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Tesla shares soar 40% in 2 days and short sellers get squeezed
- MandieD 7y agoNo matter how confident you are in your belief that a stock or the market in general is overvalued, never forget what John Maynard Keynes said: "The market can stay irrational longer than you can remain solvent." I repeat this to myself any time I'm tempted to short what I think is a grossly over-valued tech stock.
- imtringued 7y agoI wonder how much it will take until everyone understands that this market cap is unsustainable. Is Tesla going to reach 1 trillion before that?
- SideburnsOfDoom 7y agoTo what extent is is "unsustainable" and to what extent is is self-fulfilling? i.e. if the engineering is sound, can a company leverage the higher share value (by issuing or selling shares?) to deliver more and thereby justify the value?
- Scoundreller 7y agoA great strategy when your industry is in a bubble is to trade your valuable pieces of paper for other productive/hard asset companies. Tesla Apartments anyone?
- SideburnsOfDoom 7y agoTesla solar roofs, and Tesla home batteries work for full houses. You might be onto something with an apartment option! (only joking, well mostly joking)
- Scoundreller 7y agoOh, your bedroom light is out. Sorry, were out of stock on that part and there’s a 6month wait.
- SideburnsOfDoom 7y agoCould be worse, there's a CVE out today for the firmware on my actual bedroom lights https://thehackernews.com/2020/02/philips-smart-light-bulb-hacking.html https://thehackernews.com/2020/02/philips-smart-light-bulb-h...
- xkjkls 7y agoDo Tesla Solar Roofs work? The number of installations three and a half years in have been pathetic
- SideburnsOfDoom 7y agoClearly they're not a big success, yet. But after a google, it does seem to be a live product, being worked on.
- ckastner 7y agoAn analyst firm, ARK research, on Jan 31st raised the forecast for Tesla to $7,000 by 2024, for a market cap of well above one trillion. Because "robotaxis". This confidence in Tesla was really odd, given that they apparently significantly reduced their investment in Q4 [1]. [1] https://www.barrons.com/articles/tesla-stock-7000-ark-invest-stashed-stake-analyst-bullish-call-51580832133 https://www.barrons.com/articles/tesla-stock-7000-ark-invest...
- wcoenen 7y agoIt's not odd if you read the article that you linked. It explains that ARK does not allow more than 10% weight for any position, so they had to sell some Tesla shares to rebalance.
- ckastner 7y agoIt says that it does not allow purchases beyond 10% weight (and in "rare and specific cases", exceptions are possible), not 10% per se. Appreciation of an existing beyond 10% is at the discretion of the portfolio manager.
- xkjkls 7y agoThat’s because their price target is complete BS meant to hype the stock they own.
- beatgammit 7y agoI think the safer option is to buy a solid competitor that will benefit if the overvalued stock corrects. For example, if you think Ford or BMW will attract investors if Tesla deflates, buy that instead.
- mrlanderson 7y agoI know it's just an example, but buying ford or bmw in this case just wouldn't work
- vikramkr 7y agoor use options to hedge. You'd really have to be certain about the correlation between tesla and ford/bmw etc for that to make any sense, and I can't imagine that all the elon-worshipping retail investors and the people buying the tesla hype would, if disillusioned, decide to go buy a boring, lame company like Ford. DOesn't seem like the same set of investors
- ta999999171 7y agoOr their top Chinese competitor. Not that I would, but
- xkjkls 7y agoNIO hasn’t exactly been doing well
- xkjkls 7y agoWhat if you think the entire car market is overvalued, but Tesla specifically so?
- ramblerman 7y agoDoes this quote apply more to going short? I interpret it as a general 'warning' for any market speculation.
- nfriedly 7y agoYea, but it applies to shorting more than most other forms of speculation. When you buy a stock because you think it's going to go up, the maximum amount of money you could loose for being wrong is whatever you spent on buying it. When you sell/don't buy a stock because you think it's going to go down, you're only loosing potential upside, there is no downside. In other words, there's no way for it to cause you to have less money than you have today. But, when you short a stock, your potential downside is uncapped. That stock can keep going up to infinity, and as it does, your losses go up towards infinity.
- aeternum 7y agoYou can purchase puts instead of shorting the stock to eliminate the risk of insolvency. If your time horizon is more than two years, then it's not much of a prediction anyway as most companies are likely to go to zero given enough time.
- xkjkls 7y agoPuts cap your losses, but they also are inherently more volatile than the stock itself.
- xkjkls 7y agoIt really depends on how you look at short positions. If you also have a long portfolio, and you would like your returns to be less market correlated, then short positions can be fine. I’d recommend almost every retail investor never short anything, but the math can be different if you are a large fund or institutional capital
- nikofeyn 7y agoif anyone is familiar with the chinese electric car scene, then one will know that tesla, america's darling, is not as ahead as people give them credit before. if any of the chinese car manufacturers come to the u.s. and are able to break through stigma, then tesla will be in trouble. neo, byton, weltmeister, byd, and more have serious competitive car offerings. i have ridden in a nio suv, and the quality greatly surpasses that of tesla.
- valdiorn 7y agoyou can have the greatest tech in the world, but that won't help you if you can't market your product properly. I've never even heard of any of these brands, yet I'm actually an avid fan of chinese breakthrough tech in many areas, and have absolutely no problem supporting the Chinese tech industry. But almost all of them have one flaw in common; they don't know how to build a brand and market to western consumers, which is where a lot of the revenue is found. This seems to apply whether we're talking about cheap consumer electronics, specialized digital equipment (in my particular case, audio processing equipment), or cars.
- Scoundreller 7y agoUsually it takes a few decades. But there were times that Samsung and Toyota were unknowns. I think China’s problem is the Western belief that their tech products are built to spy first and perform second. And that primary functionality could just be removed for the western market.
- alexgmcm 7y agoAlso the anti-Chinese practices - my next cellphone would definitely be a Huawei P30 Pro if it wasn't for the fact you can't use Google Play Store etc. with it anymore. I'm not sure who's winning these trade wars, but the consumer is losing.
- vikramkr 7y agoThey aren't doing very much to assuage fears about spying. The west doesn't fear that because they're chinese or asian (we have no problem trusting Japanese products for example) - the fear is because China has an authoritarian government with very close links with industry and state run businesses.
- naveen99 7y agoIt’s not on the most shorted stocks list here: https://www.highshortinterest.com/nasdaq/ https://www.highshortinterest.com/nasdaq/ Where do people get their short interest data ?