Tesla - next big lottery ticket ?

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JaneyLH
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Re: Tesla - next big lottery ticket ?

Post by JaneyLH » Sat Aug 05, 2017 12:04 pm

A year ago I bought 100 shares of Royal Caribbean stock so I could get a cabin credit when I cruise on one of their ships. I thought it was a little expensive at $68 compared with the shares I purchased in Carnival a few years back at $39 for the same reason. (I've since gotten about $1000 cabin credit with Carnival Corp. lines on various trips).

RCI is now $120 and CCL $68.

Do I wish I had bought more? Sure!

Am I going to look for other bargain stocks to pick? Not on your life!

mhalley
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Re: Tesla - next big lottery ticket ?

Post by mhalley » Sat Aug 05, 2017 12:33 pm

Assuming electric cars go mainstream, I don't see how Tesla will be able to compete with the majors. I think they might continue to sell cars, maybe a niche luxury brand, but the majority of their income will be from selling batteries to the majors and for homes. Once gm has working electric cars with similar range, the average consumer will go with a bolt.
https://www.forbes.com/sites/brookecrot ... b609c728e4

btenny
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Re: Tesla - next big lottery ticket ?

Post by btenny » Sat Aug 05, 2017 1:31 pm

Homer you are way off about GM sales. See below. GM only sell 3M cars a year in the US and more importantly they only sell 170K Cadillacs. Plus they are not driving electric car technology so they are at major risk of loosing market share as Tesla moves into the mainstream market. Yes Tesla has a long way to go but those model 3 orders show there is a real market for electrics.

http://gmauthority.com/blog/gm/general- ... s-numbers/.
http://gmauthority.com/blog/gm/cadillac ... s-numbers/

Plus Tesla has a lock on the fast charger technology and the patents for fast charging. GM and the world are sort of stuck right now with paying Tesla for that feature or helping some other company build a GM style charging network. And if you have done some reading you will see that the GM/Bolt charge system is just not very good. Think about how much a big network of "fast charging stations" will make in profit when they have 300K-600K dedicated customers and no competition.

Plus Tesla has no legacy big dealer network to feed and pay for so they have a big cost advantage in the distribution channel. So they have more profit per car potential. Same for the repair channel. They own it and the profit from it.

And then if you read about the Tesla wall battery system and the Australia power battery system I think Tesla is also working hard for the power industry. They have prototypes batteries plugged in several power networks and are working the problems for smoothing intermittent power vs the other battery providers. I think that business may be even bigger than the car business.

So net net the market is pricing the Tesla stock for success in several major areas beyond the basic car business and they expect those markets to be giants.

Good Luck.

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Re: Tesla - next big lottery ticket ?

Post by Nate79 » Sat Aug 05, 2017 2:00 pm

btenny wrote:Homer you are way off about GM sales. See below. GM only sell 3M cars a year in the US and more importantly they only sell 170K Cadillacs. Plus they are not driving electric car technology so they are at major risk of loosing market share as Tesla moves into the mainstream market. Yes Tesla has a long way to go but those model 3 orders show there is a real market for electrics.

http://gmauthority.com/blog/gm/general- ... s-numbers/.
http://gmauthority.com/blog/gm/cadillac ... s-numbers/

Plus Tesla has a lock on the fast charger technology and the patents for fast charging. GM and the world are sort of stuck right now with paying Tesla for that feature or helping some other company build a GM style charging network. And if you have done some reading you will see that the GM/Bolt charge system is just not very good. Think about how much a big network of "fast charging stations" will make in profit when they have 300K-600K dedicated customers and no competition.

Plus Tesla has no legacy big dealer network to feed and pay for so they have a big cost advantage in the distribution channel. So they have more profit per car potential. Same for the repair channel. They own it and the profit from it.

And then if you read about the Tesla wall battery system and the Australia power battery system I think Tesla is also working hard for the power industry. They have prototypes batteries plugged in several power networks and are working the problems for smoothing intermittent power vs the other battery providers. I think that business may be even bigger than the car business.

So net net the market is pricing the Tesla stock for success in several major areas beyond the basic car business and they expect those markets to be giants.

Good Luck.
GM, VW, and Toyota EACH sold 10m autos in 2016. This is a world wide business and these are WW sales numbers.
http://money.cnn.com/2017/02/07/news/co ... index.html

Tesla is not today more profitable (by gross margin) than other typical auto manufacturers. This was already proved earlier in the thread with a link with gross margin for each company.

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just frank
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Re: Tesla - next big lottery ticket ?

Post by just frank » Sat Aug 05, 2017 9:12 pm

btenny wrote: Plus Tesla has a lock on the fast charger technology and the patents for fast charging. GM and the world are sort of stuck right now with paying Tesla for that feature or helping some other company build a GM style charging network. And if you have done some reading you will see that the GM/Bolt charge system is just not very good. Think about how much a big network of "fast charging stations" will make in profit when they have 300K-600K dedicated customers and no competition.
I am skeptical of this. AFAIK, the only significant patent/IP Tesla has in the fast charger space is in the design of their proprietary connector. A CCS connector (as on the Bolt) is functionally equivalent, and I see a signifiant number of CCS fast chargers in my driving area. It IS true that the Tesla supercharger network has a higher power rating (80-100 kW) than the current CCS/Chademo chargers (new ones of those are running about 50 kW). But the parts in both fast chargers are off the shelf (but expensive) semiconductor components. The hardware costs of these DCFCs are likely to be falling, and to continue to do so.

As for profitability....If I drive 15k miles/year in my (future, long-range) EV, this is about 4000 kWh/year. If I assume that 90% of that is within round-trip range of home, I am buying 400 kWh from a DCFC/yr. While those kWh are currently very dear (due to lack of competition, expensive hardware and few customers), after some build out and competition, I think they might clear $0.05-0.10 profit per kWh. So they make $20-40 profit per EV per year, or $200-400 over a ten year EV lifetime. Compared to the profit in building the cars, seems like chump change, especially split between all the DCFC owners.

KInda like saying GM built some gas stations, has a patent on gas stations, and will somehow corner the market on gasoline in the future.

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Sun Aug 06, 2017 7:49 am

just frank wrote:
KInda like saying GM built some gas stations, has a patent on gas stations, and will somehow corner the market on gasoline in the future.
*You* of all people will know the irony of this one.

Thomas Midgely, Chief Scientist at GM, is known for 2 "great" innovations:

- CFCs as used in air conditioning and refrigeration equipment - maybe we can let him off the hook, but this turned out to be a total environmental disaster which we only managed to head off in the nick of time (effects will continue to the end of this century, and beyond, buy manageable)

- lead in gasoline as an octane enhancer - and that really has turned out to be a serious nightmare due to the cognitive effects on children from exposure
(high octane aviation gasoline was an important RAF advantage in the Battle of Britain, and I think that was the lead additive, the Germans didn't have enough lead to duplicate it? So, again, maybe we can let Midgley off the hook-- but he was very arrogant and dismissive when the health evidence came in)

GM did hold the patents for these innovations- - so in some sense they did hold the patent for gasoline?

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Re: Tesla - next big lottery ticket ?

Post by munemaker » Sun Aug 06, 2017 8:14 am

prettybogle wrote:Tesla has finally released model 3 this weekend. The reviews so far are very good. We probably are witnessing another apple when it released first iPhone, another google when it started advertising on its search items, .... We are seriously debating to invest some play money, in our case, may be $5000. This could potentially jump from $350 a share to $1000 in less than a decade. Any fellow bogleheads investing in tesla ? Our long term plan is index investing but this is an 'educated' investment in a very good company that may disrupt automobile industry big time
I am currently reading "The Intelligent Investor" by Ben Graham. Tesla seems like the kind of stock Ben would advise you to avoid.

One point he makes is you should not buy a stock just because it has gone up in price or sell a stock because it has gone down in price.

Also, not being a trader, I don't know if this means anything, but I recently heard in the financial news that Tesla has more short positions against it than any other company.

Doesn't seem like a good investment.

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thirdman
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Re: Tesla - next big lottery ticket ?

Post by thirdman » Sun Aug 06, 2017 8:28 am

I bought Tesla stock when I saw the design of the Tesla S. It made sense to me. The batteries were under the floor, the motor in the rear, the controller and motor unit a proven digital analog design. I also looked at Nvidia and Mobileye since they made the computer hardware and software used in the car. I liked that Tesla sold directly to the public, since cars would become autonomous and fleets of vehicles would be sold. I also looked at Solar City, since I thought the electric grid would become localized, and Solar City and Tesla had the hardware and software for this paradigm change.

No car company other than Tesla had a rational vision to develop the electric car and ecosystems. Only Tesla updates the car’s operating system over a cellular network. They are the only car company with the technical expertise to secure their vehicles from hacking. Toyota and other car companies have developed a consortium to work on car operating systems security.

I bought Nissan stock when they were developing the Leaf. They developed a “prismatic” battery with NEC, (a flat battery), which turned out to be inferior to Tesla’s “notebook” battery. Tesla put liquid cooling in their battery pack, Nissan used air cooling, despite having proving grounds in Phoenix, AZ. Nissan put the motor and electronics in front, with front wheel drive. Inferior packaging to Tesla. All of this with a 5 billion dollar budget for development of the Leaf, vs 500 million dollar development budget for the Model S.

Having said all of this, I have been interested in batteries and cars since college. I dabble in playing with a few stocks, but mostly own index funds. At current prices I would not buy Tesla stock, but I will hold it.

Steve Jobs did not invent the iPhone, but he was the creator. He created the atmosphere and enthusiasm at Apple with the various “skunk works” that allowed the teams and individuals to come to him with their ideas and solutions. When he saw a problem, someone had a solution. Musk is similar in that he has a clear vision and has assembled top notch teams including designer Franz von Holzhausen. I recently visited Art Center College of Design and saw the latest creations of the students. Interesting. A lot of smart people.

If I was designing the controls of the Model 3 I would do just as Tesla has done, make the controls an iPad. Basically software controls the vehicle.

My guess is that at Tesla’s facility in Hawthorne they are designing self driving vehicles, the software that controls them, the infrastructure to charge and maintain them, and working on the legal and ownership issues.

What companies will produce the vehicles we use in ten years? I don’t know. Qualcomm, Intel, SoftBank and others are vying with Nvidia. Uber, Lyft, Siemens, Bosch are all parts of the puzzle. China will be the biggest market. Want to invest? My advice, for what it is worth, is to buy a total international stock index fund, unless you are in the industry and have insight. The market has already priced what information is generally available.

thirdman

danaht
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Re: Tesla - next big lottery ticket ?

Post by danaht » Sun Aug 06, 2017 8:42 am

Tesla already has a bigger market cap than Ford or GM. If you think Tesla is worth 10 Fords, or 10 GMs - then go for it and invest. I have never shorted a stock before - but Tesla would be the #1 stock on my list if I were to do so today. I like their product - but not the stock. The company also needs to prove that it can make a profit. I also would not count out GM, Toyota, Honda, Nissan, Volkswagen, or Ford to compete with Tesla. Anything Tesla creates - it can be copied by another manufacturer (ie what Google's Android did to Apple's Iphone)

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Re: Tesla - next big lottery ticket ?

Post by linenfort » Sun Aug 06, 2017 8:55 am

prettybogle wrote:Any fellow bogleheads investing in tesla ?
Yes, in 2013 but only as a goof and nowhere near 5k, which is the only reason I've been able to hold on. Up 444% now, 500% the other day, perhaps just 10% tomorrow.

I certainly don't plan to buy more shares, but I wanted a nibble of Tesla. I missed out on Facebook, like many bogleheads, constructing careful arguments to myself on why not to buy.

Indexing still feels the best. Stress-free.
Did anyone else play Acquire as a child?

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Re: Tesla - next big lottery ticket ?

Post by unclescrooge » Sun Aug 06, 2017 9:43 am

TomatoTomahto wrote:I don't get this idea of play money. 15 years ago, I invested what I considered play money in a private placement. It was, literally, 10 basis points of our current NW and it still bothers me more than any other investment, many of which went south more substantially in $ terms. I feel that way because it was hubris.

At least Tesla is a public company, but play money I don't get.
Play money provides you an opportunity to boost about your financial acumen at cocktail parties.

I use my play to buy lottery tickets. Annually, i probably spend 0.003% of household income. If I'm going to throw away my hard earned money the pay out should justify it.

runner540
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Re: Tesla - next big lottery ticket ?

Post by runner540 » Sun Aug 06, 2017 9:46 am

prettybogle wrote:Tesla has finally released model 3 this weekend. The reviews so far are very good. We probably are witnessing another apple when it released first iPhone, another google when it started advertising on its search items, .... We are seriously debating to invest some play money, in our case, may be $5000. This could potentially jump from $350 a share to $1000 in less than a decade. Any fellow bogleheads investing in tesla ? Our long term plan is index investing but this is an 'educated' investment in a very good company that may disrupt automobile industry big time
prettybogle, over the last month, Wall Street firms have downgraded their expectations for the earnings and stock price. What do you know that Goldman Sachs doesn't about the company's prospects and valuation?

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Re: Tesla - next big lottery ticket ?

Post by TomatoTomahto » Sun Aug 06, 2017 10:08 am

unclescrooge wrote:
TomatoTomahto wrote:I don't get this idea of play money. 15 years ago, I invested what I considered play money in a private placement. It was, literally, 10 basis points of our current NW and it still bothers me more than any other investment, many of which went south more substantially in $ terms. I feel that way because it was hubris.

At least Tesla is a public company, but play money I don't get.
Play money provides you an opportunity to boost about your financial acumen at cocktail parties.

I use my play to buy lottery tickets. Annually, i probably spend 0.003% of household income. If I'm going to throw away my hard earned money the pay out should justify it.
Me too :D

I know the odds, but winning $100M would change my life (I would fly private). Winnng $5k? Meh.

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Re: Tesla - next big lottery ticket ?

Post by 4nursebee » Mon Aug 07, 2017 6:51 am

runner540 wrote:
prettybogle wrote:Tesla has finally released model 3 this weekend. The reviews so far are very good. We probably are witnessing another apple when it released first iPhone, another google when it started advertising on its search items, .... We are seriously debating to invest some play money, in our case, may be $5000. This could potentially jump from $350 a share to $1000 in less than a decade. Any fellow bogleheads investing in tesla ? Our long term plan is index investing but this is an 'educated' investment in a very good company that may disrupt automobile industry big time
prettybogle, over the last month, Wall Street firms have downgraded their expectations for the earnings and stock price. What do you know that Goldman Sachs doesn't about the company's prospects and valuation?
What I know is that wall street firms are in the business of making money, not giving free advice. The best that I can do is see what they don't tout. One of the things that GS did do during the last publicly filed report is purchase an additional 107,860 shares of TSLA to now own 794,171 shares
Interesting to see them downgrade a company they are buying...
4nursebee

runner540
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Re: Tesla - next big lottery ticket ?

Post by runner540 » Mon Aug 07, 2017 8:37 am

4nursebee wrote:
runner540 wrote:
prettybogle wrote:Tesla has finally released model 3 this weekend. The reviews so far are very good. We probably are witnessing another apple when it released first iPhone, another google when it started advertising on its search items, .... We are seriously debating to invest some play money, in our case, may be $5000. This could potentially jump from $350 a share to $1000 in less than a decade. Any fellow bogleheads investing in tesla ? Our long term plan is index investing but this is an 'educated' investment in a very good company that may disrupt automobile industry big time
prettybogle, over the last month, Wall Street firms have downgraded their expectations for the earnings and stock price. What do you know that Goldman Sachs doesn't about the company's prospects and valuation?
What I know is that wall street firms are in the business of making money, not giving free advice. The best that I can do is see what they don't tout. One of the things that GS did do during the last publicly filed report is purchase an additional 107,860 shares of TSLA to now own 794,171 shares
Interesting to see them downgrade a company they are buying...
Vanguard is the third largest holder; Goldman's funds may be buying Tesla, but the research buy/sell rating is *supposed* to be independent behind a "Chinese wall".
The larger point that OP needs to answer is, why does she believe it's a good buy.

RRAAYY3
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Re: Tesla - next big lottery ticket ?

Post by RRAAYY3 » Mon Aug 07, 2017 9:00 am

Tesla is in the total stock index fund ... cool

Valuethinker
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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Mon Aug 07, 2017 3:55 pm

runner540 wrote:
4nursebee wrote:
runner540 wrote:
prettybogle wrote:Tesla has finally released model 3 this weekend. The reviews so far are very good. We probably are witnessing another apple when it released first iPhone, another google when it started advertising on its search items, .... We are seriously debating to invest some play money, in our case, may be $5000. This could potentially jump from $350 a share to $1000 in less than a decade. Any fellow bogleheads investing in tesla ? Our long term plan is index investing but this is an 'educated' investment in a very good company that may disrupt automobile industry big time
prettybogle, over the last month, Wall Street firms have downgraded their expectations for the earnings and stock price. What do you know that Goldman Sachs doesn't about the company's prospects and valuation?
What I know is that wall street firms are in the business of making money, not giving free advice. The best that I can do is see what they don't tout. One of the things that GS did do during the last publicly filed report is purchase an additional 107,860 shares of TSLA to now own 794,171 shares
Interesting to see them downgrade a company they are buying...
Vanguard is the third largest holder; Goldman's funds may be buying Tesla, but the research buy/sell rating is *supposed* to be independent behind a "Chinese wall".
The larger point that OP needs to answer is, why does she believe it's a good buy.
Not just "supposed".

GSAM, and GS private bank, will be totally organizationally separate from the investment bank. Separate premises. Separate decision makers. Their own P&L.

If GS did not do that, then they could ruin their asset management and private client businesses-- just destroy them. When the SEC or the equivalent European regulators sweep in and it becomes public that they had a Conflict of Interest violation like that.

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Mon Aug 07, 2017 3:57 pm

4nursebee wrote:
runner540 wrote:
prettybogle wrote:Tesla has finally released model 3 this weekend. The reviews so far are very good. We probably are witnessing another apple when it released first iPhone, another google when it started advertising on its search items, .... We are seriously debating to invest some play money, in our case, may be $5000. This could potentially jump from $350 a share to $1000 in less than a decade. Any fellow bogleheads investing in tesla ? Our long term plan is index investing but this is an 'educated' investment in a very good company that may disrupt automobile industry big time
prettybogle, over the last month, Wall Street firms have downgraded their expectations for the earnings and stock price. What do you know that Goldman Sachs doesn't about the company's prospects and valuation?
What I know is that wall street firms are in the business of making money, not giving free advice. The best that I can do is see what they don't tout. One of the things that GS did do during the last publicly filed report is purchase an additional 107,860 shares of TSLA to now own 794,171 shares
Interesting to see them downgrade a company they are buying...
Remind us what percentage of Tesla that works out to?

And is this the market-making side of Goldman, or does it include the GSAM and Goldman Private Wealth Management businesses? Normally that is separately disclosed (in the UK, only if over 3% of the company, or 1% if company is in a takeover period).

The MM side will hold some shares to facilitate liquidity. Also it may lend them out to short sellers.

Tesla has been a bit of a short squeeze of late. The stock just wants to go up, and the capitulation of the shorts simply accentuates the upward movement in the stock price (see VW in the Porsche fiasco).

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Mon Aug 07, 2017 4:00 pm

runner540 wrote:
prettybogle wrote:Tesla has finally released model 3 this weekend. The reviews so far are very good. We probably are witnessing another apple when it released first iPhone, another google when it started advertising on its search items, .... We are seriously debating to invest some play money, in our case, may be $5000. This could potentially jump from $350 a share to $1000 in less than a decade. Any fellow bogleheads investing in tesla ? Our long term plan is index investing but this is an 'educated' investment in a very good company that may disrupt automobile industry big time
prettybogle, over the last month, Wall Street firms have downgraded their expectations for the earnings and stock price. What do you know that Goldman Sachs doesn't about the company's prospects and valuation?
It is truly amazing how the stock price can defy the downgrades. Newsflow, I expect-- Musk is adept at that.

Also, probably, a short squeeze.

If forecasts don't start going back up at some point in the next 12 months, probably the stock runs out of oxygen.

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Re: Tesla - next big lottery ticket ?

Post by wrongfunds » Mon Aug 07, 2017 4:14 pm

Musk is adept at that.
Didn't he himself say our stock is overvalued? What more can he do?

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Mon Aug 07, 2017 4:19 pm

wrongfunds wrote:
Musk is adept at that.
Didn't he himself say our stock is overvalued? What more can he do?
No -- adept at managing newsflow. Some of the product announcements feel a bit like "vaporware" in terms of delays etc.

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Re: Tesla - next big lottery ticket ?

Post by wrongfunds » Mon Aug 07, 2017 4:27 pm

I think Google is on my side

"
He said the company's "market cap is higher than we have any right to deserve" and that building an auto-maker from scratch is "the worst way to earn money, honestly."
https://www.washingtonpost.com/news/on- ... 7a10d8f6a6

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Re: Tesla - next big lottery ticket ?

Post by 4nursebee » Tue Aug 08, 2017 2:00 am

While saying things about being over valued, he also sees a path where TSLA could be one of the largest companies in the world.

https://www.cnbc.com/video/2017/04/21/t ... mpany.html

https://www.cnbc.com/2017/05/04/elon-mu ... apple.html
4nursebee

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just frank
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Re: Tesla - next big lottery ticket ?

Post by just frank » Tue Aug 08, 2017 6:14 am

4nursebee wrote:While saying things about being over valued, he also sees a path where TSLA could be one of the largest companies in the world.

https://www.cnbc.com/video/2017/04/21/t ... mpany.html

https://www.cnbc.com/2017/05/04/elon-mu ... apple.html
But he is not the only one who believes in that possibility, apparently. :beer

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Re: Tesla - next big lottery ticket ?

Post by unclescrooge » Tue Aug 08, 2017 12:09 pm

TomatoTomahto wrote:
unclescrooge wrote:
TomatoTomahto wrote:I don't get this idea of play money. 15 years ago, I invested what I considered play money in a private placement. It was, literally, 10 basis points of our current NW and it still bothers me more than any other investment, many of which went south more substantially in $ terms. I feel that way because it was hubris.

At least Tesla is a public company, but play money I don't get.
Play money provides you an opportunity to boost about your financial acumen at cocktail parties.

I use my play to buy lottery tickets. Annually, i probably spend 0.003% of household income. If I'm going to throw away my hard earned money the pay out should justify it.
Me too :D

I know the odds, but winning $100M would change my life (I would fly private). Winnng $5k? Meh.
Exactly. Those who have have money don't need to invest in stocks like Tesla, and those who don't can't really afford to!

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Tue Aug 08, 2017 6:05 pm

wrongfunds wrote:I think Google is on my side

"
He said the company's "market cap is higher than we have any right to deserve" and that building an auto-maker from scratch is "the worst way to earn money, honestly."
https://www.washingtonpost.com/news/on- ... 7a10d8f6a6
It's really difficult when no matter what one writes it seems to be misinterpreted.

Again. What I said was that Musk is adept at managing newsflow.

I didn't say anything regarding his views 're stock valuation.

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TomatoTomahto
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Re: Tesla - next big lottery ticket ?

Post by TomatoTomahto » Tue Aug 08, 2017 6:13 pm

Two of my favorite posters bickering. Now don't make me get out of my Tesla's wonderful, minimalist, sculpted seat and go back there and break it up! Understood?

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Re: Tesla - next big lottery ticket ?

Post by wrongfunds » Wed Aug 09, 2017 8:13 am

Musk is adept at managing newsflow.
There is no way I will be disagreeing with that assertion! There are side effects of that on the population which treats him as rock star. There is a thin line separating between fandom and admiration. I am from the later camp and do not consider Musk to be snake oil salesman. Even if I were to be owner of Tesla car or stock, I hope not to join the former group.

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Re: Tesla - next big lottery ticket ?

Post by linenfort » Wed Aug 09, 2017 6:28 pm

What is the grade on the upcoming Tesla bond again? B- :D
I think the yield is supposed to be 5.25%. 8-year bond if I recall.
Did anyone else play Acquire as a child?

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Re: Tesla - next big lottery ticket ?

Post by Tycoon » Wed Aug 09, 2017 6:42 pm

linenfort wrote:What is the grade on the upcoming Tesla bond again? B- :D
I think the yield is supposed to be 5.25%. 8-year bond if I recall.
This tells me all I need to know.
...I might be just beginning | I might be near the end. Enya | | C'est la vie

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Thu Aug 10, 2017 5:48 am

wrongfunds wrote:
Musk is adept at managing newsflow.
There is no way I will be disagreeing with that assertion! There are side effects of that on the population which treats him as rock star. There is a thin line separating between fandom and admiration. I am from the later camp and do not consider Musk to be snake oil salesman. Even if I were to be owner of Tesla car or stock, I hope not to join the former group.
My apologies if I was rude to you. Sometimes when other things are going on, I should not post-- my mood infects my post.

I think we are in agreement re Musk's ability to manage disappointing news in particular. The delays get overlooked, it seems.

However most brilliant entrepreneurs have a degree of hucksterism to them. Steve Jobs was a case in point.

It's both the technology, the product, then the ability to persuade investors, customers even competitors that you are further ahead than you are (usually) and that your product is better than it is. The first iphones were not perfect devices-- but it didn't matter, because they were the future.

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Re: Tesla - next big lottery ticket ?

Post by TravelforFun » Thu Aug 10, 2017 7:07 am

Valuethinker wrote:The first iphones were not perfect devices-- but it didn't matter, because they were the future.
The first iPhones were perfect for their time and they embarrassed the heck out of Steven Anthony Ballmer.

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Re: Tesla - next big lottery ticket ?

Post by wrongfunds » Thu Aug 10, 2017 7:13 am

"Phone without real keyboard? That will never succeed! Apple made colossal error by not providing physical keyboard."
- Blackberry people

Frankly, Balmer really had no reason to worry about the iPhone as they were not in that market. On the other hand, it was Blackberry who got left in the dust of iPhone.

Also needing perfection to succeed in marketplace is quite naive. There is a joke about bear and two friends in a forest. The punchline is "I don't have to outrun the bear, I only have to outrun you!"

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Re: Tesla - next big lottery ticket ?

Post by TravelforFun » Thu Aug 10, 2017 7:42 am

This is what Ballmer said in 2007: "I said that is the most expensive phone in the world. And it doesn't appeal to business customers because it doesn't have a keyboard. Which makes it not a very good email machine. ... Right now, we're selling millions and millions and millions of phones a year. Apple is selling zero phones a year. In six months, they'll have the most expensive phone by far ever in the marketplace."

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Thu Aug 10, 2017 8:55 am

TravelforFun wrote:
Valuethinker wrote:The first iphones were not perfect devices-- but it didn't matter, because they were the future.
The first iPhones were perfect for their time and they embarrassed the heck out of Steven Anthony Ballmer.
I think that you may be applying your knowledge of the product now (and the fact that it has sold 1.2 billion units) to how it was when it came out? Whatever you thought of it, reaction was anything but universally positive.

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Re: Tesla - next big lottery ticket ?

Post by herpfinance » Thu Aug 10, 2017 11:25 am

A unprofitable business with its stock selling at very lofty valuations? Not something I'd take the odds on.

It's a lottery ticket. As long as you acknowledge that for buying a basket of these, your odds are high of coming out with a loss, I say go ahead.
"The intelligent investor is a realist who sells to optimists and buys from pessimists" - Benjamin Graham

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Re: Tesla - next big lottery ticket ?

Post by HomerJ » Thu Aug 10, 2017 11:31 am

TravelforFun wrote:This is what Ballmer said in 2007: "I said that is the most expensive phone in the world. And it doesn't appeal to business customers because it doesn't have a keyboard. Which makes it not a very good email machine. ... Right now, we're selling millions and millions and millions of phones a year. Apple is selling zero phones a year. In six months, they'll have the most expensive phone by far ever in the marketplace."
But Apple wasn't ALREADY priced back then like they would own the market in 10 years. It was priced like they were selling zero phones a year.

Only AFTER they actually sold millions and millions of phones did their price go up.

Tesla is priced like they've already won the game. The odds may be very good that they do dominate the car industry. But they are priced TODAY like they've already done it.

That is not how Apple stock worked. Apple in 2007 was not insanely over-priced because everyone expected them to sell 1.2 billion phones. They actually had to sell some stuff and make some profits before Apple stock went through the roof.

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Re: Tesla - next big lottery ticket ?

Post by linenfort » Thu Aug 10, 2017 12:39 pm

It would be interesting if they became a battery company.
Not my original idea, but I like it.
Did anyone else play Acquire as a child?

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Re: Tesla - next big lottery ticket ?

Post by just frank » Thu Aug 10, 2017 12:42 pm

HomerJ wrote:
But Apple wasn't ALREADY priced back then like they would own the market in 10 years. It was priced like they were selling zero phones a year.

Only AFTER they actually sold millions and millions of phones did their price go up.

Tesla is priced like they've already won the game. The odds may be very good that they do dominate the car industry. But they are priced TODAY like they've already done it.
Precisely. Another way to say it is that the folks holding Tesla today are mostly greedy, not fearful. I'm sure that some of those holding Apple in 2007 were fearful.

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Thu Aug 10, 2017 3:49 pm

just frank wrote:
HomerJ wrote:
But Apple wasn't ALREADY priced back then like they would own the market in 10 years. It was priced like they were selling zero phones a year.

Only AFTER they actually sold millions and millions of phones did their price go up.

Tesla is priced like they've already won the game. The odds may be very good that they do dominate the car industry. But they are priced TODAY like they've already done it.
Precisely. Another way to say it is that the folks holding Tesla today are mostly greedy, not fearful. I'm sure that some of those holding Apple in 2007 were fearful.
I agree with that.

My point was simply that Jobs was adept at creating "castles in the air". Perhaps there is a better example that I did not think of, but the iphone was at various iterations less than perfect. Remember Jobs lecturing us that there was not a problem with the antenna, we were simply holding the phone wrong? ;-).

Musk has managed to wave the fingers of prestidigitation in front of investors quite a few times. Tesla has missed deadlines, and has underperformed in some areas. I am reminded a wee bit of Richard Branson (who is not, by any stretch of the imagination, done anything like as path breaking as Musk).

Right now, the market seems prepared to ignore that. I don't think it will, forever.

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Re: Tesla - next big lottery ticket ?

Post by Quickfoot » Thu Aug 10, 2017 3:51 pm

prettybogle wrote:Tesla has finally released model 3 this weekend. The reviews so far are very good. We probably are witnessing another apple when it released first iPhone, another google when it started advertising on its search items, .... We are seriously debating to invest some play money, in our case, may be $5000. This could potentially jump from $350 a share to $1000 in less than a decade. Any fellow bogleheads investing in tesla ? Our long term plan is index investing but this is an 'educated' investment in a very good company that may disrupt automobile industry big time
I would be surprised if Tesla is making cars at all in 5 years, their best chance of survival is actually making technology for other car manufacturers. Tesla is BURNING cash at an insane rate, just had a junk bond issuance so they can pay their bills and has flat out admitted manufacturing is not their competency. As companies like Ford, Toyota, Mazda and Chevy move more into the electric space they are going to push Tesla out, unlike Tesla they do know how to make cars AND they have established dealerships and distribution networks and more trusted names.

Elon is a visionary but the only reason ANY of his businesses are in business is borrowing money and government subsidies, if those stop Tesla, Solar City and Space X will all go bankrupt in a short period of time.

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Re: Tesla - next big lottery ticket ?

Post by Jeff Albertson » Thu Aug 10, 2017 4:19 pm


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Re: Tesla - next big lottery ticket ?

Post by Helo80 » Thu Aug 10, 2017 5:56 pm

Currently, the $7,500 federal tax credit, as well as, various other state tax credits for purchasing electric vehicles like Tesla, are being priced into the Tesla stock right now. Said tax subsidies put GM, Ford, and others at a disadvantage.

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Re: Tesla - next big lottery ticket ?

Post by Helo80 » Thu Aug 10, 2017 5:58 pm

Jeff Albertson wrote:this week's Economist newspaper -
Image
https://www.economist.com/news/leaders/ ... orld-death

Wishful thinking.

Until an all electric aircraft can move cargo and passengers across the Pacific Ocean without much though or worries, I'm sticking with the ICE.

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Fri Aug 11, 2017 3:16 am

Quickfoot wrote:
prettybogle wrote:Tesla has finally released model 3 this weekend. The reviews so far are very good. We probably are witnessing another apple when it released first iPhone, another google when it started advertising on its search items, .... We are seriously debating to invest some play money, in our case, may be $5000. This could potentially jump from $350 a share to $1000 in less than a decade. Any fellow bogleheads investing in tesla ? Our long term plan is index investing but this is an 'educated' investment in a very good company that may disrupt automobile industry big time
I would be surprised if Tesla is making cars at all in 5 years, their best chance of survival is actually making technology for other car manufacturers. Tesla is BURNING cash at an insane rate, just had a junk bond issuance so they can pay their bills and has flat out admitted manufacturing is not their competency. As companies like Ford, Toyota, Mazda and Chevy move more into the electric space they are going to push Tesla out, unlike Tesla they do know how to make cars AND they have established dealerships and distribution networks and more trusted names.
Be wary of that part.

The literature on Disruptive Innovation (see the wikipedia on Clayton Christensen and D I) is pretty clear. In every case Christensen studied, it was not the industry incumbents who led in the new technology. Rather, they turned into roadkill.

Even IBM and the PC is an exception that proves the rule. The PC division was totally separate, and never made much money for the parent company. The disruption of the PC still nearly killed IBM, and mainframes & related products still make a significant fraction of their profits (I don't believe they disclose how much, which means the profit margins are still extreme).

But think railways (air travel). Fixed line telephone companies (who were given cellphone franchises, but Craig McCaw still did an end run around them, and Vodafone was not British Telecommunications). Minicomputer makers (DEC, Data General etc.). Christensen studied disk drive manufacturers. Photography (Kodak and Polaroid). Microsoft & desktop software (they did not invent Google, nor Facebook). Something similar is beginning to happen to electric utilities. The oil industry majors have been caught flat footed by fracking, and are racing to acquire or catch up-- but fracking is a fundamentally different business model to what Shell and Exxon do for a living, and that makes it hard*.

Industry incumbents often fail when there is radical change.

I agree re making cars & manufacturing, but an electric car is a radically simpler beast than an ICE car. It's more of an electronic hardware & software product. It's not beyond the realms of possibility that Foxcon could do it better than the existing manufacturers.

As to selling cars... no one would argue (would they?) that the existing dealer network and the calculated "scraw your customer" of the auto dealership is a modern, efficient or pleasant way to distribute automobiles?

The dealer network, which in the USA is embedded in political lobbying, state law etc (consider the challenges Chrysler and GM had in terms of shrinking their dealer networks; I think the figure was the average Toyota dealer did 5x the sales of the average Chrysler dealer, pre Crash) doesn't really serve the customer well, does it?

A guy from BMW told me "usership not ownership" which struck me as a really neat summary of the way cars are going. We don't own them, we just rent them from the manufacturer, who provides the finance, service etc.
Elon is a visionary but the only reason ANY of his businesses are in business is borrowing money and government subsidies, if those stop Tesla, Solar City and Space X will all go bankrupt in a short period of time.
I happen to agree with you about the risks to Musk-- but the model he is following is not so uncommon as we might think.

That's much more the model of the entrepreneur than we probably realize. Think Carlos Slim. Or Samuel Insull (the electricity grid, complete with its own financial scandal and criminal charges against him). Or Sir Adam Beck (Ontario Hydro). Companies like Alcan (cheap hydro electricity in Quebec, massive war related demand for aluminium for aviation). Lockheed & the US aerospace complex (demand from WW2 and then the Cold War; even the B 747 was an outgrowth of bomber technology). The entire satellite and launch industry. The internet (DARPA, or rather ARPA). The civilian nuclear power industry.

Even in the USA, there's a long history of governments creating the nascent markets and/or standards, for entrepreneurs to fill.

https://marianamazzucato.com/entrepreneurial-state/


* fracking is a low cost, low production model. You have to be ultra low cost, and ultra flexible. Exxon and Shell have made their money by fairly ruthless exploitation of the politics of developing countries, and by sinking 10s of billions into new fields and the infrastructure of pipelines, tankers & refineries to get it to market. Thus, they have survived the rise of the National Oil Companies like Saudi Aramco. I keep looping back to Dieter Helm but his latest book, Burn Out, is a masterly synthesis of what is happening, and will happen, to world energy industries.
Last edited by Valuethinker on Fri Aug 11, 2017 3:32 am, edited 1 time in total.

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Fri Aug 11, 2017 3:22 am

Helo80 wrote:
Jeff Albertson wrote:this week's Economist newspaper -
Image
https://www.economist.com/news/leaders/ ... orld-death

Wishful thinking.

Until an all electric aircraft can move cargo and passengers across the Pacific Ocean without much though or worries, I'm sticking with the ICE.
But your ICE car can't move cargo and passengers across the Pacific Ocean either, can it? In fact, ICE is relatively new technology in that regard-- see Vaclav Smil's book on motive engines (Smil is Bill Gates' favourite author). Until around the 1950s, it was steam turbines that were primarily used in marine propulsion (the Parsons Turbine). Now it is pretty universally Wartsila Diesels, although military went gas turbine technology, for fuel economy reasons civilian never went that way (Sea Land did build some 30 knot container ships, which were uneconomic, eventually the US Navy leased them for prepositioning ships, I believe).

You are probably aware that sailing vessels got *better* after steam engined ships were introduced? The SS Great Britain, one of Brunel's first engine driven ships (i.e. one of the first in the world) was converted to a sailing ship later in its career (it was not a particularly efficient coal burner) and brought coal from Australia back to the UK.

Boston ice merchants, shipping to Europe, became more efficient and charged lower prices after refrigeration technology was invented. They kept going for decades before finally being totally defeated, and almost lost to memory.

So the legacy technology will keep getting better and more efficient for quite some time to come-- decades. Even as its use continues to decline.

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Fri Aug 11, 2017 3:28 am

Helo80 wrote:Currently, the $7,500 federal tax credit, as well as, various other state tax credits for purchasing electric vehicles like Tesla, are being priced into the Tesla stock right now. Said tax subsidies put GM, Ford, and others at a disadvantage.
I doubt, given the cost of a new Tesla, that the $7,500 makes a huge difference to its sales. Maybe on the new cheaper one-- but they aren't shipping that yet? People do not buy a Tesla because it is/ is not $7,500 cheaper or more expensive any more than they buy a Porsche or a Mercedes on that basis.

And of course GM & Ford can get the same subsidy for their electric vehicles. Which GM does.

There is an issue with the more mainstream EVs that they need subsidies to be price competitive. There are a lot of moving plates though in this calculation, such as externalities (the negative externality you impose on everyone else, by driving your ICE car-- pollution, noise etc.). Costs of batteries are falling, impressively, so battery pack costs won't always be the sticking point.

There are potential bottlenecks (around rare earths, lithium) but electric cars do offer the potential to be much much cheaper to own & run than ICE cars because they are inherently far less complex drivetrains. And remember, most of the world thinks your gasoline prices are ridiculously low-- they are ridiculously low by the standards of any other developed country (even Canada and Australia).

ICE are at the end of a 110 year development cycle. EVs are just beginning.

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Re: Tesla - next big lottery ticket ?

Post by Jags4186 » Fri Aug 11, 2017 6:30 am

Valuethinker wrote:
Helo80 wrote:Currently, the $7,500 federal tax credit, as well as, various other state tax credits for purchasing electric vehicles like Tesla, are being priced into the Tesla stock right now. Said tax subsidies put GM, Ford, and others at a disadvantage.
I doubt, given the cost of a new Tesla, that the $7,500 makes a huge difference to its sales. Maybe on the new cheaper one-- but they aren't shipping that yet? People do not buy a Tesla because it is/ is not $7,500 cheaper or more expensive any more than they buy a Porsche or a Mercedes on that basis.

And of course GM & Ford can get the same subsidy for their electric vehicles. Which GM does.

There is an issue with the more mainstream EVs that they need subsidies to be price competitive. There are a lot of moving plates though in this calculation, such as externalities (the negative externality you impose on everyone else, by driving your ICE car-- pollution, noise etc.). Costs of batteries are falling, impressively, so battery pack costs won't always be the sticking point.

There are potential bottlenecks (around rare earths, lithium) but electric cars do offer the potential to be much much cheaper to own & run than ICE cars because they are inherently far less complex drivetrains. And remember, most of the world thinks your gasoline prices are ridiculously low-- they are ridiculously low by the standards of any other developed country (even Canada and Australia).

ICE are at the end of a 110 year development cycle. EVs are just beginning.
You'd be surprised with regards to that $7500 credit. People do illogical things--I'll buy a $70,000 care because I get a $7500 credit!--even though I could buy a BMW for $60000! Or a Honda Accord Hybrid for $30000!

And while I haven't looked in a while, the $7500 credit was prominently displayed on the Tesla website as a way to make the math work. Also with gas as cheap as it is, the car looks less appealing, IMO.

Electric is the future, but we don't know if Tesla will remain the leader. Tesla is valued like Ford. Ford sells millions of cars and trucks a year. We have to wait and see if Tesla can grow into that number or not...I've been wrong about most things in the investment world but Tesla continuing to rise 2x or 3x its current valuation tells me it is pure speculation. Speculation is rarely rewarded. I'd rather look for a $1 billion company looking to go to $3 billion than a $50 billion company looking to go to $150 billion.

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Re: Tesla - next big lottery ticket ?

Post by TomatoTomahto » Fri Aug 11, 2017 6:56 am

Anecdata (n=1): I made my deposit on my Model X a full year before I even knew about the $7500 credit. It didn't affect my decision at all, but I have used the tax credit to discuss EV financials with other semi-interested parties; I don't know how much it mattered to them. I was much more interested in the State sales tax exclusion, but even that I didn't know about until I was almost ready to take delivery (deposit to deliver was 2.5 years).

It will probably be a bigger factor for people interested in a $35k vehicle.

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Re: Tesla - next big lottery ticket ?

Post by Quickfoot » Fri Aug 11, 2017 10:28 am

The thing is as much as it likes to pretend it is, Tesla isn't innovating. The electric car existed before Tesla and many other companies offer or plan to offer electric cars. They lack a solid distribution network, they lack a solid manufacturing capability and they lack any sort of sustainable financial situation. Tesla did raise public awareness and interest in electronic cars but all they really did was do Ford, Volkswagen, Toyota and the other big manufacturers market research and marketing for them.

Most people are comfortable buying from dealers and companies they "trust" to be around to do repairs, they like existing car designs and price points. The mass market simply isn't going to abandon the existing manufacturers to buy a Tesla when they can get an all electric Ford Taurus or Lexus.
Electric is the future, but we don't know if Tesla will remain the leader.
They aren't the leader now, Nissan is, and with VW going all electric and the other major brands following suit or significantly investing in electric it is unlikely Tesla will ever be the leader. Even if they were able to build an amazing car they lack the capability or experience to mass produce it.

Tesla has to learn how to make an entire car (something they've said several times they don't know how to do well yet) while all the major manufacturers need to do is make an electric power-train function in their existing fleet essentially the same work they do already when they adopt new engines.

Tesla isn't lucky enough to have a product that's being ignored by the rest of the industry like what happened with personal computers; they have a product the rest of the industry is racing to also offer and that industry has efficiency of scale and experience on its side. Tesla will likely wind up designing and implementing power trains for the other companies and manufacturing batteries, etc.

Tesla is essentially Blackberry, things didn't go well for Blackberry once the general public actually became interested in smart phones and large experienced companies started producing them.

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