3 ms·

Well the market can be terribly wrong on many companies in the long run, both undervaluing great companies and overvaluing terrible companies. Tesla's vision is

Well the market can be terribly wrong on many companies in the long run, both undervaluing great companies and overvaluing terrible companies. Tesla's vision is for the next 20 years, not the last 5. Historical performance is also not an indicator of future performance. Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day. If anything the fantastic return would encourage long term investors so far to partially cash out and diversify their risk a bit.

ganonm 10y ago
> Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day This is a great way to think about holding investments. I remember using this argument to try and convince a family member that they should sell what I considered to be a bad investment. I phrased it as 'If you were forced to sell your shares right now would you use the money from the sale to immediately buy back your shares?'. He responded that no, he wouldn't. Obviously this ignores brokerage fees, but it is a useful thought experiment nonetheless.
- Cookingboy 10y ago
  Yep, and it's a great way to debunk stuff like the Sunken Cost (I've put in so much already!) fallacy.
- trevyn 10y ago
  Ignoring tax implications is a much, much bigger problem for your argument than ignoring brokerage fees.
  - sokoloff 10y ago
    Indeed. Even execution slippage is greater than brokerage fees for a reasonable sized round-trip trade at a discount broker.
    - floatrock 10y ago
      Sure, the real world inhabited by the pro's is complicated, but the point is when we're first learning the fundamentals, we assume an idealized frictionless plane.
- olalonde 10y ago
  > This is a great way to think about holding investments. Unless you believe in the efficient market hypothesis...
teslacar 10y ago
If you're not sure then sell...or sell a call option against the shares you own
danm07 10y ago
> Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day While I'm not a banker, I find with this method looking at investments highly disagreeable. The price of the stock at the time of purchase is the projected future profits discounted to present day. In other words, it is the fundamental value of the firm, which is invariant of its day-to-day fluctuations. If you have to be watching for the daily upticks, it's a sign the company is either incompetent or is operating in a highly unfavorable environment. I don't see how any good can be gained from envisaging a purchase price other than your lock-in price.
- IanCal 10y ago
  Perhaps you're putting too much emphasis on the "every day" part. The key idea of evaluating whether the shares are worth it now and not just when you bought them is important, to me. > I don't see how any good can be gained from envisaging a purchase price other than your lock-in price. If I have a thing valued much higher than I believe it is worth, surely the logical thing for me to do is sell and buy something else that is valued lower than I believe it is worth. The price I paid for it is completely irrelevant (except, importantly, when it comes to taxes but this may not be an issue, much less relevant for many in the UK). TSLA is ~$256. If I only think it would be worth buying at $100, then why would I keep the ones I own? The purchase price is a sunk cost.
- aidenn0 10y ago
  If company X's price is currently $100, but it's projected future profits discounted to the present day is $90, then why wouldn't you sell, regardless of the purchase price?

ganonm 10y ago

> Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day This is a great way to think about holding investments. I remember using this argument to try and convince a family member that they should sell what I considered to be a bad investment. I phrased it as 'If you were forced to sell your shares right now would you use the money from the sale to immediately buy back your shares?'. He responded that no, he wouldn't. Obviously this ignores brokerage fees, but it is a useful thought experiment nonetheless.

Cookingboy 10y ago
Yep, and it's a great way to debunk stuff like the Sunken Cost (I've put in so much already!) fallacy.
trevyn 10y ago
Ignoring tax implications is a much, much bigger problem for your argument than ignoring brokerage fees.
- sokoloff 10y ago
  Indeed. Even execution slippage is greater than brokerage fees for a reasonable sized round-trip trade at a discount broker.
  - floatrock 10y ago
    Sure, the real world inhabited by the pro's is complicated, but the point is when we're first learning the fundamentals, we assume an idealized frictionless plane.
olalonde 10y ago
> This is a great way to think about holding investments. Unless you believe in the efficient market hypothesis...

teslacar 10y ago

If you're not sure then sell...or sell a call option against the shares you own

danm07 10y ago

> Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day While I'm not a banker, I find with this method looking at investments highly disagreeable. The price of the stock at the time of purchase is the projected future profits discounted to present day. In other words, it is the fundamental value of the firm, which is invariant of its day-to-day fluctuations. If you have to be watching for the daily upticks, it's a sign the company is either incompetent or is operating in a highly unfavorable environment. I don't see how any good can be gained from envisaging a purchase price other than your lock-in price.

IanCal 10y ago
Perhaps you're putting too much emphasis on the "every day" part. The key idea of evaluating whether the shares are worth it now and not just when you bought them is important, to me. > I don't see how any good can be gained from envisaging a purchase price other than your lock-in price. If I have a thing valued much higher than I believe it is worth, surely the logical thing for me to do is sell and buy something else that is valued lower than I believe it is worth. The price I paid for it is completely irrelevant (except, importantly, when it comes to taxes but this may not be an issue, much less relevant for many in the UK). TSLA is ~$256. If I only think it would be worth buying at $100, then why would I keep the ones I own? The purchase price is a sunk cost.
aidenn0 10y ago
If company X's price is currently $100, but it's projected future profits discounted to the present day is $90, then why wouldn't you sell, regardless of the purchase price?