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I guess there's a 90% chance he's right (Tesla is overpriced) and a 10% chance Tesla will be worth 50x in a few years. But I don't have the funds to act on tha

I guess there's a 90% chance he's right (Tesla is overpriced) and a 10% chance Tesla will be worth 50x in a few years. But I don't have the funds to act on that assumption.

chegra 16y ago
hmm. 0.10x50x$23 = $115 Given those probabilities it seem like a good investment. Or for the less risky version, dollar cost averaging. You use something like share builder: Every month invest $100. 1month - $100 price of stock 25.0 Stock own:- 4 2month - $200 price of stock 20.0 Stock own:- 9 3month - $300 price of stock 20.0 Stock own:- 14 4month - $400 price of stock 10.0 Stock own:- 24 5month - $500 price of stock 10.0 Stock own:- 34 6month - $600 price of stock 5.0 Stock own:- 54 7month - $700 price of stock 5.0 stock own:- 74 8month - $800 price of stock 5.0 stock own:- 94 9month - $900 price of stock 10.0 stock own:- 104 10month -$1000 price of stock 20.0 stock own:- 109 Overall value of stock own is 109*20 = 2180. Profit:= $2180-$1000 = $1180 This is an exaggerated example and I only have knowledge of dollar cost average in theory, so anybody have real world experience, jump into the conversation. http://en.wikipedia.org/wiki/Dollar_cost_averaging http://en.wikipedia.org/wiki/Dollar_cost_averaging
- mcknz 16y ago
  Dollar cost averaging to zero is still zero. Best to stay away from hot IPO stocks until they have a history of earnings.
  - chegra 16y ago
    hmm...Risk a $1000 that can degrade to $0 or go to $50,000. The bottom is capped at $0, you cant do no worst, limited downside and unlimited upside. I think it's worth some disposable income.
    - jmm 16y ago
      Um... that's true of buying any stock, right? So I'm not sure the logic allows you to make any kind of comparative decision.
      - deleted 16y ago
        [deleted]
      - zackattack 16y ago
        Not quite. Most stocks don't have 50x potential. (I'm not saying that Tesla does.)
jrockway 16y ago
If you want to guess the price a few months out, though, you can just buy options. If you think Tesla will be $35 by mid-January, you could buy a $30 call option for something like $2 a contract. If the stock hits $35 before expiration, you'll sell the option for $500 a contract. The downside is $2, the upside is $500. I don't see any options chains for TSLA yet, though, so I am just making the first number up. But that's the idea behind options -- if you want to speculate instead of have equity in the company, buy or sell options. Much cheaper.

I guess there's a 90% chance he's right (Tesla is overpriced) and a 10% chance Tesla will be worth 50x in a few years. But I don't have the funds to act on that assumption.

chegra 16y ago

hmm. 0.10x50x$23 = $115 Given those probabilities it seem like a good investment. Or for the less risky version, dollar cost averaging. You use something like share builder: Every month invest $100. 1month - $100 price of stock 25.0 Stock own:- 4 2month - $200 price of stock 20.0 Stock own:- 9 3month - $300 price of stock 20.0 Stock own:- 14 4month - $400 price of stock 10.0 Stock own:- 24 5month - $500 price of stock 10.0 Stock own:- 34 6month - $600 price of stock 5.0 Stock own:- 54 7month - $700 price of stock 5.0 stock own:- 74 8month - $800 price of stock 5.0 stock own:- 94 9month - $900 price of stock 10.0 stock own:- 104 10month -$1000 price of stock 20.0 stock own:- 109 Overall value of stock own is 109*20 = 2180. Profit:= $2180-$1000 = $1180 This is an exaggerated example and I only have knowledge of dollar cost average in theory, so anybody have real world experience, jump into the conversation. http://en.wikipedia.org/wiki/Dollar_cost_averaging http://en.wikipedia.org/wiki/Dollar_cost_averaging

mcknz 16y ago
Dollar cost averaging to zero is still zero. Best to stay away from hot IPO stocks until they have a history of earnings.
- chegra 16y ago
  hmm...Risk a $1000 that can degrade to $0 or go to $50,000. The bottom is capped at $0, you cant do no worst, limited downside and unlimited upside. I think it's worth some disposable income.
  - jmm 16y ago
    Um... that's true of buying any stock, right? So I'm not sure the logic allows you to make any kind of comparative decision.
    - deleted 16y ago
      [deleted]
    - zackattack 16y ago
      Not quite. Most stocks don't have 50x potential. (I'm not saying that Tesla does.)

jrockway 16y ago

If you want to guess the price a few months out, though, you can just buy options. If you think Tesla will be $35 by mid-January, you could buy a $30 call option for something like $2 a contract. If the stock hits $35 before expiration, you'll sell the option for $500 a contract. The downside is $2, the upside is $500. I don't see any options chains for TSLA yet, though, so I am just making the first number up. But that's the idea behind options -- if you want to speculate instead of have equity in the company, buy or sell options. Much cheaper.