Family member has one million in one stock , doesn't want to cash out

[wilked]

Tough month so far for TSLA. With today's general selloff, it's down about 18% since August 31 as I write this.

I can't tell if it's intended to be tongue in cheek, but calling anything a tough month on the morning of the 3rd is kind of funny, esp considering it's up 30% over the last month (30 days). Might be how it was intended though

I'm guessing that the intent was that the month of September has been tough for Tesla. On August 31 (the day this thread started) Tesla closed at $498.32. Right now it is $405.83 -- losing 18.56% in three days is pretty tough. Someone who had a million in Tesla on the 31st of August is now down $185K.

That's fair. However, this same thing could have been said on Feb 5 when it lost 18% overnight. The investor that held on (ie OPs Dad) is now up nearly 3X in spite of today's drop

edited to add - taking any short term view / analysis of any investment (3 days) is not all that productive

[GoldenGoose]

First thing first, CONGRATS your dad!!! Good timing and guts on his part.

[sjl333]

In case anybody is wondering ... Dad held and plans to sell if it hits 400. He's lost 185k over a 3 day span. But is still up like 215k on the stock. We shall see what happens....

[7eight9]

In case anybody is wondering ... Dad held and plans to sell if it hits 400. He's lost 185k over a 3 day span. But is still up like 215k on the stock. We shall see what happens....

Under $400.00 bid after hours. I'm seeing 399.00 bid currently ($399.25 ask).

[retire2022]

In case anybody is wondering ... Dad held and plans to sell if it hits 400. He's lost 185k over a 3 day span. But is still up like 215k on the stock. We shall see what happens....

He really didn’t loose 185k because he didn’t sell.

And he really didn’t gain. I lost 31k of yesterday VGT value but I still own the same shares it may not go back to all time highs but we shall see.

[7eight9]

In case anybody is wondering ... Dad held and plans to sell if it hits 400. He's lost 185k over a 3 day span. But is still up like 215k on the stock. We shall see what happens....

He really didn’t loose 185k because he didn’t sell.

And he really didn’t gain. I lost 31k of yesterday VGT value but I still own the same shares it may not go back to all time highs but we shall see.

Selling or not selling does not determine whether or not an investor has lost money in a stock/ETF/mutual fund etc. Any day the price goes down money has been lost. You are poorer than you were the day before. Maybe poorer than you were when you made the investment. And you will need a larger percentage gain to make up that loss (i.e. have a 50% paper loss - you have to enjoy a 100% paper gain to get back to even).

Whether the loss is realized or only on paper doesn't matter. It is a loss. One can be in denial about it because they hope the market will recover. Markets are not guaranteed to recover in an investor's time frame, lifetime, or ever.

[8foot7]

In case anybody is wondering ... Dad held and plans to sell if it hits 400. He's lost 185k over a 3 day span. But is still up like 215k on the stock. We shall see what happens....

He really didn’t loose 185k because he didn’t sell.

And he really didn’t gain. I lost 31k of yesterday VGT value but I still own the same shares it may not go back to all time highs but we shall see.

Selling or not selling does not determine whether or not an investor has lost money in a stock/ETF/mutual fund etc. Any day the price goes down money has been lost. You are poorer than you were the day before. Maybe poorer than you were when you made the investment. And you will need a larger percentage gain to make up that loss (i.e. have a 50% paper loss - you have to enjoy a 100% paper gain to get back to even).

Whether the loss is realized or only on paper doesn't matter. It is a loss. One can be in denial about it because they hope the market will recover. Markets are not guaranteed to recover in an investor's time frame, lifetime, or ever.

This. Otherwise there is no point to this board because no one who isn’t flat cash has no actual wealth. It doesn’t just all of a sudden appear out of nowhere when you click sell.

[000]

Tough month so far for TSLA. With today's general selloff, it's down about 18% since August 31 as I write this.

lol

[Leif]

You got to know when to hold 'em,
Know when to fold 'em
Know when to walk away and know when to run
...
There'll be time enough for countin' when the dealing's done.

[tmcc]

Where is my solar city roof already jeez

[retire2022]

This. Otherwise there is no point to this board because no one who isn’t flat cash has no actual wealth. It doesn’t just all of a sudden appear out of nowhere when you click sell.

8foot7post

With all respects, try to borrow against it, go to a bank to see if they consider your shares a secure collateral.

If you have a margin account and the value drops, the custodian will be forced to sell some shares below cost basis.

[7eight9]

As if today's action (down 9.02%) wasn't bad enough extended hours now showing Bid: 384.95 Ask: 385.40 (down another 5%+).

[Leif]

Us boring Boglehead index investors are getting our vicarious thrill through your dad's investing.

[Actin]

My only advice to you is don't expect much of an inheritance and don't let your Dad move in with you when he loses the majority of it.

[sjl333]

As if today's action (down 9.02%) wasn't bad enough extended hours now showing Bid: 384.95 Ask: 385.40 (down another 5%+).

My dad decided to hold. Looks like he going to learn an expensive lesson once again.

I just hope he doesn't lose his principle.

[sjl333]

My only advice to you is don't expect much of an inheritance and don't let your Dad move in with you when he loses the majority of it.

I don't expect any inheritance. I'm hoping my dad uses up all his hard earned money for himself and for my mom. He worked very hard to get to this point, would hate to see him piss it all away like this.

[Actin]

My only advice to you is don't expect much of an inheritance and don't let your Dad move in with you when he loses the majority of it.

I don't expect any inheritance. I'm hoping my dad uses up all his hard earned money for himself and for my mom. He worked very hard to get to this point, would hate to see him piss it all away like this.

I was joking with that post.I know this forum is very dogmatic and pessimistic, but your Dad will most likely be completely fine. Unless Tesla pulls an Enron, I don't see the company going anywhere. I would be inclined to say he has a better chance of doubling his 1 million over losing half of it.

[arcticpineapplecorp.]

As if today's action (down 9.02%) wasn't bad enough extended hours now showing Bid: 384.95 Ask: 385.40 (down another 5%+).

My dad decided to hold. Looks like he going to learn an expensive lesson once again.

again? he didn't learn it the first time.

what makes you think he'll learn it the second time?

people are pattern seeking creatures.

[dacalo]

As if today's action (down 9.02%) wasn't bad enough extended hours now showing Bid: 384.95 Ask: 385.40 (down another 5%+).

Not just TSLA but AAPL, NVDA and other techs took a beating. I am sure OP's dad is seeing a lot of red. But in the long run, i am sure it will work out fine.

[000]

As if today's action (down 9.02%) wasn't bad enough extended hours now showing Bid: 384.95 Ask: 385.40 (down another 5%+).

Not just TSLA but AAPL, NVDA and other techs took a beating. I am sure OP's dad is seeing a lot of red. But in the long run, i am sure it will work out fine.

That depends on how he reacts to seeing more red tomorrow if the sell off continues.

[FireFool]

I'll admit towards the latter posts I started skimming, but I never saw any discussion in regards to "Dad's" expenses/withdrawal needs. For all we know his expenses could be running lower than his expected SS benefits/defined benefit pension. If that were the case with as large of a portfolio as he has he can be extraordinarily aggressive if that's his desire. Being an aggressive investor might be the luxury he earned with a lifetime of work, especially if all he's risking is the size of his son's eventual inheritance.

[Helo80]

I don't understand TSLA, and my two cents has always been Musk, as eccentric as he is, is why the company is doing so well. You put in a standard CEO, I think things would change for the worst as the stock gets valued more appropriately. But, Musk can say whatever he wants and has a legion of fanboys that will dance to his tune.

I don't understand how the market deems Tesla is worth 14x what Ford is worth when Ford has a well developed supply chain and dealership network, and will build millions of cars this year. Their F-series truck sells about 900k units a year. That's before you get into the car/SUV side of the house. Then when you add in GM and FCAU, I don't think Tesla's solar panels are making up the difference for 3 major domestic automakers. How is Tesla worth 4x what GM, Ford, and FCAU are worth?

That's why I index though, and that's why OP, I'd recommend your dad take his $215k earnings and invest it more broadly in multiple stocks or just settle on an index fund.

[FireFool]

People here need to stop saying index is the only way to make money. The truth is indexing is one of the ways to make money.

It's been said that indexing is a way of PROTECTING wealth, while individual investments create wealth. But I agree different people will have different investment approaches and needs, which are also largely dependent on the size of their portfolio and their withdrawal rate needs.

[tibbitts]

People here need to stop saying index is the only way to make money. The truth is indexing is one of the ways to make money.

It's been said that indexing is a way of PROTECTING wealth, while individual investments create wealth.

And the source of that?

[legio XX]

. . . EDIT: And I'd be willing to bet a six-pack of beer that if the post was about the OP's 60-year old MOM having 1/3rd of her life savings in a single stock, nobody would be saying "Awwww, leave her alone, she knows better than you."

+1
... and, "Mom, if you lose your knickers you realize I can't support you, right?"

[CardinalRule]

Us boring Boglehead index investors are getting our vicarious thrill through your dad's investing.

True, this. Hopefully the OP will soon tell us that dad exited at $400.

[Leif]

Tesla, at this moment, is down 7%. The PE is only 983. Anyone want to back up the truck (or perhaps abus)?

[Helo80]

People here need to stop saying index is the only way to make money. The truth is indexing is one of the ways to make money.

It's been said that indexing is a way of PROTECTING wealth, while individual investments create wealth.

And the source of that?

The source is likely some rando that got lucky or is trying to sell an investment vessel.

Sure, if you invested in some of the trillion dollar companies we see today at their IPO, you'd be extremely wealthy compared to doing a straight S&P500 index. However, we know there are a few serious long-term winners.... and many losers.... hence why Jack did the whole index fund to capture a broad and portion of the market.

Also, I would not say my wealth has been preserved in index funds. It has definitely grown.

The nice thing about the S&P500 or TSM, short of a complete collapse of the economy/USA, there will always be a market for the S&P500 index fund. Tesla, Apple, Microsoft, Amazon Sears, Montgomery Ward, Enron..... we don't know where any of these companies will be ten, twenty, thirty, etc. years from now.

[tdmp]

I don't understand TSLA, and my two cents has always been Musk, as eccentric as he is, is why the company is doing so well. You put in a standard CEO, I think things would change for the worst as the stock gets valued more appropriately. But, Musk can say whatever he wants and has a legion of fanboys that will dance to his tune.

I don't understand how the market deems Tesla is worth 14x what Ford is worth when Ford has a well developed supply chain and dealership network, and will build millions of cars this year. Their F-series truck sells about 900k units a year. That's before you get into the car/SUV side of the house. Then when you add in GM and FCAU, I don't think Tesla's solar panels are making up the difference for 3 major domestic automakers. How is Tesla worth 4x what GM, Ford, and FCAU are worth?

That's why I index though, and that's why OP, I'd recommend your dad take his $215k earnings and invest it more broadly in multiple stocks or just settle on an index fund.

I believe the market is efficient in "having all the information." However, market can be wrong in pricing, ie. Pets.com, Webvan, WeWork, valeant etc... Tesla currently is priced as technology and not just automotive. Some of this technology are future "robotaxi", software for autonomous driving, battery/powerwall/solar, etc. I don't believe that TSLA should be priced this way, but I don't have all the information that the market has. If priced as automotive only, then the valuation is extremely high. It will become more difficult for Tesla to keep selling $50K vehicles (high margins). There is only a limited amount of people that can buy them. Saying all this, the market will figure this out one way or another.

[Grt2bOutdoors]

Tesla, at this moment, is down 7%. The PE is only 983. Anyone want to back up the truck (or perhaps abus)?

This stock needs to get razed. Too soon to back up a truck.

[Doom&Gloom]

Tesla, at this moment, is down 7%. The PE is only 983. Anyone want to back up the truck (or perhaps abus)?

I see what you did there. Nicely done!

[Helo80]

I believe the market is efficient in "having all the information." However, market can be wrong in pricing, ie. Pets.com, Webvan, WeWork, valeant etc... Tesla currently is priced as technology and not just automotive.

That's kind of troubling, because Tesla did not invent the car. They may have a revolutionary UI/UX though that is relatively advanced and updated for what's out there. Eventually, the majors will poach their talent fully and all of that will make its way into all cars. Remember, power windows, Radio, cassette tapes, CD players, etc. all used to be options/upgrades on cars.

[tesuzuki2002]

Hello all,

My dad just told me he has surpassed one million in Tesla . He's 60 years old , 5 years left to retirement. Has a total portfolio of 3 million and RE worth 2 million.

So if Tesla goes bankrupt.... Then he will only have a $4M portfolio instead of a $5M portfolio... I really don't see a huge problem here....

[tesuzuki2002]

People here need to stop saying index is the only way to make money. The truth is indexing is one of the ways to make money.

It's been said that indexing is a way of PROTECTING wealth, while individual investments create wealth. But I agree different people will have different investment approaches and needs, which are also largely dependent on the size of their portfolio and their withdrawal rate needs.

This is so so true.... indexing will never produce WEALTH. It is a protection mechanism once you have won the game...

[hnd]

i would love to be 60 and have my kid tell me he told me so after 2 days of a down market.

[sailaway]

People here need to stop saying index is the only way to make money. The truth is indexing is one of the ways to make money.

It's been said that indexing is a way of PROTECTING wealth, while individual investments create wealth. But I agree different people will have different investment approaches and needs, which are also largely dependent on the size of their portfolio and their withdrawal rate needs.

This is so so true.... indexing will never produce WEALTH. It is a protection mechanism once you have won the game...

Are y'all using one of those blow it out of the park, filthy rich definitions of wealth?

[mptfan]

Selling or not selling does not determine whether or not an investor has lost money in a stock/ETF/mutual fund etc.

I respectfully disagree, and I think most Bogleheads would disagree.

[an_asker]

As if today's action (down 9.02%) wasn't bad enough extended hours now showing Bid: 384.95 Ask: 385.40 (down another 5%+).

My dad decided to hold. Looks like he going to learn an expensive lesson once again.

I just hope he doesn't lose his principle.

This is so funny (sorry OP!): he's gonna either lose his principle or his principal!! But not both for sure!

[clown]

To OP - What's more important - money or your relationship with your Dad?

(By the way, it's his money not yours.)

[Leif]

I really don't understand the criticism I'm reading directed to the OP. Anywhere from "not your business" to questioning his motives.

This is his dad. He wants to offer good advice. Advice that I believe most Bogleheads would agree with. I would do the same if I faced the same situation.

[Oregano]

The good news is that when TSLA hits $0, your dad will still have $4 million of other investments.

[Paul78]

I really don't understand the criticism I'm reading directed to the OP. Anywhere from "not your business" to questioning his motives.

He is his dad. He wants to offer good advice. Advice the I believe most Bogleheads would agree with. I would do the same if I faced the same situation.

Well most bogleheads are likely to be the dad in this scenario not the son (eg I would imagine the the average age and average wealth of a boglehead is higher than your average internet forum). So some probably have experienced their children giving them advice they don't want or have the thought "it is my money, I am going to do whatever I want with it, leave me alone". And don't get me wrong I 100% agree with the belief that the person who earn the money should decide what is done with it (I mean unless they are mentally incapacitated). But that doesn't mean concerned parties should offer advice.

[Taylor Larimore]

Hello all,

My dad just told me he has surpassed one million in Tesla . He's 60 years old , 5 years left to retirement. Has a total portfolio of 3 million and RE worth 2 million.

His portfolio holdings consist of individual companies such as Tesla , apple, Nvidia , AMD , GE and some other companies.

I told him to cash out , or at least cash out 50% and diversify to sp500. He is playing with fire and I told him he should cash his chips while he's running good. He told me he thinks he can time the market and will cash out before it crashes. I told him its very hard to time the market like that.

Can anybody provide some advice on what I should tell him to convince him otherwise ?

Thanks.

sjl333:

In my opinion you gave your Dad sound advice. However, your Dad has apparently done very well with his investments. Whether he sells Tesla or not, will probably make little difference in his lifestyle. Anyway, it is his decision and not worth arguing about.

Give him a Bogleheads' book for Christmas.

Best wishes.
Taylor

Jack Bogle's Words of Wisdom: "Absolutely no one knows what the stock market is going to do tomorrow, let alone next year. Nor which sector, style or region will lead and which will lag. Given this absolute uncertainty, the most logical strategy is to invest as broadly as possible."

[jajlrajrf]

I really don't understand the criticism I'm reading directed to the OP. Anywhere from "not your business" to questioning his motives.

He is his dad. He wants to offer good advice. Advice the I believe most Bogleheads would agree with. I would do the same if I faced the same situation.

Yeah, I've noticed and commented to that effect also. It's a VERY strange dynamic that would not be in play in almost any other situation. Being a dad doesn't (and shouldn't) make you somehow immune from being told you're doing a dumb thing.

The forum is full of people who stop in and say "What advice should I give my aged mom about her portfolio"; not one person in the history of Bogleheads.org has ever told those people "butt out, it's not your business." Curious.

[tdmp]

I believe the market is efficient in "having all the information." However, market can be wrong in pricing, ie. Pets.com, Webvan, WeWork, valeant etc... Tesla currently is priced as technology and not just automotive.

That's kind of troubling, because Tesla did not invent the car. They may have a revolutionary UI/UX though that is relatively advanced and updated for what's out there. Eventually, the majors will poach their talent fully and all of that will make its way into all cars. Remember, power windows, Radio, cassette tapes, CD players, etc. all used to be options/upgrades on cars.

I do agree. ie. Tesla basic autopilot (NOT the FSD). Tesla basic autopilot is basically just auto-steer and lanekeeping. Even Hyundai/Kia has that now (on the 2020 Palisade/Telluride). I just know that the market doesn't price Tesla as normal auto manufacturer like Toyota, Ford, etc...

[7eight9]

This probably won't be welcome news for Tesla holders.

Tesla Didn’t Join the S&P 500, but Three Others Did
https://www.barrons.com/articles/tesla- ... 1599255574

[sjl333]

This probably won't be welcome news for Tesla holders.

Tesla Didn’t Join the S&P 500, but Three Others Did
https://www.barrons.com/articles/tesla- ... 1599255574

Do you know thw criteria of which companies get in and booted out ? Why wasn't tesla pikced ? Because it dropped in valuation ?

[7eight9]

This probably won't be welcome news for Tesla holders.

Tesla Didn’t Join the S&P 500, but Three Others Did
https://www.barrons.com/articles/tesla- ... 1599255574

Do you know thw criteria of which companies get in and booted out ? Why wasn't tesla pikced ? Because it dropped in valuation ?

Companies must be U.S. based, and listed on either the NYSE, the Nasdaq or the Cboe. They also must have a market cap of more than $8.2 billion, and report four straight quarters of profit as determined by U.S. generally accepted accounting principles (GAAP).

Even if a company meets these criteria as well as the other stipulations, that does not guarantee inclusion in the index. The committee meets on a quarterly basis to rebalance the index, but companies can be added or removed from the S&P at any time.

https://www.cnbc.com/2020/09/04/tesla-f ... maker.html

[We're wolves]

I really don't understand the criticism I'm reading directed to the OP. Anywhere from "not your business" to questioning his motives.

He is his dad. He wants to offer good advice. Advice the I believe most Bogleheads would agree with. I would do the same if I faced the same situation.

Yeah, I've noticed and commented to that effect also. It's a VERY strange dynamic that would not be in play in almost any other situation. Being a dad doesn't (and shouldn't) make you somehow immune from being told you're doing a dumb thing.

The forum is full of people who stop in and say "What advice should I give my aged mom about her portfolio"; not one person in the history of Bogleheads.org has ever told those people "butt out, it's not your business." Curious.

But the OP said he did tell him, and his dad ignored that advice. He is now asking what can he do now and the correct answer is "Nothing". This situation is completely different from a poster asking what he should tell a person who has come to him for advice on investing. The dad is pointedly NOT interested in taking the advice already provided.

[tesuzuki2002]

delete