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Woohoo! I was wondering whether to buy more TSLA. Now I just have to wait a couple of days and buy it on the cheap. They've got plenty going for them in the f

by adwf 12y ago

Woohoo! I was wondering whether to buy more TSLA. Now I just have to wait a couple of days and buy it on the cheap. They've got plenty going for them in the future: New humungous battery plant, new more reasonably priced mass-market car, the most advanced electric drivetrain in the world (which they can license out), the ongoing scale out of charging points, and they still can't make the Model S fast enough to match demand. I can't really see where S&P are coming from on this one, but I'll take free money when I see it...

mikeash 12y ago
You see a high chance of striking it rich and a small chance of losing your investment, and you think, this is great! That's because you're buying stock. You'll share in the upside, if and when it comes. This rating is abound bonds. The high chance of striking it rich doesn't do anything. And what's a small chance of losing your investment as a stock investor in a company that could become huge is a relatively big chance of losing your investment as a bond buyer who gets a fixed rate of return no matter how successful the company becomes. I can see buying Tesla stock, but I'd be really hesitant at buying Tesla bonds.
- Retric 12y ago
  It's convertable debt which is effectively a bond + stock option so you do share in the upside.
  - mikeash 12y ago
    That's interesting! However, is it taken into account in the ratings? Even if there is a potential upside, it looks to me as far as I can tell (and I could be wrong!) that the rating is still just based on the chances of the company paying it back, and not on the risk-adjusted potential gain.
- adwf 12y ago
  The bond rating will affect the stock by proxy, so it's alright for me. But even the bonds have a decent chance of maturing. They're convertible bonds too, not just standard interest bearing ones. So really, you can treat them more like stock anyway. The question is "Do I see Tesla as still being here in 5 years?". No doubt about it. Well, in one form or another anyway.

by adwf 12y ago

mikeash 12y ago

You see a high chance of striking it rich and a small chance of losing your investment, and you think, this is great! That's because you're buying stock. You'll share in the upside, if and when it comes. This rating is abound bonds. The high chance of striking it rich doesn't do anything. And what's a small chance of losing your investment as a stock investor in a company that could become huge is a relatively big chance of losing your investment as a bond buyer who gets a fixed rate of return no matter how successful the company becomes. I can see buying Tesla stock, but I'd be really hesitant at buying Tesla bonds.

Retric 12y ago
It's convertable debt which is effectively a bond + stock option so you do share in the upside.
- mikeash 12y ago
  That's interesting! However, is it taken into account in the ratings? Even if there is a potential upside, it looks to me as far as I can tell (and I could be wrong!) that the rating is still just based on the chances of the company paying it back, and not on the risk-adjusted potential gain.
adwf 12y ago
The bond rating will affect the stock by proxy, so it's alright for me. But even the bonds have a decent chance of maturing. They're convertible bonds too, not just standard interest bearing ones. So really, you can treat them more like stock anyway. The question is "Do I see Tesla as still being here in 5 years?". No doubt about it. Well, in one form or another anyway.