I took a 10yr loan to buy TSLA shares

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chipperd
Posts: 933
Joined: Sat Sep 24, 2011 5:58 am
Location: here and now

Re: I took a 10yr loan to buy TSLA shares

Post by chipperd »

OP: To answer your question, are you speculating or are you investing?
I believe you could look up those definitions and quite quickly and accurately decide for yourself.
So you are posting this question for other than a direct answer to your question, but I'll humor you.

My answer: It doesn't matter what you call it. You have decided that you want to take on a higher risk so that you have an opportunity for a higher reward. Some would be comfortable taking on that risk and some not. Your comfort level with this decision will educate yourself about what level of risk you are willing to take on going forward in your investing life. As long as you can step back along the way and evaluate your inner world with clear eyes, this will be a valuable education about yourself regardless of the financial outcome.

My advice: what ever you learn about yourself from an emotional standpoint as an investor should not be muddled with the financial results of your current investment. In other words, let this experience teach you about yourself, however, the numerical results over time of your Tesla purchase are no indication of the level of your investor expertise. Don't generalize your success or failure as an investor, or allow such generalizations to determine your next investment. Stay unemotional in that regard and continue to, with an open mind, seek out materials and other inputs that contradict your current position.
Remain insecure in your financial decisions, but continue to sleep well at night.

Best of luck!
:sharebeer
"A portfolio is like a bar of soap, the more it's handled, the less there is." Dr. William Bernstein
Wanderingwheelz
Posts: 1073
Joined: Mon Mar 04, 2019 9:52 am

Re: I took a 10yr loan to buy TSLA shares

Post by Wanderingwheelz »

herbert_21 wrote: Tue Nov 17, 2020 2:34 pm So, yes, I do have high conviction. I rather discuss the Tesla bull thesis in the appropriate thread. But, I wouldn't say it's too late.

Let me answer your questions

Why didn't I invest into TSLA earlier?

I paid for a flat. I had no money for imvesting. In 2008, when flats where cheap I bought a 3 room flat for 108k. I used my own 65k and my.sister.borrowed me the money. I tried to repay as quickly as I could. In never even looked on the house prices. I did not look at interest rates. I had a personal obligation. I avoided debt by all means.
When I took out my house loan, I thought OMG. What is going on here. The bank would.literally give me all the money at under Inflation rate.
End of 2018, I sold my flat for 235k. This is the answer why I did not invest in Alphabet earlier. I did not know about TSLA.

What is your expected return
About 10-20% plus x. I believe the current value of Tesla is somewhere between $600 and $720. Short term and options are risky. Long term investing is less risky but still risky. Individual companies is market risk plus individual stock risk, and I'm aware.
I want to have a place to document my journey. I do think this forum is the right place.

So, TSLA is a high risk / high reward investment. You can call it a bet. I would disagree. When Ron Barron invested in Tesla, was this very risky? Yes. Was he speculating? No.

From a value investor standpoint, you are taking a higher risk, because the stock price went up so much. I'd beg to differ. This company is in it's early innings.

Why am I writing this and am I a troll?
Well, basically I want to discuss people on a certain level. And by level I don't mean r/wallstreetbets. I need some place to reflect. I am willing to see some criticism and different opinions.
You’re willing to see criticism and different options? Um, pardon me, but no you’re not.

Bogleheads is a place for folks who may have done something like what you’ve pieced together at some point in their past, but never, ever, would again. Why do you suppose that is?
3 Fund Portfolio. 70%/30% AA. No mortgage. Simple.
BNAIBOA
Posts: 44
Joined: Tue Oct 27, 2020 11:56 am

Re: I took a 10yr loan to buy TSLA shares

Post by BNAIBOA »

I made a small fortune by investing in NIO.

Diversification works for most people because they don’t have the stomach for volatility.

@ the end of the day the only thing that matters is whether you got it right or wrong. It is like going to Vegas and putting everything on red.

It wasn’t easy for me to bet big on a start up like NIO but I have other sources of income and I am comfortable with losing my investment. Good luck to you (to us).
Topic Author
herbert_21
Posts: 63
Joined: Tue Nov 17, 2020 10:41 am

Re: I took a 10yr loan to buy TSLA shares

Post by herbert_21 »

chipperd wrote: Sun Nov 29, 2020 6:49 am OP: To answer your question, are you speculating or are you investing?
I believe you could look up those definitions and quite quickly and accurately decide for yourself.
So you are posting this question for other than a direct answer to your question, but I'll humor you.

My answer: It doesn't matter what you call it. You have decided that you want to take on a higher risk so that you have an opportunity for a higher reward. Some would be comfortable taking on that risk and some not. Your comfort level with this decision will educate yourself about what level of risk you are willing to take on going forward in your investing life. As long as you can step back along the way and evaluate your inner world with clear eyes, this will be a valuable education about yourself regardless of the financial outcome.

My advice: what ever you learn about yourself from an emotional standpoint as an investor should not be muddled with the financial results of your current investment. In other words, let this experience teach you about yourself, however, the numerical results over time of your Tesla purchase are no indication of the level of your investor expertise. Don't generalize your success or failure as an investor, or allow such generalizations to determine your next investment. Stay unemotional in that regard and continue to, with an open mind, seek out materials and other inputs that contradict your current position.
Remain insecure in your financial decisions, but continue to sleep well at night.

Best of luck!
:sharebeer
Hello chipperd,

Thanks for your posting. Yes, in fact I do see my investment as such and not as pure speculation. More pricisely, it's supposed to be a high/risk high/reward investment. The posting of BNAIBOA shows correctly, that it is in fact possible to 10x your investment, if you have the stomach to risk your money, are long enough in the market to make such returns before taking the gains out making it possible that you are lucky. Kostolany said something about the four Gs in German, which translates to luck (Gllück),patience(Geduld),money(Geld)and thought (due diligence, Gedanken).

Lets' talk about debt, baby
So, as I wrote, I contacted my bank. Ideally I'd end up with 25k, which I would then use to repay all high interest loans.
While on it, I also calculated what was critized as high interest rate (e.g. 3600€ over a period of 10yrs for the 4,375% interest rate) in this thread. When I started my investment in Tesla, I started small, and did my due diligence. I don't want to write that much, because, in the end that's something any investor has to do on his/her own. But the moment I decided to buy the shares on margin, I realized that the stock price of Tesla will be much higher so fast, that I won't be able to "save" enough money. So I'd end up with having done all due diligence, have some conviction, have a few shares, and make 1 or 2k. When I started thinking about this, I watched Ron Barrons first and second interview on CNBC. He convinced me. He said sth. like he was pretty sure that over a long period, Tesla would 10x investment. He had missed out on Amazon, but wasn't willing to miss on Tesla.

Now you might say, Ron Barron is a professional investor and might be in a much different financial position than me. That's all correct. But leads me to my point, a main question:

Why da heck should a private investor, if he is convinced of a company's future, with excellent execution, and integer* management, in a highly-growing business, ability to scale, innovative company culture, well, why should a private investor not be able to take some risk, in a situation offering an extremely good risk/reward to offer? That's why I really don't care if anyone calls me a speculator. (* I know, I know Elon Musk is pretty excentric on Twitter, but that's not what I'm talking about, instead: PayPal, SpaceX, Tesla.) That situation was when Tesla was at €313 because it hadn't been included in the S&P. It was pretty clear that after having 4 consecutive profitable quarters, and another one w/o regulatory credits, that TSLA couldn't be ignored much longer by the committee. And apart from the index inclusion, it's a terrific growth story, a great company, and while the valuation makes no sense if you use 2020 P/E, it makes some sense if you factor in future growth.

Now to your point, I shouldn't attribute gains that were maybe just luck, to my skill. Let me be clear: I try not to fall into that error. You cannot know in advance what the share price will do.

Also, I will diversify pretty soon. I was considering something like keeping my 80k growth portfolio (because the cheapest fund I can run is not touching my equity position at all, with the cost of holding my shares being 0, 0 taxes, no costs apart from the interest) and put the next 20k by DCAing into Vanguard S&P 500. Whether I will repay everything within a month or two, or refinance, will be defined by the conditions. Even with record levels in S&P at 3600 I think long term the stock market has some good returns to offer north 1%, and with more than 20 years of working ahead, it all makes some sense and should help me to meeting my goals.

Again, @chipperd thanks also for the second part of your comment. I will "get a life" and find some reward elsewhere than in stock returns.
Topic Author
herbert_21
Posts: 63
Joined: Tue Nov 17, 2020 10:41 am

Re: I took a 10yr loan to buy TSLA shares

Post by herbert_21 »

BNAIBOA wrote: Sun Nov 29, 2020 10:03 am I made a small fortune by investing in NIO.

Diversification works for most people because they don’t have the stomach for volatility.

@ the end of the day the only thing that matters is whether you got it right or wrong. It is like going to Vegas and putting everything on red.

It wasn’t easy for me to bet big on a start up like NIO but I have other sources of income and I am comfortable with losing my investment. Good luck to you (to us).
I'm curious:
What percentage or how many months of work are we talking about?
Topic Author
herbert_21
Posts: 63
Joined: Tue Nov 17, 2020 10:41 am

Re: I took a 10yr loan to buy TSLA shares

Post by herbert_21 »

Schlabba wrote: Sun Nov 29, 2020 4:27 am Hi Herbert,

I found an interesting video where Tesla (and other companies in the EV space) are being compared to the Bicycle index: https://youtu.be/HeWLcsgBpgM

Edit: and just by coincidence Ben Felix did a relevant video as well https://youtu.be/UZnVt_CvL3k
Hi,

I saw both videos. Pensioncraft is very risk-adverse and admits that. I like his channel, he's really good.

But even Pensioncraft doesn't know whether "the EV bubble will pop up" like some people believe. In fact, look at the following:
- VW CEO did a Linkedin posting this weekend on "How we transform Volkswagen https://www.linkedin.com/feed/update/ur ... 271738368/
- BMW moved their ICE production to GB, while they will produce EVs in their headquarter/main location in Germany and
- Chinese EV stocks are going crazy, and incentives in China will benefit EVs in a huge way.

So, yes, there is some risk that the EV is a bubble. But on the other hand, there is demand, there is growth, and nobody really knows which company will survive and dominate the others. Will Tesla be what Apple was with smartphones? Yes, I think so. Can you know for sure? No, that's the risk of investing into an individual company.
Topic Author
herbert_21
Posts: 63
Joined: Tue Nov 17, 2020 10:41 am

Re: I took a 10yr loan to buy TSLA shares

Post by herbert_21 »

https://www.akrecapital.com/the-art-of-not-selling/
Holding on means resisting the temptations to sell — and there are many. We tune out politics and macroeconomics. To the surprise of many, neither valuation nor price targets play a role in our sell decisions.

To be clear, there may be times when we believe it is appropriate to sell. In these instances, it is typically because of an adverse change in the business itself.

This determination to hold on is a critically important, and not always well understood, aspect of our investment philosophy. At its core, it relates to the power of compounding. We believe these two ideas — (not) selling and compounding — are inextricably linked. Getting the first wrong makes the second impossible.

Allowing our investments to compound uninterrupted is our North Star. (...)

In addition, we try to develop an understanding of what really matters for each of our portfolio companies. (...)

In our experience, this kind of refined understanding is the best antidote to the noise and helps provide us with the fortitude to stay the course and allow our investments in growing, competitively advantaged businesses to compound uninterrupted.
pseudoiterative
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Location: australia

Re: I took a 10yr loan to buy TSLA shares

Post by pseudoiterative »

herbert_21 wrote: Sun Nov 29, 2020 12:56 pm So, yes, there is some risk that the EV is a bubble. But on the other hand, there is demand, there is growth, and nobody really knows which company will survive and dominate the others. Will Tesla be what Apple was with smartphones? Yes, I think so. Can you know for sure? No, that's the risk of investing into an individual company.
Different industries have different dynamics: one reason Apple's smartphone business is so profitable is their monopoly the app store -- it's a two-sided marketplace where app developers pay Apple to sell apps to phone users. Apple provides some value to users by reviewing and weeding out obviously terrible apps (e.g. malware), Apple provides value to developers by giving them a marketing and distribution channel to a large number of relatively wealthy users, and Apple extracts value for itself by taking a 30% cut of app store revenue. Due to network effects there's a feedback loop where it makes more sense for users and developers to participate in the app store with the largest network, making it larger still: it's not worth developing apps for an app store that doesn't have many users, you go develop apps for the store that gives you access to the largest market. Similarly it's not worth buying a phone that gives you access to an app store that doesn't have any apps.

Microsoft gave up trying to establish their own competing smartphone app store ecosystem after Apple and Google took the first two places in the race.

There aren't comparable network-effect economics for the car manufacturing business. Look at VW and Toyota, the two manufacturers with the largest market share today: Toyota manages a net profit margin of around 6% -- 8% . VW runs at an net profit margin of around -1% -- 6% . Apple in contrast achieves a net profit margin of 20%+. From an economic point of view, the business of car manufacturing is terrible compared to the business of gatekeeping an app store monopoly. It doesn't have winner-take-all dynamics. You can become the largest auto manufacturer in the world by revenue and your prize is: a relatively unprofitable business with high capital requirements in a competitive industry.
BNAIBOA
Posts: 44
Joined: Tue Oct 27, 2020 11:56 am

Re: I took a 10yr loan to buy TSLA shares

Post by BNAIBOA »

herbert_21 wrote: Sun Nov 29, 2020 12:47 pm
BNAIBOA wrote: Sun Nov 29, 2020 10:03 am I made a small fortune by investing in NIO.

Diversification works for most people because they don’t have the stomach for volatility.

@ the end of the day the only thing that matters is whether you got it right or wrong. It is like going to Vegas and putting everything on red.

It wasn’t easy for me to bet big on a start up like NIO but I have other sources of income and I am comfortable with losing my investment. Good luck to you (to us).
I'm curious:
What percentage or how many months of work are we talking about?
I put 3% of my net worth into NIO when it was cheap. I made money from rental properties so I was pretty comfortable with my NIO investment.

I check on my NIO stock first thing in the morning. When you have a lot of money in just one stock, it can be stressful and you can’t help but spend time following the stock.
chipperd
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Location: here and now

Re: I took a 10yr loan to buy TSLA shares

Post by chipperd »

herbert_21 wrote: Sun Nov 29, 2020 12:45 pm
chipperd wrote: Sun Nov 29, 2020 6:49 am OP: To answer your question, are you speculating or are you investing?
I believe you could look up those definitions and quite quickly and accurately decide for yourself.
So you are posting this question for other than a direct answer to your question, but I'll humor you.

My answer: It doesn't matter what you call it. You have decided that you want to take on a higher risk so that you have an opportunity for a higher reward. Some would be comfortable taking on that risk and some not. Your comfort level with this decision will educate yourself about what level of risk you are willing to take on going forward in your investing life. As long as you can step back along the way and evaluate your inner world with clear eyes, this will be a valuable education about yourself regardless of the financial outcome.

My advice: what ever you learn about yourself from an emotional standpoint as an investor should not be muddled with the financial results of your current investment. In other words, let this experience teach you about yourself, however, the numerical results over time of your Tesla purchase are no indication of the level of your investor expertise. Don't generalize your success or failure as an investor, or allow such generalizations to determine your next investment. Stay unemotional in that regard and continue to, with an open mind, seek out materials and other inputs that contradict your current position.
Remain insecure in your financial decisions, but continue to sleep well at night.

Best of luck!
:sharebeer
Hello chipperd,

Thanks for your posting. Yes, in fact I do see my investment as such and not as pure speculation. More pricisely, it's supposed to be a high/risk high/reward investment. The posting of BNAIBOA shows correctly, that it is in fact possible to 10x your investment, if you have the stomach to risk your money, are long enough in the market to make such returns before taking the gains out making it possible that you are lucky. Kostolany said something about the four Gs in German, which translates to luck (Gllück),patience(Geduld),money(Geld)and thought (due diligence, Gedanken).

Lets' talk about debt, baby
So, as I wrote, I contacted my bank. Ideally I'd end up with 25k, which I would then use to repay all high interest loans.
While on it, I also calculated what was critized as high interest rate (e.g. 3600€ over a period of 10yrs for the 4,375% interest rate) in this thread. When I started my investment in Tesla, I started small, and did my due diligence. I don't want to write that much, because, in the end that's something any investor has to do on his/her own. But the moment I decided to buy the shares on margin, I realized that the stock price of Tesla will be much higher so fast, that I won't be able to "save" enough money. So I'd end up with having done all due diligence, have some conviction, have a few shares, and make 1 or 2k. When I started thinking about this, I watched Ron Barrons first and second interview on CNBC. He convinced me. He said sth. like he was pretty sure that over a long period, Tesla would 10x investment. He had missed out on Amazon, but wasn't willing to miss on Tesla.

Now you might say, Ron Barron is a professional investor and might be in a much different financial position than me. That's all correct. But leads me to my point, a main question:

Why da heck should a private investor, if he is convinced of a company's future, with excellent execution, and integer* management, in a highly-growing business, ability to scale, innovative company culture, well, why should a private investor not be able to take some risk, in a situation offering an extremely good risk/reward to offer? That's why I really don't care if anyone calls me a speculator. (* I know, I know Elon Musk is pretty excentric on Twitter, but that's not what I'm talking about, instead: PayPal, SpaceX, Tesla.) That situation was when Tesla was at €313 because it hadn't been included in the S&P. It was pretty clear that after having 4 consecutive profitable quarters, and another one w/o regulatory credits, that TSLA couldn't be ignored much longer by the committee. And apart from the index inclusion, it's a terrific growth story, a great company, and while the valuation makes no sense if you use 2020 P/E, it makes some sense if you factor in future growth.

Now to your point, I shouldn't attribute gains that were maybe just luck, to my skill. Let me be clear: I try not to fall into that error. You cannot know in advance what the share price will do.

Also, I will diversify pretty soon. I was considering something like keeping my 80k growth portfolio (because the cheapest fund I can run is not touching my equity position at all, with the cost of holding my shares being 0, 0 taxes, no costs apart from the interest) and put the next 20k by DCAing into Vanguard S&P 500. Whether I will repay everything within a month or two, or refinance, will be defined by the conditions. Even with record levels in S&P at 3600 I think long term the stock market has some good returns to offer north 1%, and with more than 20 years of working ahead, it all makes some sense and should help me to meeting my goals.

Again, @chipperd thanks also for the second part of your comment. I will "get a life" and find some reward elsewhere than in stock returns.
Your welcome
"A portfolio is like a bar of soap, the more it's handled, the less there is." Dr. William Bernstein
harikaried
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Re: I took a 10yr loan to buy TSLA shares

Post by harikaried »

chipperd wrote: Sun Nov 29, 2020 6:49 amDon't generalize your success or failure as an investor, or allow such generalizations to determine your next investment.
Some reason I don't seem to recall seeing "past performance is not an indicator of future performance" recently, but maybe that's because our investments are on autopilot. :wink:
chipperd
Posts: 933
Joined: Sat Sep 24, 2011 5:58 am
Location: here and now

Re: I took a 10yr loan to buy TSLA shares

Post by chipperd »

harikaried wrote: Mon Dec 07, 2020 12:53 pm
chipperd wrote: Sun Nov 29, 2020 6:49 amDon't generalize your success or failure as an investor, or allow such generalizations to determine your next investment.
Some reason I don't seem to recall seeing "past performance is not an indicator of future performance" recently, but maybe that's because our investments are on autopilot. :wink:
Yes and in the past I've been guilty of not applying that view of past performance to myself!
FWIW, I just saw a post that by someone else who is asking about shorting Tesla. For every buyer there is a seller.
"A portfolio is like a bar of soap, the more it's handled, the less there is." Dr. William Bernstein
Topic Author
herbert_21
Posts: 63
Joined: Tue Nov 17, 2020 10:41 am

Re: I took a 10yr loan to buy TSLA shares

Post by herbert_21 »

My banker called me on Monday. It won't be possible to refinance my debt with a loan against the house, as the Austrian law does not allow this.

So I'll slowly pay off my debt within the next 2 years.

Meanwhile, my 80 Tesla shares are up 50% and price targets keep coming in. Pierre Ferragu recommends selling everything above $578, but sees the stock at $1200 in 2025. That would be a 20% CAGR, and it's below my base case. So I will stay 120% invested in stocks (depending on what you include in asset allocation).

His PT is here: https://www.google.com/amp/s/finance.ya ... 52738.html

In case you're interested, watch the interview from Rob Maurer, asked about his L/T investment case, Ferragu answered:
"But I think the stock will be larger than Apple, larger than Google, larger than Facebook, larger than Microsoft, without any doubt."


I have to state this very clearly: I would not have been able too buy that much of the stock w/o taking the loan.
I'll keep you posted.
Sinsji
Posts: 89
Joined: Sat Oct 06, 2018 6:23 am

Re: I took a 10yr loan to buy TSLA shares

Post by Sinsji »

Please stop.

Tesla is a story full of [expletive removed by admin LadyGeek]. They are not years ahead. Their market share is evaporating in Europe since VW introduced ID.3.
They do not have autonomous vehicles or anything close. This was not introduced in Europe, because it would have been refused. They overstate their range. The have poor service. Low reliability compared to other brands.
Tesla's other business are low margin businesses (solar, energy storage).
I can't afford their car and I believe the people who state they drive great. I'm sure BMW, Porsche, Toyota, Honda will make EVs that drive great.
They've cut on R&D to make a profit. Majority of income is from energy credits, some sort of indirect subsidy from other car companies. These companies are now pulling the rug.

Companies like Morgan Stanley earn money by ridiculous analysis with cash flow predictions 20 years ahead about robo-taxies and they underwrite TSLA stock offerings. JP Morgan has a target price < $100,-

Tesla is lucky because of cheap credit from insane stock prices.

EDIT: if you want to speculate, go ahead.
Anon9001
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Re: I took a 10yr loan to buy TSLA shares

Post by Anon9001 »

This leveraged portfolio of Growth Index seems to better idea than doing this:https://www.portfoliovisualizer.com/bac ... ion3_2=100

It is 3.5X Leveraged and still seems to have lower standard deviation than Tesla while having similar returns to it. It is really hard to pick stocks in Developed Markets (even Buffet is under-performing the S&P for last 10-15 years) so if I were you I would just use this if I was bullish on Growth stocks.
Land/Real Estate:88.3% Equities:5.4% Fixed Income:3.9% Gold:1.7% Cryptocurrency:0.4%
SEAworld9
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Re: I took a 10yr loan to buy TSLA shares

Post by SEAworld9 »

checking-in with OP. Cheers! :D
thegreatPY
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Re: I took a 10yr loan to buy TSLA shares

Post by thegreatPY »

You can find the answer in books of John Bogle and Benjamin Graham. Take a time to read them and surely you will find the answer whether you’re speculating or investing according to them and obviously to the people in this forum.

:beer
Topic Author
herbert_21
Posts: 63
Joined: Tue Nov 17, 2020 10:41 am

Re: I took a 10yr loan to buy TSLA shares

Post by herbert_21 »

chipperd wrote: Sun Nov 29, 2020 6:49 am OP: To answer your question, are you speculating or are you investing?
I believe you could look up those definitions and quite quickly and accurately decide for yourself.
So you are posting this question for other than a direct answer to your question, but I'll humor you.

My answer: It doesn't matter what you call it. You have decided that you want to take on a higher risk so that you have an opportunity for a higher reward. Some would be comfortable taking on that risk and some not. Your comfort level with this decision will educate yourself about what level of risk you are willing to take on going forward in your investing life. As long as you can step back along the way and evaluate your inner world with clear eyes, this will be a valuable education about yourself regardless of the financial outcome.

My advice: what ever you learn about yourself from an emotional standpoint as an investor should not be muddled with the financial results of your current investment. In other words, let this experience teach you about yourself, however, the numerical results over time of your Tesla purchase are no indication of the level of your investor expertise. Don't generalize your success or failure as an investor, or allow such generalizations to determine your next investment. Stay unemotional in that regard and continue to, with an open mind, seek out materials and other inputs that contradict your current position.
Remain insecure in your financial decisions, but continue to sleep well at night.

Best of luck!
:sharebeer
I consider my Tesla investment now a good decision. Portfolio is now six-figure for the first time.

I would do it again. Conviction helped.
Anon9001
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Re: I took a 10yr loan to buy TSLA shares

Post by Anon9001 »

herbert_21 wrote: Wed Jan 13, 2021 8:07 am I consider my Tesla investment now a good decision. Portfolio is now six-figure for the first time.

I would do it again. Conviction helped.
Would take the chips off the table now. There is no guarantee it will keep out-performing.
Land/Real Estate:88.3% Equities:5.4% Fixed Income:3.9% Gold:1.7% Cryptocurrency:0.4%
chipperd
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Re: I took a 10yr loan to buy TSLA shares

Post by chipperd »

herbert_21 wrote: Wed Jan 13, 2021 8:07 am
chipperd wrote: Sun Nov 29, 2020 6:49 am OP: To answer your question, are you speculating or are you investing?
I believe you could look up those definitions and quite quickly and accurately decide for yourself.
So you are posting this question for other than a direct answer to your question, but I'll humor you.

My answer: It doesn't matter what you call it. You have decided that you want to take on a higher risk so that you have an opportunity for a higher reward. Some would be comfortable taking on that risk and some not. Your comfort level with this decision will educate yourself about what level of risk you are willing to take on going forward in your investing life. As long as you can step back along the way and evaluate your inner world with clear eyes, this will be a valuable education about yourself regardless of the financial outcome.

My advice: what ever you learn about yourself from an emotional standpoint as an investor should not be muddled with the financial results of your current investment. In other words, let this experience teach you about yourself, however, the numerical results over time of your Tesla purchase are no indication of the level of your investor expertise. Don't generalize your success or failure as an investor, or allow such generalizations to determine your next investment. Stay unemotional in that regard and continue to, with an open mind, seek out materials and other inputs that contradict your current position.
Remain insecure in your financial decisions, but continue to sleep well at night.

Best of luck!
:sharebeer
I consider my Tesla investment now a good decision. Portfolio is now six-figure for the first time.

I would do it again. Conviction helped.
That's great for you!
Tesla P/E ratio is: 1,692.84 and the rest of the market's P/E ratio is: 38.xx. When will you sell? Best of luck!
"A portfolio is like a bar of soap, the more it's handled, the less there is." Dr. William Bernstein
WienerG
Posts: 56
Joined: Thu Feb 06, 2020 6:11 pm

Re: I took a 10yr loan to buy TSLA shares

Post by WienerG »

herbert_21 wrote: Wed Jan 13, 2021 8:07 am
I consider my Tesla investment now a good decision. Portfolio is now six-figure for the first time.

I would do it again. Conviction helped.
OP,

With the greatest of respect, your original post was not a question about conviction, it was asking whether or not you are speculating. I think the many responses that you have already received have answered that. My point to you was on single company risk (which you didn't like, it is unfortunately worth repeating now). If you have all of your eggs in one basket and Mr Musk has a bad day at the office, tweeting that his stock is over valued or he should take the company private again, then the price will drop and the value of your single stock portfolio will also drop. That is something you should consider. The P/E ratio is significantly out of kilter with the market and there will be a correction at some stage.
At the very minimum it would make sense to cash out enough to fully repay the loan.

WienerG
chipperd
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Re: I took a 10yr loan to buy TSLA shares

Post by chipperd »

WienerG wrote: Sun Jan 17, 2021 6:47 am
herbert_21 wrote: Wed Jan 13, 2021 8:07 am
I consider my Tesla investment now a good decision. Portfolio is now six-figure for the first time.

I would do it again. Conviction helped.
OP,

With the greatest of respect, your original post was not a question about conviction, it was asking whether or not you are speculating. I think the many responses that you have already received have answered that. My point to you was on single company risk (which you didn't like, it is unfortunately worth repeating now). If you have all of your eggs in one basket and Mr Musk has a bad day at the office tweeting that his stock is over valued or he should take the company private again, then the price will drop and the value of your single stock portfolio will also drop. That is something you should consider. The P/E ratio is significantly out of kilter with the market and there will be a correction at some stage.
At the very minimum it would make sense to cash out enough to fully repay the loan.

WienerG
In addition to the PE ratio, the highlighted above is a great point. Much of the value of Tesla going forward is based on Musk as an individual, who is, probably correctly, perceived as one who can do things others can't. That said, Musk is an also an unpredictable gadfly, who seems to make poor interpersonal and impulsive decisions at times. Self admitted characteristics that seems ego syntonic and unlikely to change. This is, of course, is setting aside the lying he has done in the past and lawlessness in the way he has treated employees.
When a company's forward value, and your potential profit, is pinned to a large degree on a single individual's abilities and characteristics, this isn't a calculable variable and adds to the risk.
"A portfolio is like a bar of soap, the more it's handled, the less there is." Dr. William Bernstein
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anon_investor
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Re: I took a 10yr loan to buy TSLA shares

Post by anon_investor »

herbert_21 wrote: Wed Jan 13, 2021 8:07 am
chipperd wrote: Sun Nov 29, 2020 6:49 am OP: To answer your question, are you speculating or are you investing?
I believe you could look up those definitions and quite quickly and accurately decide for yourself.
So you are posting this question for other than a direct answer to your question, but I'll humor you.

My answer: It doesn't matter what you call it. You have decided that you want to take on a higher risk so that you have an opportunity for a higher reward. Some would be comfortable taking on that risk and some not. Your comfort level with this decision will educate yourself about what level of risk you are willing to take on going forward in your investing life. As long as you can step back along the way and evaluate your inner world with clear eyes, this will be a valuable education about yourself regardless of the financial outcome.

My advice: what ever you learn about yourself from an emotional standpoint as an investor should not be muddled with the financial results of your current investment. In other words, let this experience teach you about yourself, however, the numerical results over time of your Tesla purchase are no indication of the level of your investor expertise. Don't generalize your success or failure as an investor, or allow such generalizations to determine your next investment. Stay unemotional in that regard and continue to, with an open mind, seek out materials and other inputs that contradict your current position.
Remain insecure in your financial decisions, but continue to sleep well at night.

Best of luck!
:sharebeer
I consider my Tesla investment now a good decision. Portfolio is now six-figure for the first time.

I would do it again. Conviction helped.
Will you take any off the table now?
mptfan
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Re: I took a 10yr loan to buy TSLA shares [Austria]

Post by mptfan »

herbert_21 wrote: Wed Nov 18, 2020 5:10 am So this is also something that strikes me:
It is socially accepted to take a 50k loan on an ICE cars. ICE cars depreacciate in value like crazy.
But if you take a small loan in something you truly believe is the future, underappreciated, and will make tons of money, everyone calls you a speculator.
It is socially acceptable to take a 50k loan for a car, but it's generally not acceptable to most Bogleheads, so that does not support your argument.
"Everyone" does not call you a speculator, only some Bogleheads. And whether you truly believe something is the future nd underappreciated and will make tons of money is not relevant. There have been many people who believed that and were wrong.
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Re: I took a 10yr loan to buy TSLA shares

Post by JonnyDVM »

Everytime someone urges OP to sell and get out TSLA goes up another 5%.

The years is 2050. Every car in the world and most of the products we use are made by TSLA. Society is completely dependent on TSLA made artificial intelligence. TSLA has purchased Google, Microsoft, Facebook and Amazon. The PE ratio is down to a mere 400. Bogleheads still hate it.
I’d trade it all for a little more | -C Montgomery Burns
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Re: I took a 10yr loan to buy TSLA shares [Austria]

Post by coachd50 »

kimura king wrote: Sat Nov 21, 2020 2:21 pm
Anon9001 wrote: Fri Nov 20, 2020 1:44 am
NewMoneyMustBeSmart wrote: Thu Nov 19, 2020 5:03 pm
Anon9001 wrote: Wed Nov 18, 2020 8:30 am
Well actually I am much younger than 20 years from 60. Counting from my current age it would be 39 years for me to go to 60. But the point still stands. For a guy who is 39 (referring to OP) the risk preferences will be vastly different from some-one who is 60 so it would not be wise to avoid taking some risk if the OP can afford to lose the money.
I am very sorry, but you are 21. You know almost nothing. Learn don't preach.
I am very sorry but you are all random strangers who I don't know real name of. Why should I trust you people any more than I should trust average person on Reddit,Youtube? I would be more comfortable "learning" if this was not a anonymous forum in which anyone with no qualifications can post.
For clarity, I'm a stranger with a $600 pair of alligator shoes. You’re talking to the Rolex wearin’, diamond ring wearin’, kiss stealin’, wheelin’ dealin’, limousine ridin’, jet flyin’ son of a gun. And I’m having a hard time holding these alligators down.
Whoooo!
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Re: I took a 10yr loan to buy TSLA shares

Post by Helo80 »

I have enjoyed this thread for a change, because of the contrarian opinion that goes very much against BH philosophy --- single stock concentration and incurring debt to support it.

OP - Not rooting for or against you. I'm in an active fund that has benefited greatly from TSLAs rise. However, history is littered with hot stocks that can do no wrong and then end up nosediving. I worked with a guy once that was at Enron pre-collapse, and his Enron colleagues thought he was crazy to sell his shares (because I think he was buying a house). Well, many ended up losing a lot in the Enron collapse. Citi bank was trading at super-high levels 15 years ago.... and has still yet to recover to those levels.

If we are in fact in a bubble, I think that TSLA is going to be particularly punished for it. Then again, I've been very wrong on TSLA, and I still do not understand its valuation.
Thank God for Wall Street Bets.
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Re: I took a 10yr loan to buy TSLA shares

Post by coachd50 »

Helo80 wrote: Sun Jan 17, 2021 8:44 am I have enjoyed this thread for a change, because of the contrarian opinion that goes very much against BH philosophy --- single stock concentration and incurring debt to support it.

OP - Not rooting for or against you. I'm in an active fund that has benefited greatly from TSLAs rise. However, history is littered with hot stocks that can do no wrong and then end up nosediving. I worked with a guy once that was at Enron pre-collapse, and his Enron colleagues thought he was crazy to sell his shares (because I think he was buying a house). Well, many ended up losing a lot in the Enron collapse. Citi bank was trading at super-high levels 15 years ago.... and has still yet to recover to those levels.

If we are in fact in a bubble, I think that TSLA is going to be particularly punished for it. Then again, I've been very wrong on TSLA, and I still do not understand its valuation.
Agreed.
In having to defend an argument (either for or against TSLA or other individual picks) the discussion introduces a great deal of financial literacy to the readers.

I do think that one theme that often is found in threads such as this is difference in purpose.
I would argue that the fundamental objective of bogelheadism is to prepare for a comfortable time after one's work related income has stopped (retirement). It isn't to make piles and piles of money.

In this particular thread, it seems like the OP is looking to utilize stock trading in the short term to increase his cash available for long term investing.
Last edited by coachd50 on Sun Jan 17, 2021 11:13 am, edited 1 time in total.
Vihoo
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Re: I took a 10yr loan to buy TSLA shares

Post by Vihoo »

As someone with a cost average of $81 (post-split adjusted, yes I am now up 1000%) on TSLA = I commend and thank OP for their conviction! :beer :moneybag
Tamalak
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Re: I took a 10yr loan to buy TSLA shares

Post by Tamalak »

Grats to the OP for his extremely unboglehead success! Are you selling now that it's doubled, or sticking to your TSLA concentration?
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Re: I took a 10yr loan to buy TSLA shares

Post by StevieG72 »

herbert_21 wrote: Wed Jan 13, 2021 8:07 am
chipperd wrote: Sun Nov 29, 2020 6:49 am OP: To answer your question, are you speculating or are you investing?
I believe you could look up those definitions and quite quickly and accurately decide for yourself.
So you are posting this question for other than a direct answer to your question, but I'll humor you.

My answer: It doesn't matter what you call it. You have decided that you want to take on a higher risk so that you have an opportunity for a higher reward. Some would be comfortable taking on that risk and some not. Your comfort level with this decision will educate yourself about what level of risk you are willing to take on going forward in your investing life. As long as you can step back along the way and evaluate your inner world with clear eyes, this will be a valuable education about yourself regardless of the financial outcome.

My advice: what ever you learn about yourself from an emotional standpoint as an investor should not be muddled with the financial results of your current investment. In other words, let this experience teach you about yourself, however, the numerical results over time of your Tesla purchase are no indication of the level of your investor expertise. Don't generalize your success or failure as an investor, or allow such generalizations to determine your next investment. Stay unemotional in that regard and continue to, with an open mind, seek out materials and other inputs that contradict your current position.
Remain insecure in your financial decisions, but continue to sleep well at night.

Best of luck!
:sharebeer
I consider my Tesla investment now a good decision. Portfolio is now six-figure for the first time.

I would do it again. Conviction helped.
Confirmation bias!

When do you plan on selling?

Are you invested in Bitcoin?
Fools think their own way is right, but the wise listen to others.
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Re: I took a 10yr loan to buy TSLA shares

Post by harrychan »

herbert_21 wrote: Wed Jan 13, 2021 8:07 am
I consider my Tesla investment now a good decision. Portfolio is now six-figure for the first time.

I would do it again. Conviction helped.
Good for you. Did you sell? Otherwise your gains aren't realized. We bought also but back in March of 2020. Like you, our only regret was not buying more! With that said, we do not plan on buying more or selling. It is a very small part of our overall portfolio and we would never take out a loan to buy single stock.
This is not legal or certified financial advice but you know that already.
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herbert_21
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Re: I took a 10yr loan to buy TSLA shares

Post by herbert_21 »

Hello,

No, I didn't sell yet.
In this particular thread, it seems like the OP is looking to utilize stock trading in the short term to increase his cash available for long term investing
That's correct. Basically because so far I have only invested into the stock market for a short period (20 months), and before that only into my real estate, I decided I need a six-figure Portfolio or those % gains have no meaningful impact. And I don't want to invest into index funds to reach that goal until I'm fifty-something. So yes, I'm here to "make money" in this huge bull market, and I see the opportunity.

Currently I own 114 TSLA shares, and I think it would be stupid to do sell while every day a new analyst increases his price target. That's 60% of my Portfolio, and it still outperforms QQQ.

At a later point I want to add some €25k into an index fund, likely Vanguard FTSE All-World or SP500. Other stocks are all large cap growth stocks.

Regarding Tesla
As long as still people don't understand the company, but are 100% sure it's "overvalued," I still see reason to hold. But the biggest opportunity was to buy before the index inclusion, when it was so obvious that Tesla was profitable.

Am I thinking I probably should sell something? Well, I consider it every day. I just want to avoid the second biggest error, selling to early. - Biggest would be losing money :-)
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herbert_21
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Re: I took a 10yr loan to buy TSLA shares

Post by herbert_21 »

And if there is one reason of all why I would never sell a growth stock it's the high P/E.

This metric means absolutely nothing, and has zero predection power for future returns. The same with the words to describe.the market as a bubble, overvaluation, Shiller P/E. We might see a correction any time, but if science has confirmed one thing it's: we can't know in advance.
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Re: I took a 10yr loan to buy TSLA shares

Post by Laurizas »

herbert_21 wrote: Wed Jan 20, 2021 10:59 pm As long as still people don't understand the company, but are 100% sure it's "overvalued," I still see reason to hold.
Who are the people? Members of this forum? The general population? What metrics do you use determining that people don't understand the company?
Sinsji
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Re: I took a 10yr loan to buy TSLA shares

Post by Sinsji »

herbert_21 wrote: Wed Jan 20, 2021 10:59 pm Hello,

No, I didn't sell yet.
In this particular thread, it seems like the OP is looking to utilize stock trading in the short term to increase his cash available for long term investing
That's correct. Basically because so far I have only invested into the stock market for a short period (20 months), and before that only into my real estate, I decided I need a six-figure Portfolio or those % gains have no meaningful impact. And I don't want to invest into index funds to reach that goal until I'm fifty-something. So yes, I'm here to "make money" in this huge bull market, and I see the opportunity.

Currently I own 114 TSLA shares, and I think it would be stupid to do sell while every day a new analyst increases his price target. That's 60% of my Portfolio, and it still outperforms QQQ.

At a later point I want to add some €25k into an index fund, likely Vanguard FTSE All-World or SP500. Other stocks are all large cap growth stocks.

Regarding Tesla
As long as still people don't understand the company, but are 100% sure it's "overvalued," I still see reason to hold. But the biggest opportunity was to buy before the index inclusion, when it was so obvious that Tesla was profitable.

Am I thinking I probably should sell something? Well, I consider it every day. I just want to avoid the second biggest error, selling to early. - Biggest would be losing money :-)
I made a sour note about your strategy earlier. Just for the record: happy for your gains.

Still, your arguments don't make sense to me. You don't want to sell to early? So that means you want to time the market? At what point will it be enough, since you say numbers don't say anything?

What makes you think people don't understand the company as well as you do? Tesla's stock price has anything to do with its future profits, or maybe just speculation? Analyst are not the most objective people in financial markets...

Some facts: Tesla barely makes money. Tesla is losing market share, has lowest ratings on car reliability, increasing competition worldwide, Tesla doesn't make its own batteries.

Good luck on your endevour with Tesla, just to note here that there are many people less enthousiastic about Tesla's future as a profitable company.
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Re: I took a 10yr loan to buy TSLA shares

Post by Valuethinker »

herbert_21 wrote: Wed Jan 20, 2021 11:10 pm And if there is one reason of all why I would never sell a growth stock it's the high P/E.

This metric means absolutely nothing, and has zero predection power for future returns. The same with the words to describe.the market as a bubble, overvaluation, Shiller P/E. We might see a correction any time, but if science has confirmed one thing it's: we can't know in advance.
I would argue the market is weak-form mean reverting over time. It tends back to a central valuation just over an indefinite time period.

For individual stocks again I think the evidence is that is what happens. However stock-specific factors outweigh that. This might be the next Google, or Amazon.
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Re: I took a 10yr loan to buy TSLA shares

Post by coachd50 »

herbert_21 wrote: Wed Jan 20, 2021 10:59 pm Hello,

No, I didn't sell yet.
In this particular thread, it seems like the OP is looking to utilize stock trading in the short term to increase his cash available for long term investing
That's correct. Basically because so far I have only invested into the stock market for a short period (20 months), and before that only into my real estate, I decided I need a six-figure Portfolio or those % gains have no meaningful impact. And I don't want to invest into index funds to reach that goal until I'm fifty-something. So yes, I'm here to "make money" in this huge bull market, and I see the opportunity.

Currently I own 114 TSLA shares, and I think it would be stupid to do sell while every day a new analyst increases his price target. That's 60% of my Portfolio, and it still outperforms QQQ.

At a later point I want to add some €25k into an index fund, likely Vanguard FTSE All-World or SP500. Other stocks are all large cap growth stocks.

Regarding Tesla
As long as still people don't understand the company, but are 100% sure it's "overvalued," I still see reason to hold. But the biggest opportunity was to buy before the index inclusion, when it was so obvious that Tesla was profitable.

Am I thinking I probably should sell something? Well, I consider it every day. I just want to avoid the second biggest error, selling to early. - Biggest would be losing money :-)
Then by your own answers here, you are clearly speculating. It isn’t an illegal or immoral thing to do, but since you asked, the answer is you are clearly doing it
Last edited by coachd50 on Thu Jan 21, 2021 8:31 am, edited 1 time in total.
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Re: I took a 10yr loan to buy TSLA shares

Post by Anon9001 »

I am very confused if I were I would have sold everything and put in a Index due to making massive returns. If you are still greedy why not put in leveraged ETF like UPRO/SSO?
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Topic Author
herbert_21
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Re: I took a 10yr loan to buy TSLA shares

Post by herbert_21 »

Positions
41 x ARKK Ark Innovation ETF (~5k)
7 x Amazon
77 x Microsoft
114 x Tesla
100 x Apple
~125k (all numbers in €)
Sold all other stocks.

Current Portfolio Gains
about 40k

Current leverage
Refinanced 40k / 2.8% with a 10yr consumer loan.
Flatex -11k @ 4.9%
Taking out the consumer loan decreases interest paid, and allows me to stay solvent while my holdings are being transferred to Degiro.


Next steps (Spring 2021)
Moving 7 x Amazon and 113 Tesla shares to Degiro -> Custody Transfer
Leverage 10k @ 1.25% and pay back all Flatex
No trading until this is established, except 7 more shares to get my desired 125 shares.
I would have sold everything and put in a Index due to making massive returns
@Anon9001 I don't think a QQQ index could do 50% better than my portfolio, which is a good rule. Selling all my positions would result in a 10k tax bill, why would I want to do that?
Tellurius
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Re: I took a 10yr loan to buy TSLA shares

Post by Tellurius »

herbert_21 wrote: Tue Nov 17, 2020 10:53 am Hi,

I am 39, an IT guy, unmarried. I own a house which is 50% paid. My job is nice. I love my girl.
I sold my 3-room flat in a city and bought a house in the suburb. This was the first time I had money on my bank account.

I made a 50% down payment. I kept only 30k.
My interest rate is now at 0.5% (Europe, thank you, Draghi) and I learned that paying back early does not make sense. My rate is now €700, which currently is $830, plus $200. So I started investing with ETFs.

Now let's come to the topic. My house is not on my land. I pay about $200 a month for it. Forever. But the loan was much less because of this.
So I decided, if I can make debt for my house, I want to own something when I stop working. Bcs the house will be where I live, but it will be something I have to pay for (a liablility) and not sth I own, like Kyosaki says.

So I took a 10yr loan to buy some TSLA shares. I haven't made a lot of money, but I believe I will. I own 75 shares. I still want to buy more.

Today, Tesla was included in the S&P 500. Tesla is more than 25% of my portfolio. Another 30% is in AMZN and AAPL. Portfolio is about 70k, debt for investing is 20k, house is 150k, down payment was 150k. I think that growth stock will continue to outperform, and even as we see some recovery, this will continue bcs of low interest rates, low inflation rate and high deficit spending of FED and ECB.

Am I speculating or investing? To be continued.
Kyosaki is a man who sells the fact that he is an American to Europeans.
La nuit semblait profonde. L'hiver interminable.
Valuethinker
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Re: I took a 10yr loan to buy TSLA shares

Post by Valuethinker »

herbert_21 wrote: Sun Feb 07, 2021 6:04 am Positions
41 x ARKK Ark Innovation ETF (~5k)
7 x Amazon
77 x Microsoft
114 x Tesla
100 x Apple
~125k (all numbers in €)
Sold all other stocks.

Current Portfolio Gains
about 40k

Current leverage
Refinanced 40k / 2.8% with a 10yr consumer loan.
Flatex -11k @ 4.9%
Taking out the consumer loan decreases interest paid, and allows me to stay solvent while my holdings are being transferred to Degiro.


Next steps (Spring 2021)
Moving 7 x Amazon and 113 Tesla shares to Degiro -> Custody Transfer
Leverage 10k @ 1.25% and pay back all Flatex
No trading until this is established, except 7 more shares to get my desired 125 shares.
I would have sold everything and put in a Index due to making massive returns
@Anon9001 I don't think a QQQ index could do 50% better than my portfolio, which is a good rule. Selling all my positions would result in a 10k tax bill, why would I want to do that?
This is exactly the sort of portfolio people had in 2000.

It didn't end well. My last boss had had his retirement plans ruined - he was a telecomms consultant so he thought he could pick the best stocks (Colt Communications, etc.). He did, but the problem is when the sector drops 80-90% that barely matters.

My advice to you would be to take (at least) half your gains off the table-- sell and reinvest in the broadest possible world index fund. Almost all your shares are among the 10 largest stocks by market capitalisation in the world -- they cannot do in the future as they have done in the past in terms of market outperformance.
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nedsaid
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Re: I took a 10yr loan to buy TSLA shares

Post by nedsaid »

Helo80 wrote: Sun Jan 17, 2021 8:44 am I have enjoyed this thread for a change, because of the contrarian opinion that goes very much against BH philosophy --- single stock concentration and incurring debt to support it.

OP - Not rooting for or against you. I'm in an active fund that has benefited greatly from TSLAs rise. However, history is littered with hot stocks that can do no wrong and then end up nosediving. I worked with a guy once that was at Enron pre-collapse, and his Enron colleagues thought he was crazy to sell his shares (because I think he was buying a house). Well, many ended up losing a lot in the Enron collapse. Citi bank was trading at super-high levels 15 years ago.... and has still yet to recover to those levels.

If we are in fact in a bubble, I think that TSLA is going to be particularly punished for it. Then again, I've been very wrong on TSLA, and I still do not understand its valuation.
Amazon.com has had a consistently high valuation and thus I would not have touched the stock with a 10 foot pole and I would have said all this 21 years ago. I joked that Amazon's business model was taking dollar bills, selling them at 90 cents and making it up on the volume. The stock has zoomed and zoomed and zoomed since. I was wrong about Amazon.
A fool and his money are good for business.
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anon_investor
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Re: I took a 10yr loan to buy TSLA shares

Post by anon_investor »

nedsaid wrote: Sun Feb 07, 2021 1:23 pm
Helo80 wrote: Sun Jan 17, 2021 8:44 am I have enjoyed this thread for a change, because of the contrarian opinion that goes very much against BH philosophy --- single stock concentration and incurring debt to support it.

OP - Not rooting for or against you. I'm in an active fund that has benefited greatly from TSLAs rise. However, history is littered with hot stocks that can do no wrong and then end up nosediving. I worked with a guy once that was at Enron pre-collapse, and his Enron colleagues thought he was crazy to sell his shares (because I think he was buying a house). Well, many ended up losing a lot in the Enron collapse. Citi bank was trading at super-high levels 15 years ago.... and has still yet to recover to those levels.

If we are in fact in a bubble, I think that TSLA is going to be particularly punished for it. Then again, I've been very wrong on TSLA, and I still do not understand its valuation.
Amazon.com has had a consistently high valuation and thus I would not have touched the stock with a 10 foot pole and I would have said all this 21 years ago. I joked that Amazon's business model was taking dollar bills, selling them at 90 cents and making it up on the volume. The stock has zoomed and zoomed and zoomed since. I was wrong about Amazon.
But if you have a lot of VTSAX then you have a lot of Amazon...
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nedsaid
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Re: I took a 10yr loan to buy TSLA shares

Post by nedsaid »

anon_investor wrote: Sun Feb 07, 2021 1:26 pm
nedsaid wrote: Sun Feb 07, 2021 1:23 pm
Helo80 wrote: Sun Jan 17, 2021 8:44 am I have enjoyed this thread for a change, because of the contrarian opinion that goes very much against BH philosophy --- single stock concentration and incurring debt to support it.

OP - Not rooting for or against you. I'm in an active fund that has benefited greatly from TSLAs rise. However, history is littered with hot stocks that can do no wrong and then end up nosediving. I worked with a guy once that was at Enron pre-collapse, and his Enron colleagues thought he was crazy to sell his shares (because I think he was buying a house). Well, many ended up losing a lot in the Enron collapse. Citi bank was trading at super-high levels 15 years ago.... and has still yet to recover to those levels.

If we are in fact in a bubble, I think that TSLA is going to be particularly punished for it. Then again, I've been very wrong on TSLA, and I still do not understand its valuation.
Amazon.com has had a consistently high valuation and thus I would not have touched the stock with a 10 foot pole and I would have said all this 21 years ago. I joked that Amazon's business model was taking dollar bills, selling them at 90 cents and making it up on the volume. The stock has zoomed and zoomed and zoomed since. I was wrong about Amazon.
But if you have a lot of VTSAX then you have a lot of Amazon...
I do own some Amazon through my mutual funds and ETFs. I do not own it individually. I wish I had but I am not a prophet.
A fool and his money are good for business.
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nedsaid
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Re: I took a 10yr loan to buy TSLA shares

Post by nedsaid »

Valuethinker wrote: Sun Feb 07, 2021 12:51 pm
herbert_21 wrote: Sun Feb 07, 2021 6:04 am Positions
41 x ARKK Ark Innovation ETF (~5k)
7 x Amazon
77 x Microsoft
114 x Tesla
100 x Apple
~125k (all numbers in €)
Sold all other stocks.

Current Portfolio Gains
about 40k

Current leverage
Refinanced 40k / 2.8% with a 10yr consumer loan.
Flatex -11k @ 4.9%
Taking out the consumer loan decreases interest paid, and allows me to stay solvent while my holdings are being transferred to Degiro.


Next steps (Spring 2021)
Moving 7 x Amazon and 113 Tesla shares to Degiro -> Custody Transfer
Leverage 10k @ 1.25% and pay back all Flatex
No trading until this is established, except 7 more shares to get my desired 125 shares.
I would have sold everything and put in a Index due to making massive returns
@Anon9001 I don't think a QQQ index could do 50% better than my portfolio, which is a good rule. Selling all my positions would result in a 10k tax bill, why would I want to do that?
This is exactly the sort of portfolio people had in 2000.

It didn't end well. My last boss had had his retirement plans ruined - he was a telecomms consultant so he thought he could pick the best stocks (Colt Communications, etc.). He did, but the problem is when the sector drops 80-90% that barely matters.

My advice to you would be to take (at least) half your gains off the table-- sell and reinvest in the broadest possible world index fund. Almost all your shares are among the 10 largest stocks by market capitalisation in the world -- they cannot do in the future as they have done in the past in terms of market outperformance.
I loved the Telecom sector too. The losses I took in Lucent and later Nortel still smart today.

I have had success with Tech, more successes than failures but this industry is cyclical. I had the sad experience of riding Hewlett Packard up and then back down. I also owned Compaq which then merged with H-P. It is an industry with a narrow moat, some kid from Taiwan could come up with an invention tomorrow that could upend the entire industry. Some pretty might Tech companies have come and gone, never to be seen again.

As far as Autos, I would not put huge bets of Tesla. But I was wrong about Amazon and I could be wrong about Tesla. It is the biggest innovation in the history of finance that you really don't have to be all that profitable as long as you can convince investors that big profits are in the future. Amazon has done that for over 25 years now and Tesla could possibly pull this off too. Strong belief systems surround such stocks and they have almost cult like followings.

I remember will the church of GE and the church of Coke. There were many others in the 1990s.
A fool and his money are good for business.
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Helo80
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Re: I took a 10yr loan to buy TSLA shares

Post by Helo80 »

nedsaid wrote: Sun Feb 07, 2021 1:23 pm
Helo80 wrote: Sun Jan 17, 2021 8:44 am I have enjoyed this thread for a change, because of the contrarian opinion that goes very much against BH philosophy --- single stock concentration and incurring debt to support it.

OP - Not rooting for or against you. I'm in an active fund that has benefited greatly from TSLAs rise. However, history is littered with hot stocks that can do no wrong and then end up nosediving. I worked with a guy once that was at Enron pre-collapse, and his Enron colleagues thought he was crazy to sell his shares (because I think he was buying a house). Well, many ended up losing a lot in the Enron collapse. Citi bank was trading at super-high levels 15 years ago.... and has still yet to recover to those levels.

If we are in fact in a bubble, I think that TSLA is going to be particularly punished for it. Then again, I've been very wrong on TSLA, and I still do not understand its valuation.
Amazon.com has had a consistently high valuation and thus I would not have touched the stock with a 10 foot pole and I would have said all this 21 years ago. I joked that Amazon's business model was taking dollar bills, selling them at 90 cents and making it up on the volume. The stock has zoomed and zoomed and zoomed since. I was wrong about Amazon.


Funny you mention this, because I seriously looked at amazon around 2007-ish when it was $265 a share or so, and I remember thinking that it was too rich for my blood. Then, AWS, and the rest is history.
Thank God for Wall Street Bets.
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anon_investor
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Re: I took a 10yr loan to buy TSLA shares

Post by anon_investor »

nedsaid wrote: Sun Feb 07, 2021 1:39 pm I do own some Amazon through my mutual funds and ETFs. I do not own it individually. I wish I had but I am not a prophet.
Hindsight is 20/20. I think we all wish we had bought Amazon for peanuts!
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nedsaid
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Re: I took a 10yr loan to buy TSLA shares

Post by nedsaid »

Helo80 wrote: Sun Feb 07, 2021 1:58 pm
nedsaid wrote: Sun Feb 07, 2021 1:23 pm
Helo80 wrote: Sun Jan 17, 2021 8:44 am I have enjoyed this thread for a change, because of the contrarian opinion that goes very much against BH philosophy --- single stock concentration and incurring debt to support it.

OP - Not rooting for or against you. I'm in an active fund that has benefited greatly from TSLAs rise. However, history is littered with hot stocks that can do no wrong and then end up nosediving. I worked with a guy once that was at Enron pre-collapse, and his Enron colleagues thought he was crazy to sell his shares (because I think he was buying a house). Well, many ended up losing a lot in the Enron collapse. Citi bank was trading at super-high levels 15 years ago.... and has still yet to recover to those levels.

If we are in fact in a bubble, I think that TSLA is going to be particularly punished for it. Then again, I've been very wrong on TSLA, and I still do not understand its valuation.
Amazon.com has had a consistently high valuation and thus I would not have touched the stock with a 10 foot pole and I would have said all this 21 years ago. I joked that Amazon's business model was taking dollar bills, selling them at 90 cents and making it up on the volume. The stock has zoomed and zoomed and zoomed since. I was wrong about Amazon.


Funny you mention this, because I seriously looked at amazon around 2007-ish when it was $265 a share or so, and I remember thinking that it was too rich for my blood. Then, AWS, and the rest is history.
Unlike the Fonz and a certain author and investment expert who used to post here, I can admit I was wrong.
A fool and his money are good for business.
euphonious
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Re: I took a 10yr loan to buy TSLA shares

Post by euphonious »

Helo80 wrote: Sun Feb 07, 2021 1:58 pm
nedsaid wrote: Sun Feb 07, 2021 1:23 pm Amazon.com has had a consistently high valuation and thus I would not have touched the stock with a 10 foot pole and I would have said all this 21 years ago. I joked that Amazon's business model was taking dollar bills, selling them at 90 cents and making it up on the volume. The stock has zoomed and zoomed and zoomed since. I was wrong about Amazon.
Funny you mention this, because I seriously looked at amazon around 2007-ish when it was $265 a share or so, and I remember thinking that it was too rich for my blood. Then, AWS, and the rest is history.
I still remember back in 1998, my dad took me to meet with his financial advisor. I was still a little kid, and if I recall they were setting up a custodial account of some sort. I mainly just sat there and listened. The one time I spoke up, I suggested buying Amazon stock. I can still remember the financial advisor turning to look down at me, smiling, and saying something along the lines of, "Sure, we could do that, but it would be better to do this instead..." I stayed silent for the rest of the meeting.

I'm not at all claiming to have been an investing prodigy, but sometimes I wonder what could've happened if they had gone all in on some little kid's idea, or if the financial advisor remembers me at all from that meeting.
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