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Your Retirement Money is about to get much riskier

GarScramb

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May 22, 2020
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Tesla (TSLA) is about to get added to the S&P 500 Index. The way the stocks in the index are weighted, TSLA will be almost 1.5% of the index. This means that any retirement money you have invested in a mutual fund that tracks that index will have to buy TSLA. Currently the stock is trading for around 1,200 x earnings. This is totally insane. For perspective, say you are offered the opportunity to buy the best pizza shop in town. Currently that shop generates $100,000 in income for the owner per year. The town is growing fast so there is potential for more. Would you pay $120,000,000 for that business?

Get ready for some wild rides.
 
Tesla (TSLA) is about to get added to the S&P 500 Index. The way the stocks in the index are weighted, TSLA will be almost 1.5% of the index. This means that any retirement money you have invested in a mutual fund that tracks that index will have to buy TSLA. Currently the stock is trading for around 1,200 x earnings. This is totally insane. For perspective, say you are offered the opportunity to buy the best pizza shop in town. Currently that shop generates $100,000 in income for the owner per year. The town is growing fast so there is potential for more. Would you pay $120,000,000 for that business?

Get ready for some wild rides.

Flipside is you will be buying on dips as well. Valuations on the entire market is insane right now.
 
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At 1200x earnings, how much of a dip can one expect? Genuinely curious...

Look at the historical tesla chart. I have bought and sold tesla a few times (I am not a trader at all) and doubled my money each time. That stock swings pretty wildly, who knows maybe this S&P addition will stabilize it a bit.
 
Look at the historical tesla chart. I have bought and sold tesla a few times (I am not a trader at all) and doubled my money each time. That stock swings pretty wildly, who knows maybe this S&P addition will stabilize it a bit.

I see that now.
Damn what a swing, from 650 a share to 90.
Probably time to buy 10 or 20 shares.....
 
While we're trying to figure out Tesla maybe someone can also explain how the market is up at all time highs among mass business closure scamdemic. Or is shit still going to come crumbling down like everyone thought it was a year ago?
 
While we're trying to figure out Tesla maybe someone can also explain how the market is up at all time highs among mass business closure scamdemic. Or is shit still going to come crumbling down like everyone thought it was a year ago?

It will once the bailout money is all gone, until the new 600 billion bailout goes into effect i guess:rolleyes:
And fyi, that was 9 months ago:laughing:
 
While we're trying to figure out Tesla maybe someone can also explain how the market is up at all time highs among mass business closure scamdemic. Or is shit still going to come crumbling down like everyone thought it was a year ago?

$27T in government spending... It's all artificially inflated.
 
I see that now.
Damn what a swing, from 650 a share to 90.
Probably time to buy 10 or 20 shares.....

Not exactly. It was never $90/share (at least not in recent history). Several months ago, Tesla did a 4:1 split, so that "$90" you see was actually $360." Conversely, the current $600 is actually $2400 off that $360 investment.
 
Not exactly. It was never $90/share (at least not in recent history). Several months ago, Tesla did a 4:1 split, so that "$90" you see was actually $360." Conversely, the current $600 is actually $2400 off that $360 investment.

I missed the part that states 90 is the price target, not the price:homer:
Apparently bidding jobs and looking at the stock market doesn't mix:laughing:Now i gotta go back and look through my work to be sure i didn't fuck one up while playing on irate:lmao:
 
Yet the S&P has digested gluts of over-valued tech stocks on a regular basis since 1997 or so. The hiccups associated with tech valuations have largely left institutional and fund investors unscathed about stock prices, and more concerned with the broader economy.

That's why people are quipping 'Stocks always go up' in a sarcastic manner, but essentially it's true.

Yes, 1.5% of the index is nothing. But the smart guy says "yeah but perception valuation, if TSLA goes, so goes the index". But then all that extra capital is laying around looking for a place to go. It's most likely to go into other S&P traded stocks. So there is a shock, then a dip, then an over-eager buy-back-in, then it settles down and the same general amount of money is available for the market, and your mutual funds recover and you go on with your life.

Everyone over 45 should have this completely figured out by now.
 
Not exactly. It was never $90/share (at least not in recent history). Several months ago, Tesla did a 4:1 split, so that "$90" you see was actually $360." Conversely, the current $600 is actually $2400 off that $360 investment.

and never mind that even elon musk said it was wildly overvalued back when that $2400 was still only $700 🤣

according to the article, they've raised billions this year though, so they should still be in business for at least the next 2 or 3 years :lmao:
 
Yet the S&P has digested gluts of over-valued tech stocks on a regular basis since 1997 or so. The hiccups associated with tech valuations have largely left institutional and fund investors unscathed about stock prices, and more concerned with the broader economy.

That's why people are quipping 'Stocks always go up' in a sarcastic manner, but essentially it's true.

Yes, 1.5% of the index is nothing. But the smart guy says "yeah but perception valuation, if TSLA goes, so goes the index". But then all that extra capital is laying around looking for a place to go. It's most likely to go into other S&P traded stocks. So there is a shock, then a dip, then an over-eager buy-back-in, then it settles down and the same general amount of money is available for the market, and your mutual funds recover and you go on with your life.

Everyone over 45 should have this completely figured out by now.

I can't disagree with any of that. I do think the weighting issue goes a little deeper, in that TSLA is being valued at the same level as Berkshire and Google (Alphabet). To me that is just mind-boggling.
 
There's $70 billion in unpaid rent. Probably that same amount or more in unpaid mortgages. The average family not paying rent is behind $5400 just on rent. All of this is going to come due and it will affect markets.
 
Not a single poster really has a grasp on the market that much is obvious. OP does not understand how the market values TSLA.

F you are relying purely on some ETF tracking the S&P to take car of your retirement, you are barely going to keep up with inflation - especially once the Fed stops printing money, and inflation takes hold. If anything that addition of TSLA to the S&P will help your ETF's as they can dump whatever company is doing so badly it is getting the boot from the index. The ETF's make money when the stock goes up, not because of some P/E target that is almost meaningless. Would you have bought AMZN in the first ten years when it lost money every quarter? And if you did how many millions would you be worth now?

To put it simply, TSLA is not valued on P/E or how many cars they sell (at the moment). They are being valued as a technology company, and as the world transitions to e-vehicles, with e-batteries, guided by e-drivers, and homes need solar panels to charge their e-home batteries, the technology owned by and licensed by Tesla will be worth trillions - that is why TSLA is so highly valued.

In a single sentence - the stock market is projecting forward (somewhere between 6 and 12 months depending which "expert" you believe), so the current valuations are predicting that the country will return to some semblance of normal by late summer / fall of 2021. Biden is more in the pocket of wall street than Trumpy ever was (take a look at where wall street money went in the election), so the money men expect the printing of money to continue unabated for the near future.

Why bitch and moan, why not take advantage of the way the system works. I don't try to change the rules of golf, or the course, I accept it for what it is, and play within those parameters, rules and restrictions. If I really give a shit, I may even take a lesson or two to improve.

Just another indictment of the education system really. We over-emphasize the importance of a college education, yet have kids leaving high school who could not balance a check book (or Venmo account). Not difficult to teach. But if you actually taught them how to understand the most basic math and finances, they likely would not be suckered into multi decade student loans that just perpetuate and support the same poor education system (but at least the kids are indoctrinated into socialism, and it is better they don't understand math)

:flipoff2::flipoff2: :grinpimp::grinpimp:

and laughing because I am long TSLA since the $500's - PRE split, heck I bought several large positions at $380 post split, and with TSLA at 625 plus today, those are on their way to double soon. But TSLA options trades this year have been key, responsible for two five figure days alone. Keep hating on TSLA, enjoy the FOMO
 
i don't disagree that TSLA isn't valued as a vehicle company, or anything really, but even was it was ~6x cheaper than it is now, it was still too expensive for me :laughing:

but to say that the markets are predicting forward or have some metric that drives things and isn't just all made up bullshit, and then to try and justify TSLA as some kind of reasonable valuation is silly :flipoff2:
 
i don't disagree that TSLA isn't valued as a vehicle company, or anything really, but even was it was ~6x cheaper than it is now, it was still too expensive for me :laughing:

but to say that the markets are predicting forward or have some metric that drives things and isn't just all made up bullshit, and then to try and justify TSLA as some kind of reasonable valuation is silly :flipoff2:

Everyone needs to trade to their risk tolerance, and if it is too expensive, that is just fine.

Don't get me wrong, I spent years moaning about TSLA, and thought those "investing" in it were fools. At some point I realized that TSLA does not trade like any other stock, valuations do not matter, only the technicals, and momentum matter. When I accepted that I went from being red on most TSLA trades to being way green. Probably one of my top 5 stocks traded this year, but there are definitely times I will not touch TSLA (even with TexasBlake's dick).

IF you honestly think the market is just made up bullshit, you are probably better off investing in lead and powder, and hoping that folks eventually get off the porch. Lead and powder are my hedges, I hope I never have to use them, until I do, I try to work within my own miniscule part of the market to make a few bucks. And that means trading stocks I don't believe in or trust, but if the technicals are right, volume is on the up, and momentum is there, I would be silly to fight the trends.
 
Everyone needs to trade to their risk tolerance, and if it is too expensive, that is just fine.

Don't get me wrong, I spent years moaning about TSLA, and thought those "investing" in it were fools. At some point I realized that TSLA does not trade like any other stock, valuations do not matter, only the technicals, and momentum matter. When I accepted that I went from being red on most TSLA trades to being way green. Probably one of my top 5 stocks traded this year, but there are definitely times I will not touch TSLA (even with TexasBlake's dick).

IF you honestly think the market is just made up bullshit, you are probably better off investing in lead and powder, and hoping that folks eventually get off the porch. Lead and powder are my hedges, I hope I never have to use them, until I do, I try to work within my own miniscule part of the market to make a few bucks. And that means trading stocks I don't believe in or trust, but if the technicals are right, volume is on the up, and momentum is there, I would be silly to fight the trends.

i'm comforted that my prediction when it was falling under $400, that it would break $700 before DJIA went back above 27k was correct. turns out, way more correct than i thought.

on the lower end side, i did hit a 5x return on and oil & gas company, so that was comforting :laughing:

neverminding that i really do think it is all bullshit, after this year i think i'm going to change my stance from "it's all bullshit" to "it's all bullshit, but imma participate a little anyways"
 
So you about to retire I take it? Those must be a nice return.

Was that before or after his "funding secured at 420" tweet?:smokin::smokin:

Lets just say I'm pretty popular with my tax collector 😂😂

Edit: it was before that.
 
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neverminding that i really do think it is all bullshit, after this year i think i'm going to change my stance from "it's all bullshit" to "it's all bullshit, but imma participate a little anyways"

Honestly wish I had come to the same conclusion myself a decade or two ago. I made $$$ during the dot.com boom by being contrarian and shorting the high flyers. Some of those were painful, either stopping out, OR not holding long enough to really see results (Sold yahoo short at 265, covered at 250, within 18 months they were sub 20 - that was retirement money left on the table)

I could not handle the stress, so went back to a normal job, well as normal as racing can be for a job.

Now I don't fight the trends, don't argue valuations, don't fight momentum, and am at least 50% cash every night, 75% cash on weekends. I would say I sleep better but really I spend half the night waiting for the market to open in the morning, really nice to be excited to go to the office every day. :bounce::bounce:

Especially those days when I know the market is opening and I will be taking profits.

Don't get me wrong, this is an incredibly difficult way to make a living, and there are zero excuses, the idiot two finger typing the entry and exit orders is the only one you can blame. Worst run I have had was 11 days in the red, and that can certainly make you question your life choices, especially if you are reaching your own financial limits or mental limits. But those strong green days make it all worthwhile, and this is one job I can do from almost anywhere in the world. Just need a lap top, a couple screens, and internet service, and hopefully a time zone that works for market open. Thailand and Vietnam are on my list of possible places to move in the next 5 years. Will be nice to work from 8pm until 9pm each night and then go chase asian pussy (j/k still married), get drunk, spend the day on the beach, and wait for market open in NY. Need to wrap up a couple things stateside first though.

Happy trading
 
Put it all in commodities last week. I did the same thing last year at this time of year betting I should hold cash through the end of the first quarter, but I questioned myself and bought back. Had I followed my gut, I'd be up another 20%
 
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