4 ms·

> I think a Tesla shareholder should be pretty happy with this settlement. The $20m fine at a time when Tesla is already running low of cash is certainly tough

> I think a Tesla shareholder should be pretty happy with this settlement. The $20m fine at a time when Tesla is already running low of cash is certainly tough news, but every other part of this settlement is probably good news for the company's long term health. Hi there. More than 1/4 of my net worth, and over 1/2 of my equity holdings are in TSLA. I agree with every word of this. The $20M hurts, but on net, I think this is better for Tesla than if Elon had won the lawsuit.

kosei 8y ago
You do you, but having 1/4 of your net worth in any company is extremely risky and ill-advised. I hope it works out for you, but I also really hope you diversify your portfolio.
- jsight 8y ago
  Granted, we know nothing about the person's current life circumstances, but this is really good advice.
  - mytaa 8y ago
    I mean it's the most generic advice you can give. Maybe he enjoys believing in a single company and taking risks. Maybe he's totally fine even if he lost it all. People spend more than 1/4 of their net worth's on hobbies, but suddenly if you have 1/4 of your net worth in a single company it's a disaster and you are crazy.
    - marvin 8y ago
      Maybe he invested 2% of his net worth in Tesla at the IPO, was determined to hold the shares for at least 10 years until they executed on their vision, and has been too stubborn to sell until now. Re-balancing your portfolio after things have started to go very, very well is certainly sound advice, and so is selling all your equity in a promising startup the moment it has significant market value (it will most likely still be worthless).
      - freerobby 8y ago
        Yeah, this is closer to how I got here (cost basis is way more than 2%, but nowhere near 25%). As you hint at though, there's a cognitive bias in holding my position by this reasoning -- my gains are a "sunk benefit" and I am where I am regardless of how I got here. For me, it boils down to two things: 1. I'm pretty conservative with the rest of my money (index funds, rental property). If Tesla went bankrupt tomorrow, I'd be fine. Don't get me wrong -- it'd be a bad day. But the financial hit wouldn't threaten my long-term happiness. 2. I only buy individual stocks when I feel the market has wildly misjudged a company. Tesla fit this to a tee, particularly (but not exclusively) in the early days. I took a large early position and have been buying dips along the way (yes, still). By my judgment, a dollar invested in Tesla still has a much higher expected value over 10 years than a dollar invested in any other equity that I feel qualified to assess. I would love to diversify the highly aggressive part of my portfolio, but hard as I try, I cannot find a deal this good in any other public company. So I've decided how much I'm willing to lose on what I believe is a great bet, and have invested accordingly.
        marvin 8y ago
        I agree with your reasoning.
- nodesocket 8y ago
  Came to echo this sentiment, though don't know how old you are, and if in fact you are being 100% truthful. Having that much in a single highly risky company under intense conditions is not a sound investment strategy. Rolling the dice, just know the risk.
  - freerobby 8y ago
    I'm being 100% truthful, but I recognize that saying this doesn't establish any additional credibility. :) I didn't mean to make this about me or my investment strategy. I was just trying to back up the sentiment that the poster above me expressed -- that people with skin in the game will see this settlement as a great thing for Tesla. I have a lot of skin in the game and that's exactly how I feel.
    - nodesocket 8y ago
      Congratulations on the $TSLA rebound today. Best of luck, just to risky for my blood especially to have such a large position.
- Aeolun 8y ago
  1/4th of my $500 net worth! :P
hn_throwaway_99 8y ago
> More than 1/4 of my net worth, and over 1/2 of my equity holdings are in TSLA. No offense, but why???? It is crazy to have this much of your meet worth in ANY single company. I can only hope that you are independently wealthy and if TSLA went bankrupt (of which there is a very large possibility) that you'd be ok.
- tasuki 8y ago
  Interestingly, I was hoping the OP is a poor college student for whom 1/4 of their net worth isn't all that much money...
  - blackbrokkoli 8y ago
    Well arguably it would be even worse than. I think it's save to say that the relative amount of money lost is more important than the absolute money lost for most people
    - isostatic 8y ago
      If his net worth is $1k, with $500 in cash and $250 in Tesla that makes perfect sense. Under 35s median net worth is $4k https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F167908%2Fmedian-net-worth-by-age.JPG&w=700&op=resize https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com...
    - DennisP 8y ago
      If your earnings are likely to go up dramatically later, then it's fine to take large risks with the money you can invest now. Unless you have large gains, it's not enough money to make much difference anyway. This assumes of course that you've got the basics covered, like being out of debt and having some kind of emergency backup (savings, insurance, well-off parents, etc).
- LeifCarrotson 8y ago
  The only way this could make sense would be if OP was an employee recieving stock they are not yet allowed to sell.
jvreagan 8y ago
What the others already said; also, I am reminded of Enron and the stories almost 20 years ago of people being wiped out due to the Enron collapse. My internal reaction at the time was "diversify a little."
- jaggederest 8y ago
  Or hedge with some puts, or something, to limit your downside risk.
  - marvin 8y ago
    Due to the volatility and the extreme short interest, those puts are quite expensive, and have been for years ;) You could certainly buy out-of-the-money options at 50% of the current market cap expiring in the next quarter, and been doing so regularly during the last five years during which Tesla's prospects have seemed quite dodgy. But it would have more or less have wiped out your upside. So if that's the insurance you would have liked for such a risky investment, it would have been better to just invest in something else.
    - jaggederest 8y ago
      I was thinking that one might partially cover (e.g. buy puts for 25-50% of the value of their portfolio) but you're right. the risk premium should be exactly equal to the expected profit on the asset, if the world works the way theory predicts.
  - phyller 8y ago
    Just FYI, but when you hedge with puts your holding period to realize long term gains instead of short term gains gets reset immediately, then you have to wait another year after you close the put position before you can sell as long term gains. Just something to keep in mind.
    - jaggederest 8y ago
      Interesting, yes, since the ownership of the put is an equivalent to a sale, yes?

kosei 8y ago

You do you, but having 1/4 of your net worth in any company is extremely risky and ill-advised. I hope it works out for you, but I also really hope you diversify your portfolio.

jsight 8y ago
Granted, we know nothing about the person's current life circumstances, but this is really good advice.
- mytaa 8y ago
  I mean it's the most generic advice you can give. Maybe he enjoys believing in a single company and taking risks. Maybe he's totally fine even if he lost it all. People spend more than 1/4 of their net worth's on hobbies, but suddenly if you have 1/4 of your net worth in a single company it's a disaster and you are crazy.
  - marvin 8y ago
    Maybe he invested 2% of his net worth in Tesla at the IPO, was determined to hold the shares for at least 10 years until they executed on their vision, and has been too stubborn to sell until now. Re-balancing your portfolio after things have started to go very, very well is certainly sound advice, and so is selling all your equity in a promising startup the moment it has significant market value (it will most likely still be worthless).
    - freerobby 8y ago
      Yeah, this is closer to how I got here (cost basis is way more than 2%, but nowhere near 25%). As you hint at though, there's a cognitive bias in holding my position by this reasoning -- my gains are a "sunk benefit" and I am where I am regardless of how I got here. For me, it boils down to two things: 1. I'm pretty conservative with the rest of my money (index funds, rental property). If Tesla went bankrupt tomorrow, I'd be fine. Don't get me wrong -- it'd be a bad day. But the financial hit wouldn't threaten my long-term happiness. 2. I only buy individual stocks when I feel the market has wildly misjudged a company. Tesla fit this to a tee, particularly (but not exclusively) in the early days. I took a large early position and have been buying dips along the way (yes, still). By my judgment, a dollar invested in Tesla still has a much higher expected value over 10 years than a dollar invested in any other equity that I feel qualified to assess. I would love to diversify the highly aggressive part of my portfolio, but hard as I try, I cannot find a deal this good in any other public company. So I've decided how much I'm willing to lose on what I believe is a great bet, and have invested accordingly.
      - marvin 8y ago
        I agree with your reasoning.
nodesocket 8y ago
Came to echo this sentiment, though don't know how old you are, and if in fact you are being 100% truthful. Having that much in a single highly risky company under intense conditions is not a sound investment strategy. Rolling the dice, just know the risk.
- freerobby 8y ago
  I'm being 100% truthful, but I recognize that saying this doesn't establish any additional credibility. :) I didn't mean to make this about me or my investment strategy. I was just trying to back up the sentiment that the poster above me expressed -- that people with skin in the game will see this settlement as a great thing for Tesla. I have a lot of skin in the game and that's exactly how I feel.
  - nodesocket 8y ago
    Congratulations on the $TSLA rebound today. Best of luck, just to risky for my blood especially to have such a large position.
Aeolun 8y ago
1/4th of my $500 net worth! :P

hn_throwaway_99 8y ago

> More than 1/4 of my net worth, and over 1/2 of my equity holdings are in TSLA. No offense, but why???? It is crazy to have this much of your meet worth in ANY single company. I can only hope that you are independently wealthy and if TSLA went bankrupt (of which there is a very large possibility) that you'd be ok.

tasuki 8y ago
Interestingly, I was hoping the OP is a poor college student for whom 1/4 of their net worth isn't all that much money...
- blackbrokkoli 8y ago
  Well arguably it would be even worse than. I think it's save to say that the relative amount of money lost is more important than the absolute money lost for most people
  - isostatic 8y ago
    If his net worth is $1k, with $500 in cash and $250 in Tesla that makes perfect sense. Under 35s median net worth is $4k https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F167908%2Fmedian-net-worth-by-age.JPG&w=700&op=resize https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com...
  - DennisP 8y ago
    If your earnings are likely to go up dramatically later, then it's fine to take large risks with the money you can invest now. Unless you have large gains, it's not enough money to make much difference anyway. This assumes of course that you've got the basics covered, like being out of debt and having some kind of emergency backup (savings, insurance, well-off parents, etc).
LeifCarrotson 8y ago
The only way this could make sense would be if OP was an employee recieving stock they are not yet allowed to sell.

jvreagan 8y ago

What the others already said; also, I am reminded of Enron and the stories almost 20 years ago of people being wiped out due to the Enron collapse. My internal reaction at the time was "diversify a little."

jaggederest 8y ago
Or hedge with some puts, or something, to limit your downside risk.
- marvin 8y ago
  Due to the volatility and the extreme short interest, those puts are quite expensive, and have been for years ;) You could certainly buy out-of-the-money options at 50% of the current market cap expiring in the next quarter, and been doing so regularly during the last five years during which Tesla's prospects have seemed quite dodgy. But it would have more or less have wiped out your upside. So if that's the insurance you would have liked for such a risky investment, it would have been better to just invest in something else.
  - jaggederest 8y ago
    I was thinking that one might partially cover (e.g. buy puts for 25-50% of the value of their portfolio) but you're right. the risk premium should be exactly equal to the expected profit on the asset, if the world works the way theory predicts.
- phyller 8y ago
  Just FYI, but when you hedge with puts your holding period to realize long term gains instead of short term gains gets reset immediately, then you have to wait another year after you close the put position before you can sell as long term gains. Just something to keep in mind.
  - jaggederest 8y ago
    Interesting, yes, since the ownership of the put is an equivalent to a sale, yes?