Tesla leaving Extended for S&P500.

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MJS
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Tesla leaving Extended for S&P500.

Post by MJS »

Will Vanguard Extended Market Index Fund drop in value when Tesla dances off to the big time at the S&P500?

I have the common S&P500 plus extended market mix that mimics the US Stock Market index. Extended has been going up beautifully (mainly due to Tesla & Zoom), resulting in a Glow of Satisfaction. But Tesla is moving to the S&P500. Okay: No gain or loss to me, but ... will Extended drop suddenly and deeply in value, resulting in a Grumpy Moment? Forewarned is fore-armed.
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Re: Tesla leaving Extended for S&P500.

Post by abuss368 »

I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
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Steve Reading
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Re: Tesla leaving Extended for S&P500.

Post by Steve Reading »

MJS wrote: Mon Nov 30, 2020 11:00 pm Will Vanguard Extended Market Index Fund drop in value when Tesla dances off to the big time at the S&P500?

I have the common S&P500 plus extended market mix that mimics the US Stock Market index. Extended has been going up beautifully (mainly due to Tesla & Zoom), resulting in a Glow of Satisfaction. But Tesla is moving to the S&P500. Okay: No gain or loss to me, but ... will Extended drop suddenly and deeply in value, resulting in a Grumpy Moment? Forewarned is fore-armed.
As long as Vanguard sells the Tesla shares for their market value (as in, they don't just gift them away) then the fund itself shouldn't drop in value from selling the Tesla shares.
"... so high a present discounted value of wealth, it is only prudent for him to put more into common stocks compared to his present tangible wealth, borrowing if necessary" - Paul Samuelson
TropikThunder
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Re: Tesla leaving Extended for S&P500.

Post by TropikThunder »

Steve Reading wrote: Tue Dec 01, 2020 12:45 am
MJS wrote: Mon Nov 30, 2020 11:00 pm Will Vanguard Extended Market Index Fund drop in value when Tesla dances off to the big time at the S&P500?

I have the common S&P500 plus extended market mix that mimics the US Stock Market index. Extended has been going up beautifully (mainly due to Tesla & Zoom), resulting in a Glow of Satisfaction. But Tesla is moving to the S&P500. Okay: No gain or loss to me, but ... will Extended drop suddenly and deeply in value, resulting in a Grumpy Moment? Forewarned is fore-armed.
As long as Vanguard sells the Tesla shares for their market value (as in, they don't just gift them away) then the fund itself shouldn't drop in value from selling the Tesla shares.
How can the extended market index (VEXAX in Vanguard’s case) not drop once Tesla leaves? Tesla is almost 5% of the fund and that will go to zero when it moves to the S&P500. VEXAX sells for $116.92 per share now based in part on the fact it has a lot of Tesla. Soon, it will have none.
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Re: Tesla leaving Extended for S&P500.

Post by Iridium »

TropikThunder wrote: How can the extended market index (VEXAX in Vanguard’s case) not drop once Tesla leaves? Tesla is almost 5% of the fund and that will go to zero when it moves to the S&P500. VEXAX sells for $116.92 per share now based in part on the fact it has a lot of Tesla. Soon, it will have none.
Because the money that extended market fund will make selling Tesla will be reinvested in companies remaining in the extended market index. While it won't have Tesla anymore, it will have a bit more of 4000+ different companies, in value roughly equal to the Tesla stock it is giving up.
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Re: Tesla leaving Extended for S&P500.

Post by Watty »

Steve Reading wrote: Tue Dec 01, 2020 12:45 am As long as Vanguard sells the Tesla shares for their market value (as in, they don't just gift them away) then the fund itself shouldn't drop in value from selling the Tesla shares.
I'm not sure about that.

Aren't capital gains normally distributed to the mutual fund holders then the fund holders can reinvest in the mutual fund if they want to?

When a dividend is paid the mutual fund price by the same amount so I would expect the mutual fund price to also drop by the same amount if there is a capital gain distribution because of the sale of the Tesla stock.

If it is in a retirement account this does not really matter but if it is in a taxable account then you might have some capital gains taxes to pay.
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Re: Tesla leaving Extended for S&P500.

Post by Steve Reading »

Watty wrote: Tue Dec 01, 2020 8:50 am
Steve Reading wrote: Tue Dec 01, 2020 12:45 am As long as Vanguard sells the Tesla shares for their market value (as in, they don't just gift them away) then the fund itself shouldn't drop in value from selling the Tesla shares.
I'm not sure about that.

Aren't capital gains normally distributed to the mutual fund holders then the fund holders can reinvest in the mutual fund if they want to?

When a dividend is paid the mutual fund price by the same amount so I would expect the mutual fund price to also drop by the same amount if there is a capital gain distribution because of the sale of the Tesla stock.

If it is in a retirement account this does not really matter but if it is in a taxable account then you might have some capital gains taxes to pay.
I was not aware Vanguard Extended distributed capital gains.
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Re: Tesla leaving Extended for S&P500.

Post by snailderby »

abuss368 wrote: Mon Nov 30, 2020 11:14 pm I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Chuck
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Re: Tesla leaving Extended for S&P500.

Post by Chuck »

Steve Reading wrote: Tue Dec 01, 2020 10:01 am I was not aware Vanguard Extended distributed capital gains.
Vanguard does some accounting voodoo that shoves the capital gains into the ETF where they evaporate or something.

https://www.bloomberg.com/graphics/2019 ... tax-dodge/
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Re: Tesla leaving Extended for S&P500.

Post by hightower »

snailderby wrote: Tue Dec 01, 2020 10:04 am
abuss368 wrote: Mon Nov 30, 2020 11:14 pm I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Yes, it's quite crazy. Although Tesla is not strictly a car company, so a little tough to compare directly to Ford or GM. But, still, their value is hard to justify based on their revenue/profit. It will continue to be a very interesting story to follow that's for sure.
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JoMoney
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Re: Tesla leaving Extended for S&P500.

Post by JoMoney »

hightower wrote: Tue Dec 01, 2020 10:13 am
snailderby wrote: Tue Dec 01, 2020 10:04 am
abuss368 wrote: Mon Nov 30, 2020 11:14 pm I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Yes, it's quite crazy. Although Tesla is not strictly a car company, so a little tough to compare directly to Ford or GM. But, still, their value is hard to justify based on their revenue/profit. It will continue to be a very interesting story to follow that's for sure.
... if you look at their current profits, Ford/GM are pretty hard to justify too :?
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Re: Tesla leaving Extended for S&P500.

Post by GrowthSeeker »

Just a guess, but VG might be able to do a 3-way swap to limit the amount of capital gains realized:
TSLA shares from VXF to VOO ,
some S&P 500 shares from VOO to VTI,
some non-S&P500 shares from VTI to VXF.

Is that something mutual funds are allowed to do?
Just because you're paranoid doesn't mean they're NOT out to get you.
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Re: Tesla leaving Extended for S&P500.

Post by abuss368 »

snailderby wrote: Tue Dec 01, 2020 10:04 am
abuss368 wrote: Mon Nov 30, 2020 11:14 pm I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
That is beyond comprehension! Is the intrinsic value really that large of a difference?
John C. Bogle: “Simplicity is the master key to financial success."
Soon2BXProgrammer
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Re: Tesla leaving Extended for S&P500.

Post by Soon2BXProgrammer »

GrowthSeeker wrote: Tue Dec 01, 2020 11:16 am Just a guess, but VG might be able to do a 3-way swap to limit the amount of capital gains realized:
TSLA shares from VXF to VOO ,
some S&P 500 shares from VOO to VTI,
some non-S&P500 shares from VTI to VXF.

Is that something mutual funds are allowed to do?
for funds with ETF share classes, they will use ETF creation/redemption units to make the capital gains disappear.
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Re: Tesla leaving Extended for S&P500.

Post by GrowthSeeker »

Soon2BXProgrammer wrote: Tue Dec 01, 2020 11:20 am
GrowthSeeker wrote: Tue Dec 01, 2020 11:16 am Just a guess, but VG might be able to do a 3-way swap to limit the amount of capital gains realized:
TSLA shares from VXF to VOO ,
some S&P 500 shares from VOO to VTI,
some non-S&P500 shares from VTI to VXF.

Is that something mutual funds are allowed to do?
for funds with ETF share classes, they will use ETF creation/redemption units to make the capital gains disappear.
I was assuming (but don't know for sure) that the magnitude of the VXF/VEXAX ownership of TSLA would overwhelm this mechanism.
Just because you're paranoid doesn't mean they're NOT out to get you.
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Re: Tesla leaving Extended for S&P500.

Post by Soon2BXProgrammer »

GrowthSeeker wrote: Tue Dec 01, 2020 11:24 am
Soon2BXProgrammer wrote: Tue Dec 01, 2020 11:20 am
GrowthSeeker wrote: Tue Dec 01, 2020 11:16 am Just a guess, but VG might be able to do a 3-way swap to limit the amount of capital gains realized:
TSLA shares from VXF to VOO ,
some S&P 500 shares from VOO to VTI,
some non-S&P500 shares from VTI to VXF.

Is that something mutual funds are allowed to do?
for funds with ETF share classes, they will use ETF creation/redemption units to make the capital gains disappear.
I was assuming (but don't know for sure) that the magnitude of the VXF/VEXAX ownership of TSLA would overwhelm this mechanism.
Hopefully it doesn't, this article was helpful
https://www.bloomberg.com/graphics/2019 ... tax-dodge/
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Re: Tesla leaving Extended for S&P500.

Post by Lyrrad »

GrowthSeeker wrote: Tue Dec 01, 2020 11:24 am I was assuming (but don't know for sure) that the magnitude of the VXF/VEXAX ownership of TSLA would overwhelm this mechanism.
As of October 31, 2020, VXF seems to have realized capital losses of about 5% of the value of the fund. This should be enough to cover all of, or the majority of the capital gains of Tesla when the shares are sold/exchanged with VOO. In addition, presumably they could have performed or will perform additional heartbeat transactions since then to accumulate additional capital losses.
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Re: Tesla leaving Extended for S&P500.

Post by inbox788 »

hightower wrote: Tue Dec 01, 2020 10:13 am
snailderby wrote: Tue Dec 01, 2020 10:04 am
abuss368 wrote: Mon Nov 30, 2020 11:14 pm I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Yes, it's quite crazy. Although Tesla is not strictly a car company, so a little tough to compare directly to Ford or GM. But, still, their value is hard to justify based on their revenue/profit. It will continue to be a very interesting story to follow that's for sure.
How much is a Ford or GM truck carrying a load of hay or fertilizer worth? How much is a Tesla truck carrying a ton of gold bullion worth?

Leaving the Extended for the SP500 is a little like taking that gold bullion to the US mint and carrying out the equivalent value of the gold in currency/cash.

S&P’s decision to add Tesla in one shot demonstrates the power of passive investing
https://www.cnbc.com/2020/12/01/sps-dec ... sting.html
stan1
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Re: Tesla leaving Extended for S&P500.

Post by stan1 »

Whether the issues are real or likely more theoretical this is why I do not use extended market index, especially in a taxable account. There are better constructed indexes.
Topic Author
MJS
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Re: Tesla leaving Extended for S&P500.

Post by MJS »

stan1 wrote: Tue Dec 01, 2020 3:39 pm Whether the issues are real or likely more theoretical this is why I do not use extended market index, especially in a taxable account. There are better constructed indexes.
Good point. Four years ago, a mix was the best choice in that 401 account, but I've never checked back for a simple Total US. Thanks for the reminder!
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Re: Tesla leaving Extended for S&P500.

Post by TropikThunder »

Iridium wrote: Tue Dec 01, 2020 4:21 am
TropikThunder wrote: How can the extended market index (VEXAX in Vanguard’s case) not drop once Tesla leaves? Tesla is almost 5% of the fund and that will go to zero when it moves to the S&P500. VEXAX sells for $116.92 per share now based in part on the fact it has a lot of Tesla. Soon, it will have none.
Because the money that extended market fund will make selling Tesla will be reinvested in companies remaining in the extended market index. While it won't have Tesla anymore, it will have a bit more of 4000+ different companies, in value roughly equal to the Tesla stock it is giving up.
Oh ok, so the index composition and relative weightings will change (i.e., now Zoom will be the biggest company) but $10,000 of VEXAX will still have $10,000 of "stuff". <--- technical term :P
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Re: Tesla leaving Extended for S&P500.

Post by z3r0c00l »

snailderby wrote: Tue Dec 01, 2020 10:04 am
abuss368 wrote: Mon Nov 30, 2020 11:14 pm I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Tesla easily overvalued by 10x against any reasonable future scenario. Forget comparisons to other car companies, they are worth 100 billion more than Walmart right now. Walmart that has $520 billion in annual revenue, that owns 75,000 acres of land with thousands of stores, warehouses, trucks, a company that could potentially rival Amazon in online retail.

I see TSLA at $50 in 2030 if they are a going concern at all.
columbia
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Re: Tesla leaving Extended for S&P500.

Post by columbia »

z3r0c00l wrote: Tue Dec 01, 2020 7:13 pm
snailderby wrote: Tue Dec 01, 2020 10:04 am
abuss368 wrote: Mon Nov 30, 2020 11:14 pm I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Tesla easily overvalued by 10x against any reasonable future scenario. Forget comparisons to other car companies, they are worth 100 billion more than Walmart right now. Walmart that has $520 billion in annual revenue, that owns 75,000 acres of land with thousands of stores, warehouses, trucks, a company that could potentially rival Amazon in online retail.

I see TSLA at $50 in 2030 if they are a going concern at all.
Then you should short TSLA.
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Re: Tesla leaving Extended for S&P500.

Post by z3r0c00l »

columbia wrote: Tue Dec 01, 2020 7:33 pm
z3r0c00l wrote: Tue Dec 01, 2020 7:13 pm
snailderby wrote: Tue Dec 01, 2020 10:04 am
abuss368 wrote: Mon Nov 30, 2020 11:14 pm I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Tesla easily overvalued by 10x against any reasonable future scenario. Forget comparisons to other car companies, they are worth 100 billion more than Walmart right now. Walmart that has $520 billion in annual revenue, that owns 75,000 acres of land with thousands of stores, warehouses, trucks, a company that could potentially rival Amazon in online retail.

I see TSLA at $50 in 2030 if they are a going concern at all.
Then you should short TSLA.
A 10 year short position? Betting against the irrationality of the Joe Rogan/Robinhood crowd?
columbia
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Re: Tesla leaving Extended for S&P500.

Post by columbia »

z3r0c00l wrote: Tue Dec 01, 2020 8:35 pm
columbia wrote: Tue Dec 01, 2020 7:33 pm
z3r0c00l wrote: Tue Dec 01, 2020 7:13 pm
snailderby wrote: Tue Dec 01, 2020 10:04 am
abuss368 wrote: Mon Nov 30, 2020 11:14 pm I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Tesla easily overvalued by 10x against any reasonable future scenario. Forget comparisons to other car companies, they are worth 100 billion more than Walmart right now. Walmart that has $520 billion in annual revenue, that owns 75,000 acres of land with thousands of stores, warehouses, trucks, a company that could potentially rival Amazon in online retail.

I see TSLA at $50 in 2030 if they are a going concern at all.
Then you should short TSLA.
A 10 year short position? Betting against the irrationality of the Joe Rogan/Robinhood crowd?

10 years? By your own prediction, you can make a killing on shorting it now and waiting for it to merely drop in half.
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Re: Tesla leaving Extended for S&P500.

Post by z3r0c00l »

columbia wrote: Tue Dec 01, 2020 10:00 pm
z3r0c00l wrote: Tue Dec 01, 2020 8:35 pm
columbia wrote: Tue Dec 01, 2020 7:33 pm
z3r0c00l wrote: Tue Dec 01, 2020 7:13 pm
snailderby wrote: Tue Dec 01, 2020 10:04 am Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Tesla easily overvalued by 10x against any reasonable future scenario. Forget comparisons to other car companies, they are worth 100 billion more than Walmart right now. Walmart that has $520 billion in annual revenue, that owns 75,000 acres of land with thousands of stores, warehouses, trucks, a company that could potentially rival Amazon in online retail.

I see TSLA at $50 in 2030 if they are a going concern at all.
Then you should short TSLA.
A 10 year short position? Betting against the irrationality of the Joe Rogan/Robinhood crowd?

10 years? By your own prediction, you can make a killing on shorting it now and waiting for it to merely drop in half.
You confuse a prediction with some kind of actionable certainty. Instead of "see" let me use the less vague "envision" TSLA at $50 in 10 years. It could easily hold enough market cap to be where Toyota is today, then again it could have been bought out, or it could fold in an accounting scandal. But generally a slow painful decline is how it goes for automobile companies.
dumbmoney
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Re: Tesla leaving Extended for S&P500.

Post by dumbmoney »

columbia wrote: Tue Dec 01, 2020 7:33 pm
z3r0c00l wrote: Tue Dec 01, 2020 7:13 pm
snailderby wrote: Tue Dec 01, 2020 10:04 am
abuss368 wrote: Mon Nov 30, 2020 11:14 pm I did read about this in the Wall Street Journal. This is resulting in additional buying as the company is added to the S&P 500 index, thus helping the increase in share price.

Crazy how this company has been valued higher than GM!
Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Tesla easily overvalued by 10x against any reasonable future scenario. Forget comparisons to other car companies, they are worth 100 billion more than Walmart right now. Walmart that has $520 billion in annual revenue, that owns 75,000 acres of land with thousands of stores, warehouses, trucks, a company that could potentially rival Amazon in online retail.

I see TSLA at $50 in 2030 if they are a going concern at all.
Then you should short TSLA.
I think Warren Buffett said something to the effect of, if I had made a career of shorting stocks, I would have been right 90% of the time and still lost money.
I am pleased to report that the invisible forces of destruction have been unmasked, marking a turning point chapter when the fraudulent and speculative winds are cast into the inferno of extinction.
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Re: Tesla leaving Extended for S&P500.

Post by z3r0c00l »

columbia wrote: Tue Dec 01, 2020 10:00 pm
z3r0c00l wrote: Tue Dec 01, 2020 8:35 pm
columbia wrote: Tue Dec 01, 2020 7:33 pm
z3r0c00l wrote: Tue Dec 01, 2020 7:13 pm
snailderby wrote: Tue Dec 01, 2020 10:04 am Tesla's market cap is more than five times the value of Ford and GM combined? :shock:

Tesla: $560 billion
GM: $64 billion
Ford: $36 billion
Tesla easily overvalued by 10x against any reasonable future scenario. Forget comparisons to other car companies, they are worth 100 billion more than Walmart right now. Walmart that has $520 billion in annual revenue, that owns 75,000 acres of land with thousands of stores, warehouses, trucks, a company that could potentially rival Amazon in online retail.

I see TSLA at $50 in 2030 if they are a going concern at all.
Then you should short TSLA.
A 10 year short position? Betting against the irrationality of the Joe Rogan/Robinhood crowd?

10 years? By your own prediction, you can make a killing on shorting it now and waiting for it to merely drop in half.
Well I guess someone took your advice to short it. https://markets.businessinsider.com/new ... 1029859345
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Re: Tesla leaving Extended for S&P500.

Post by z3r0c00l »

So what is my devil's advocate case for TSLA being a big deal in 10 years? If they focus on trucks and make a valid replacement for the 2 million semi trucks on the road in the US.

https://www.youtube.com/watch?time_cont ... =emb_title
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Re: Tesla leaving Extended for S&P500.

Post by cusetownusa »

z3r0c00l wrote: Fri Dec 04, 2020 11:10 am So what is my devil's advocate case for TSLA being a big deal in 10 years? If they focus on trucks and make a valid replacement for the 2 million semi trucks on the road in the US.

https://www.youtube.com/watch?time_cont ... =emb_title
wow, is that sped up? Looks crazy seeing a large semi truck accelerate like that.
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Re: Tesla leaving Extended for S&P500.

Post by z3r0c00l »

cusetownusa wrote: Fri Dec 04, 2020 11:28 am
z3r0c00l wrote: Fri Dec 04, 2020 11:10 am So what is my devil's advocate case for TSLA being a big deal in 10 years? If they focus on trucks and make a valid replacement for the 2 million semi trucks on the road in the US.

https://www.youtube.com/watch?time_cont ... =emb_title
wow, is that sped up? Looks crazy seeing a large semi truck accelerate like that.
Don't think so, electric is the real deal as it is more energy efficient by far and can offer massive acceleration too. This tesla truck is said to hit 0-60 in 20 seconds with an 80,000 lbs load. That might not sound like much but I assure you it is a big deal.
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Re: Tesla leaving Extended for S&P500.

Post by tibbitts »

stan1 wrote: Tue Dec 01, 2020 3:39 pm Whether the issues are real or likely more theoretical this is why I do not use extended market index, especially in a taxable account. There are better constructed indexes.
What is the better constructed index that will give you the complement of the S&P500, such that when paired in approximately correct proportions, they will roughly equate to a total market fund?
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Re: Tesla leaving Extended for S&P500.

Post by tibbitts »

MJS wrote: Mon Nov 30, 2020 11:00 pm Will Vanguard Extended Market Index Fund drop in value when Tesla dances off to the big time at the S&P500?

I have the common S&P500 plus extended market mix that mimics the US Stock Market index. Extended has been going up beautifully (mainly due to Tesla & Zoom), resulting in a Glow of Satisfaction. But Tesla is moving to the S&P500. Okay: No gain or loss to me, but ... will Extended drop suddenly and deeply in value, resulting in a Grumpy Moment? Forewarned is fore-armed.
Why would you believe Extended would drop in value, since at the time the shares are sold (even assuming all at once, with no buffering), the fund would receive cash equivalent to the value of the Tesla shares?
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Re: Tesla leaving Extended for S&P500.

Post by Anon9001 »

I would hesitate to call this over-valued as this is a very large company and retail investors probably would not be able to influence the company's price. A fund manager who I am invested with called the guy who heads this a con artist 2 years ago I think and look how wrong they got it. I do question their ability to select foreign stocks after that comment but I still invest with them as there is no index option available which is tax efficient for me and the other active mangers don't seem as trust worthy to me as the guy who I am invested with. It is arrogance to assume you are smarter than the market when the pros don't get it right.
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rascott
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Re: Tesla leaving Extended for S&P500.

Post by rascott »

tibbitts wrote: Fri Dec 04, 2020 11:41 am
stan1 wrote: Tue Dec 01, 2020 3:39 pm Whether the issues are real or likely more theoretical this is why I do not use extended market index, especially in a taxable account. There are better constructed indexes.
What is the better constructed index that will give you the complement of the S&P500, such that when paired in approximately correct proportions, they will roughly equate to a total market fund?

If you're in a taxable account, why not just buy total market and be done with it? Using the extended market funds are typically done in 401ks and such where a total market fund isn't available. And in those accounts these tax considerations are irrelevant.
z3r0c00l
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Re: Tesla leaving Extended for S&P500.

Post by z3r0c00l »

tibbitts wrote: Fri Dec 04, 2020 11:41 am
stan1 wrote: Tue Dec 01, 2020 3:39 pm Whether the issues are real or likely more theoretical this is why I do not use extended market index, especially in a taxable account. There are better constructed indexes.
What is the better constructed index that will give you the complement of the S&P500, such that when paired in approximately correct proportions, they will roughly equate to a total market fund?
Wilshire 5000?
harikaried
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Re: Tesla leaving Extended for S&P500.

Post by harikaried »

The wiki has various weightings that may achieve what people want if trying to avoid Tesla:
https://www.bogleheads.org/wiki/Approxi ... ock_market

E.g., 82% Vanguard 500 + 18% Vanguard Small currently excludes Tesla.

Although more interesting is what happens to the rest of Vanguard Extended companies when Tesla leaves… ?
Topic Author
MJS
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Re: Tesla leaving Extended for S&P500.

Post by MJS »

Tesla Day, Dec 18th: Extended market index funds are soaring. Both Vanguard Extended Market Index Fund;Institutional (VIEIX) and Vanguard Institutional Index Fund;Inst Plus (VIIIX) are at all time highs, while Vanguard Total Stock Market ETF is down. This seems profoundly unreasonable...

MJS wrote: Mon Nov 30, 2020 11:00 pm Will Vanguard Extended Market Index Fund drop in value when Tesla dances off to the big time at the S&P500?

I have the common S&P500 plus extended market mix that mimics the US Stock Market index. Extended has been going up beautifully (mainly due to Tesla & Zoom), resulting in a Glow of Satisfaction. But Tesla is moving to the S&P500. Okay: No gain or loss to me, but ... will Extended drop suddenly and deeply in value, resulting in a Grumpy Moment? Forewarned is fore-armed.
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