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> Software scales. People like to make money. Combine the two and its a real winner. There were plenty of tech losers. You still had to pick the winners. > Ph

> Software scales. People like to make money. Combine the two and its a real winner. There were plenty of tech losers. You still had to pick the winners. > Physics based thinking. I knew electric cars were going to work because the math checked out. Electric cars were obvious, but Tesla was not an obvious play. In hindsight, it might seem so, but in the beginning it was far from clear that Tesla would dominate the space. Additionally, time will tell if Tesla's stock stays 8x higher than its pre-pandemic price. > Sell when forward price to earnings after cash starts to look wonky. Which was 2007 and I think 2019. This happened many more times than the two massive crashes. If you actually followed this advice, you'd probably be worse off than investing in the s&p - even if you did pick good stocks. -- As others have mentioned, beating the market with $1M invested is much easier than beating the market with $10B invested. Especially when your appetite for potentially losing money is much higher. Let's naively assume that you actually can pick stocks. At $10Bn - you need to pick more stocks - otherwise you would drive up the price too much in buying that much of the stock - unless you only picked Apple and Google and MSFT and Amazon.

ionwake 5y ago
Driving the price of a stock higher is a bad thing? Also why are you calling his actions naive ? He made money as did others.
- MichaelBurge 5y ago
  The goal is to buy the largest percentage of the company with as little money as possible. If the asks in an order book are (price, quantity) pairs of (p0, q0), (p1, q1), etc. with p0 < p1 < ... and you have $C in capital, then ignoring the "driving price of a stock higher" effect(i.e. if C/p0 < q0) you could buy floor(C/p0) shares. However, if you purchase more than q0 shares, those will be priced at p1, p2, etc. and you'll instead buy C/(weighted_average([p0, p1, ...], [q0, q1, ... q_remainder]) shares(where the weights are the quantities). And because p0 < p1 < p2 ..., this will be fewer shares than C/p0. At the extreme end, if you try to "clear out the order book", a stock that is nominally $10 you'd be paying $1 million per share to someone that put in a joke order to sell. So you'd be getting 100,000x fewer shares per marginal capital deployed compared to a smaller investor.
treis 5y ago
>Electric cars were obvious, but Tesla was not an obvious play. In hindsight, it might seem so, but in the beginning it was far from clear that Tesla would dominate the space. Additionally, time will tell if Tesla's stock stays 8x higher than its pre-pandemic price. Tesla's stock price isn't really related to the fundamentals. It's a meme stock that, as you note, benefited hugely from the increased retail interest in stocks during Covid. Even if the GP got into it by looking at the fundamentals their profit is (mostly) because of its status as a meme stock.
- 3pt14159 5y ago
  I agree it's a meme stock now, but it wasn't always a meme stock. There was a time where it was severely undervalued and that's when I bought. I did not hold it all the way to the top. I sold it way before then.
  - Aunche 5y ago
    In retrospect, Tesla was undervalued, but this wasn't a guarantee. Elon is a loose cannon with a history of overpromising to the extent of borderline lying. This got him in trouble with the SEC (funding secured), and he lost his board chair position and could have been ousted as CEO. In hindsight, the SEC obviously wouldn't screw over the fastest growing American company for a dumb meme tweet, but this isn't something people knew at the time.
    - onlyrealcuzzo 5y ago
      Fastest growing in what way? Tesla is hardly growing profits or revenues at the rate of Google and Apple. And their profits are already 50-100x bigger... It's only fastest growing in asset price.
3pt14159 5y ago
> Let's naively assume that you actually can pick stocks. At $10Bn - you need to pick more stocks - otherwise you would drive up the price too much in buying that much of the stock This refrain is common enough, but I don't think it really bears out in the math. Elon just sold $16B worth of stock and the price barely budged. If you've got enough alpha to work with every beta seller out there will hop off and it's well, well before the peak. > There were plenty of tech losers. You still had to pick the winners. Yes because I applied basic reasoning. People were still investing in AOL and Yahoo when I picked Google. Seriously. AOL and Yahoo. It was bananas. Every person I knew that had any amount of tech savviness was on Google. The search results were clearly superior. "Invest in products that are better" should be a meme on WSB or something. What I didn't mention above was that in the mid 2000s I also made money off of oil because I was following China's modernization and politics in the middle east. People back then pushed me on just how much oil would go up and when I said I thought it could triple they looked at me sideways. But it nearly tripled then I sold. I tried to get into lithium through SQM, because I thought electric cars and widespread computing were going to strain supplies, but they didn't. That's when I learned the lesson that over time commodities go down. > If you actually followed this advice, you'd probably be worse off than investing in the s&p - even if you did pick good stocks. Not really? Buying in at the very lowest part of 2009 gives a lot of range to play with. This bullrun is much, much longer than most, but over time I think it's easier to dodge the correction than to call the top. The reason for this is that to call the top is to predict when human irrationality reverses. Something I'm not great at doing. What I'm good at is first principles. And at some point I don't care how much blood there is in the streets. That fucking share of Apple is undervalued enough to where I would sell priceless art to buy it.
- atombender 5y ago
  > Elon just sold $16B worth of stock and the price barely budged. I could be wrong, but my understanding that such huge trades are not put on the market the normal way, but run through big investment banks that are able to use different techniques to avoid harming the stock price. For example, they can exchange the shares with hedge funds, ETFs/mutual funds, pension funds, and they can do the trades in batches over several days.

ionwake 5y ago

Driving the price of a stock higher is a bad thing? Also why are you calling his actions naive ? He made money as did others.

MichaelBurge 5y ago
The goal is to buy the largest percentage of the company with as little money as possible. If the asks in an order book are (price, quantity) pairs of (p0, q0), (p1, q1), etc. with p0 < p1 < ... and you have $C in capital, then ignoring the "driving price of a stock higher" effect(i.e. if C/p0 < q0) you could buy floor(C/p0) shares. However, if you purchase more than q0 shares, those will be priced at p1, p2, etc. and you'll instead buy C/(weighted_average([p0, p1, ...], [q0, q1, ... q_remainder]) shares(where the weights are the quantities). And because p0 < p1 < p2 ..., this will be fewer shares than C/p0. At the extreme end, if you try to "clear out the order book", a stock that is nominally $10 you'd be paying $1 million per share to someone that put in a joke order to sell. So you'd be getting 100,000x fewer shares per marginal capital deployed compared to a smaller investor.

treis 5y ago

>Electric cars were obvious, but Tesla was not an obvious play. In hindsight, it might seem so, but in the beginning it was far from clear that Tesla would dominate the space. Additionally, time will tell if Tesla's stock stays 8x higher than its pre-pandemic price. Tesla's stock price isn't really related to the fundamentals. It's a meme stock that, as you note, benefited hugely from the increased retail interest in stocks during Covid. Even if the GP got into it by looking at the fundamentals their profit is (mostly) because of its status as a meme stock.

3pt14159 5y ago
I agree it's a meme stock now, but it wasn't always a meme stock. There was a time where it was severely undervalued and that's when I bought. I did not hold it all the way to the top. I sold it way before then.
- Aunche 5y ago
  In retrospect, Tesla was undervalued, but this wasn't a guarantee. Elon is a loose cannon with a history of overpromising to the extent of borderline lying. This got him in trouble with the SEC (funding secured), and he lost his board chair position and could have been ousted as CEO. In hindsight, the SEC obviously wouldn't screw over the fastest growing American company for a dumb meme tweet, but this isn't something people knew at the time.
  - onlyrealcuzzo 5y ago
    Fastest growing in what way? Tesla is hardly growing profits or revenues at the rate of Google and Apple. And their profits are already 50-100x bigger... It's only fastest growing in asset price.

3pt14159 5y ago

> Let's naively assume that you actually can pick stocks. At $10Bn - you need to pick more stocks - otherwise you would drive up the price too much in buying that much of the stock This refrain is common enough, but I don't think it really bears out in the math. Elon just sold $16B worth of stock and the price barely budged. If you've got enough alpha to work with every beta seller out there will hop off and it's well, well before the peak. > There were plenty of tech losers. You still had to pick the winners. Yes because I applied basic reasoning. People were still investing in AOL and Yahoo when I picked Google. Seriously. AOL and Yahoo. It was bananas. Every person I knew that had any amount of tech savviness was on Google. The search results were clearly superior. "Invest in products that are better" should be a meme on WSB or something. What I didn't mention above was that in the mid 2000s I also made money off of oil because I was following China's modernization and politics in the middle east. People back then pushed me on just how much oil would go up and when I said I thought it could triple they looked at me sideways. But it nearly tripled then I sold. I tried to get into lithium through SQM, because I thought electric cars and widespread computing were going to strain supplies, but they didn't. That's when I learned the lesson that over time commodities go down. > If you actually followed this advice, you'd probably be worse off than investing in the s&p - even if you did pick good stocks. Not really? Buying in at the very lowest part of 2009 gives a lot of range to play with. This bullrun is much, much longer than most, but over time I think it's easier to dodge the correction than to call the top. The reason for this is that to call the top is to predict when human irrationality reverses. Something I'm not great at doing. What I'm good at is first principles. And at some point I don't care how much blood there is in the streets. That fucking share of Apple is undervalued enough to where I would sell priceless art to buy it.

atombender 5y ago
> Elon just sold $16B worth of stock and the price barely budged. I could be wrong, but my understanding that such huge trades are not put on the market the normal way, but run through big investment banks that are able to use different techniques to avoid harming the stock price. For example, they can exchange the shares with hedge funds, ETFs/mutual funds, pension funds, and they can do the trades in batches over several days.