock in order to kick out the support a few hours later.

Really need to hear it again.

 

[woodisgood]

I

I could listen to Cathie Wood for hours. She even mentioned the Giga-Texas rumor.

Right? Too bad they never just let her speak for long enough.

 

[kalefranz]

Cathie's own personal account recently has profited handsomely from TSLA LEAPS call options.

Is there a place we can follow what Cathie is investing in her personal accounts?

 

[MTL_HABS1909]

FYI Elon changed his location to Austin, Tx on Twitter. Seems Giga Texas may be further along than we thought....

And now he’s removed it. Strange....

 

[Mkorpal]

And now he’s removed it. Strange....

probably good. No need to ruffle feathers while they finish securing GF Austin.

 

[elasalle]

Some one bought 900 June 800 Contracts for $20. that is $1.8M

Last year some billionaire shorted big time, SP goes to $170

Looks like whales can move markets big time.

 

[Curt Renz]

Is there a place we can follow what Cathie is investing in her personal accounts?

I suspect not, but Benzinga published this related article on Monday: Fund Manager's Bullish Tesla Options Bet Nets 6,000% Return

 

[SoGA Fan Club]

CNBC - hour ago:

When the idiot host asked, in response to her comment that Tesla's market share had increased from 17 to 18% globally in the face of several "Tesla killers" being released, "is that ALL vehicles or just electric?", I wish she would have said, "really? Are you THAT damn clueless?".

Oh yea, Tesla owns 18% of the world auto market. If so, discussing $7000 a share would be a discussion about it falling by by 80%.

What an idiot.