Is Tesla the new Apple or Amiga?

Business Money
41

Nope, I’m certainly not certain of what the future holds, but I can look at the pieces and make some educated guesses. Rising demand on one side (due to burdgeoning populations and economic development) along with a costlier supply base on the other. Doesn’t take too much to figure out that when demand exceeds supply prices can accelerate upwards quickly, and that the supply chain becomes a nice speculative target and even more susceptible to any ‘fears’ that are out there. I think most of that growth (China specifically) is baked into the current price, it may take a big spurt in India to put another big spike into oil prices.

I have never mentioned exponential price increases, that was Finley. Don’t get us confused. :bow:

I predict oil will float between 100-200 USD/barrel in todays money for the foreseeable future…10 years out…because it simply CANNOT go above a certain point without demand destruction along with the clear cost advantage other energy sources would have. Peak oil is not about running out of oil, few are dumb enough to believe in that… There will always be oil in the ground, the question is only whether is there is an economic incentive to extract it or not (and in the future perhaps an environmental incentive).

I’ve missed the boat a bit in not investing more in Tesla, there are very few pure play electric vehicles or electric component supplier that I can think of that I could invest in. I had previously thought about putting money in A321 batteries…lucky I didn’t.
I don’t like to invest money in a company that doesn’t have a certain amount of proven success under it’s belt, the best bets are those that have launched something commercial and working through the kinks and not much loved or noticed by the analysts and the Goldmans yet. I don’t know the other ways I could play this. I don’t know much about investing in oil companies either nor am I very interested in that.

42

I don’t trade stocks, I’m an option trader so I’ll keep the discussion from my end on what I do best. There are 2 reasons it’s difficult to consistently make money in the long run:

  1. All asset classes move in BOTH directions. We have to trade with a careful eye on the fact that the underlying can move up, or down, and we have to be prepared for both. People try to pretend they know when these are going to happen, but the truth is nobody does. Anybody who tries to represent that they can accurately predict market direction has been proven time and time again that it’s really not much better than 50/50. This is why I trade options and not stocks. To be a good option trader, it’s almost entirely about math. It’s just probabilities, just calculus, managing volatility, managing the greeks ( delta, theta, vega, gamma, color, charm, etc… ) I don’t ever have to make a single prediction, I just buy what’s mathematically cheap, sell what’s mathematically expensive, and in the long run it all adds up to profit.

Now, for a person like you who seems to know the future enough to say that a certain asset class is going to have a STRONG bias in one direction, you are in an incredibly powerful position. You can now set up trades with a strong upward bias. If you only knew how much money you could make doing this if you happen to be right. My trading systems return about 2% a month aggregate and my flagship system within that fund has earned 5% a month for 30 months straight now, but I still have to worry about both directions. If I actually could find an asset class that I could put a strong bias one direction or the other, I could easily make 2-3 times that value. Input 7% per month into an investment calculator and see what comes out the other side.

Unfortunately, these simply don’t exist. That brings us to point #2 of why they don’t exist.

  1. Prices are forward looking. People in your camp, the peak oil crowd who talk about how obvious it is that prices are going to go through the roof, and i’m sorry to lump you in with them but the gold bug crowd who think gold is going nowhere but up up up as well, you guys are missing one of the most fundamental aspects of markets there is. Prices are forward looking.

You guys think oil is at 100$ and going to 200$ BECAUSE of reasons you mentioned. I’m here to tell you that the price of oil is at 100$ ALREADY because of those very same reasons. Everything you have said has already been baked into today’s price through the futures market. You have no information that we don’t all share. Everything you’ve said is public knowledge and has already been poured over by the worlds best and brightest. You haven’t seen any data that the world’s leading investors haven’t already seen, AND REACTED TO with their investment decisions.

This is why perpetually bullish people always get left holding the bag. It’s because they look at the price today, they think they know something about where it’s going tomorrow because of some imminent crisis ( peak oil, inflation, etc ) but they never realized that the price today IS BECAUSE of that crisis already. So when it makes a big old U-Turn and goes the other way, they are surprised. But why should they be surprised by that? Why would it continue rising? The crisis has already been baked into today’s price. It takes a brand new crisis, or an unforeseen worsening of the original crisis to actually get the price to rise further. You post up charts for example about the increasing use of vehicles in the third world and use that to point to a reason the price will rise in the future. No my friend, the price has already risen BECAUSE of that chart. It would require things to get a whole lot worse than anybody originally thought for it to make a difference in the price of oil now. You see how this works? We’ve already seen it and reacted to it.

This is also the same reason why regular folks with regular jobs get their ass handed to them when they try to dip their toes into “trading.” They simply don’t understand that what they think they know, all other professionals already know. Now regular folks with regular jobs can do quite well buying passive index funds and sitting on them, but that’s another debate entirely :slight_smile:

The point is, the price today already reflects what the majority of experts think about tomorrow. Now if you think you know something that 80% of the worlds smartest experts don’t know, and you happen to be right about it, then you are in a position to become extremely wealthy through option trading. I don’t mean any offense when I say this ( i’m just a math geek who sees the world through averages and probabilities ) but in all probability you’re just wrong. I still wish you luck though. Just remember, all asset prices move in both directions. Oil could just as easily go to 50$ as it could to 200$. Don’t for one second think the price of oil is not intelligently placed already. Just like gold, it’s 1300$ per ounce for a reason. It’s been placed there by the worlds best and brightest who have already seen all the data you’ve seen plus plenty more.

43

What do they say, there is no such thing as perfect information, I agree nobody knows with much certainty which way things will go. But as I said we can make educated guesses. I have also said 100 USD has baked in the China story, but there are other vast populations that are only starting to get motorised and a tase for air con like India, Indonesia and Africa. Also air travel is taking off too.
So what does that mean to me, demand is not going to slacken off anytime soon. So there’s a fairly good base line around 100 USD give or take, there are no massive reservoirs of oil in the wings. If economic growth is robust worldwide oil could then jump between 100 to 150 USD/barrel with spikes higher if geopolitical problems ie a war happens. However I think that is unlikely due to Iran and Venezuela elections.

Given that we know gas and electric are already competitive or getting competitive at current prices, a jump to 150 USD would really give those energy sources a big push into transportation. As I said electric batteries at least halving in price in ten years, very possibly more! I can guess this by looking at what happened in the solar area.

cleantechnica.com/2013/05/24/sol … rop-graph/

I know they are not the same tech, but they are similar in terms of the main impediment to uptake is cost due to limited industrial capacity, not technological limitations per se. Solar and electric also create a synergistic benefit, they should propel each other forward in sunnier climates.

So I can’t be sure if the oil price will increase a lot, but I don’t see it dropping due to the demand and supply imbalance.

The only thing I am very confident on is battery price plummeting. So I conclude investing in an anti ETF battery price index would be ideal. Since this is unlikely to exist how do I invest with this principle in mind?

I guess the only other firm prediction I have is that natural gas price will definitely increase over the long term, due to its use both in power stations (China and US have more stringent regulations making against coal stations now) and motorised vehicles and chemical factories.

44

Again, I think what I said has only partially sunk in. Let me re-iterate that all your points are valid and I agree with almost all of them. In fact, I don’t think I’ve disagreed on one thing you’ve said about the state of the world energy consumption or what’s happening with the shifts in energy types and prices. I’ve seen all the same charts and data that you have and agree on the trend as anybody with a rational mind would.

The thing you’re still missing though is the sheer number of people who already knew this 10 years ago. Prices most certainly can go back down, for the very same reason that you think they can’t. The information and all those forward looking charts and predictions have been vetted by countless multi-millionaires and the price has already taken them ALL into account.

It’s the exact same argument that gold bugs state consistently: Because of reasons X Y and Z, the price has nowhere to go but through the roof. Then someone like me who is immersed in markets every day simply says, excuse me, they already have gone through the roof :sunglasses:

Oil is a little different than gold in that when it’s consumed it’s gone, so certainly there is a more stable price floor under oil then there is with gold. Same goes for agricultural commodities, but the same basic premise holds true. Today’s price already reflects every single word you’ve said about the world energy crisis, and then some. The reason I add the, “and then some” is due to something called the volatility risk premium. Markets always price in future unforeseen events as more dramatic then they actually are. 100$ oil reflects a true future price of less then that. It’s already juiced to the upside.

Recall gold: 300$ —> 1900$ —> 1300$ It went through the roof already for the very same reasons that gold bugs said it would. They just don’t get the simple fact they are 10 years late to the party, and there was no additional bad news to keep it going to the extreme prices they were SO SURE it was going to go to. Some of them still are :unamused:

Oil went from 30$ —> 100$ in pretty short order for the exact reasons you have mentioned in all your charts and data (plus some help from all the things I mentioned of course like wars, fear, corruption, etc) We need additional unforeseen bad news to keep pushing it higher, and good news, new technology, new discoveries, or geopolitical resolutions can deflate that price in a big hurry.

But as I said, if you really are willing to put your money on this prediction of a solid price floor, and you happen to be right about it, there is a lot of personal wealth just waiting for you to claim. Option trading has been around for over 2000 years. The first detailed historical record of a person using option trading to get rich was detailed in a book by Aristotle in 300 BC. A man named Thales of Miletus got filthy rich by using options to speculate on the future price of olives.

Maybe it’s HeadHoncho’s turn to convert an oil price prediction into vast wealth :slight_smile:

45

First I’d have to understand what an option is :slight_smile:.

46

Brentgolf, I think you and HH2 are talking at cross purposes because you’re looking at different timescales and different metrics. All you’re interested in is price: will I make money on this trade? And by your own admission, you’re looking at short-term prices, where volatility (i.e., gaussian noise) dominates. Frankly, I’m surprised you make any money at all doing that: any individual trader is invariably outclassed by institutions with better information feeds, better software, better algorithms, and cleverer people with PhDs. I did a bit of mathematical modelling on stock prices a few years back using adaptive signal-processing techniques. I was able to predict short-term price trends quite well, but I was unable to construct a trading strategy that could make any worthwhile profits from those predictions, mainly because I was unable to develop an effective hedge against large losses. I assume you have a solution to that.

Anyway, that’s beside the point: because you and every other financial guy is interested only in short-term price movements, not long-term fundamentals, there is inevitably a shortage of cash for big, game-changing projects. People with liquidity to throw around can make more profits, and quicker, by doing what you’re doing. It’s all about now now now. Very few people are interested in projects which pay back huge dividends to their children or grandchildren.

The corollary is that today’s prices do have (anticipated) futures built-in, but only up to the horizon that the average trader is interested in: a couple of years, at most. Over decades, noise fades into the background and long-term trends become apparent. The problem is, of course, we can only see those trends in hindsight. Humans are astoundingly bad at making long-term predictions.

The way around that is to think in terms of probabilities and cost functions, and certain people have indeed made fortunes gambling on those long-term trends. Cargill, for example, has quietly taken over the world on the basis that there will always be a long-term (and increasing) demand for food. The company in its present highly-profitable form (vertical integration and distribution of agricultural products) is barely 50 years old. So in the case of energy, let’s say one has decided to start a solar energy company in some second-world country where energy is expensive and unreliable. You can be quite confident that the long-term retail price of energy will not fall because there is absolutely no physical reason why it could: the price is set by geography, demographics, and political/economic reality. This probability is a function on two variables (time horizon and price), i.e, a surface, but you can boil that down to a few pertinent features: say P(price<$0.20/kWh,horizon<10years) <= 0.1, where $0.20 is the minimum retail price of electricity you need to stay profitable, and 10 years is your expected breakeven date. In other words, the risk of failure is extremely low, and the chance of making an absolute shitload of cash is high (>0.5, I’d say). If you fail, the worst that can happen is that you’ll have to sell your stock on eBay. You wouldn’t walk away smiling, but it wouldn’t be the end of the world.

This isn’t idle speculation: I’m working towards actually doing this.

47

A valid point maybe that applies to other traders you may have come across. I fully agree that the majority of wall street are short term traders with a laundry list of reasons why they can’t or won’t accurately model future prices, and also why they don’t really care to. But that doesn’t apply to me, my trading, or anything I’ve mentioned in this thread. I’m an option trader specializing in trading volatility as an asset class. I have never taken a position in oil or gold in any form and I probably never will. I don’t trade stocks either and I don’t make a single market prediction in any of my trades. The last thing in the world I want is to be lumped in with financial advisors and wall street hedge funds. I have worked hard in the last few years to separate myself from that crowd. I pretty much disagree with everything they represent. So no, your assumptions of what I do are off base, but I can certainly understand why you would have assumed them. After all, it’s not like the practices of the financial industry are a big secret. Most people already know how shady they are, and when we hear that someone is a “trader” we all have the same knee jerk reaction to them. But just know that not all traders are like that :slight_smile:

The bar institutions, fund managers, and hedge funds set for portfolio returns is so low, I’d feel like killing myself if I didn’t surpass their annual returns by early April. I’m surprised that you don’t know how poor their returns are. Maybe you should do some research before assuming that individuals like me can’t do infinitely better. Somebody has lied to you if you’re under the impression that institutions and hedge funds are the best path to high portfolio returns…

48

businessinsider.com/tesla-te … ted-2013-8

Go Tesla !

49

Anyone see the article in the China Post on Sunday? Young guy puts his life savings into TSLA and buys 1000 shares at around $30’ish. Quadruples his money. Cashes out and then takes proceeds to buy call options on TSLA. The strategy is working for him, but I think it’s a surefire way to piss away his money. Complete lunacy :loco: , might as well take his cash to Vegas or Macau!

50

If it is like you said, and he really did just buy long calls on Tesla then yeah the guy is an idiot and it won’t be long before he gives all his gains back. However without knowing the full details on his strategy I can’t say anymore than it sounds suspect. The calls may in fact just be part of a broader spread.

There are several ways to option trade that really aren’t any different than going to Vegas and betting on red or black, but there are many ways to use option trading to reduce overall risk. It really depends on how the person is using them. The vast majority of people just getting into option trading do make the rookie mistake of thinking it has anything to do with the price of the underlying asset and making predictions on it. It doesn’t. Successful option traders know it’s almost entirely about the math. Managing implied volatility, delta’s, theta’s, vega’s, etc. One should never enter a trade with any sort of bias on the price of the underlying. Stay neutral and arbitrage the time factor.

People have been option trading for the better part of 2000 years now, and if done right it’s definitely the safest and most profitable way to trade. Sadly though it gets a bad rap because the only stories we ever hear about are when people misuse options and end up losing their shirt. If used wrong, yeah option trading is the fast track to bankruptcy, no doubt.

I hope for his sake this guy is smarter than the report made him sound :astonished:

51

couldn’t find the China Post article online, but here’s the CNBC link:

cnbc.com/id/100984355

Granted he does say that he will dump the calls in the next month or two, but I still have to shake my head… extreme risk.
here’s an excerpt from the article:

"Hop, made in his initial investment in Tesla a year ago when the stock was trading at $32. When Tesla stock took off, Hop went along for the ride. When it soared to $115, he dumped the stock. But instead of pocketing a huge profit, he reinvested the money into Tesla call options that expire in January 2015 with a strike price of $130.

“I figure it wasn’t that risky going into those options,” said Hop. “And I’ll probably dump those options in the next month or two.”

When it’s all said and done, it remains to be seen exactly how much of a profit Hop will make off his initial investment. Still, the college student who hopes to someday start up his own company thinks his strategy of investing heavily in one company was the right thing to do."

52

I’ve argued the same myself to other young people starting out here. Because they are young they can afford to take a punt on riskier stocks that can pay back big time. If they lose a big chunk of their savings, they’ve got time to make it up.

53

I’ve recommended the same myself to some younger people. If they have a little bit of cash and a decent job when they are young there’s nothing wrong with rolling the dice on something that can possibly get a big payout. He’s young, decent future it seems, so yeah nothing wrong with what he did.

The problem I have with this article is he is being paraded out as if he somehow made an intelligent investment decision. No, it was 100% speculation. Long calls are the most dangerous investment there is. They are a constantly depreciating asset and time is your worst enemy. Even if Tesla stock does go up, you can still lose 100% of your initial investment. Buying calls is no more “investing” than hitting the craps table in Vegas…

HA ! Proof right there that the guy has no clue what he’s doing. I’m happy for the guy, he took a shot and it paid off big time. But anybody reading that article is now going to be tempted to try to do the same thing on their own favorite stock. BIG mistake ! Long calls and long puts on their own are either for idiots, or people who don’t mind losing their entire savings.

54

Oh yeah it would good to see where he’s at with the recent drop in price.

There’s been a few fires , but no fatalities from the incidents.

The current price is a much better deal if you think they are in it for the long run.

55

So Tesla stock is at 230 USD or so, that college kid must have done well!

Despite massive civil unrest in the Middle East and a growing economy in the US oil price has DROPPED to 80 USD/barrel. Some of this is of course due to the strengthening of the USD relative to other currencies. Demand destruction, energy efficiency, speculation, China cooling down, …and a load of other factors I am sure

Natural gas prices have hardly budged since 2012.

56

Here’s the problem that I have with buying Tesla right now. Is anybody that is buying have any idea how many cars they have to sell to support the current price? They could be a very successful company but they might not be able to sell enough cars to justify current prices.

I like what they are doing but an investor (gambler?) should be cautious.

57

It’s all about the lead they have on other companies , in my opinion they are still far ahead of the pack. If they execute a successful launch of a cheaper sedan then the stock could double.

58

interesting to see where this thread started out (and some of the comments a year ago) and where Tesla stands today:

  1. some more accidents. has it hurt?
  2. more talk of installing infrastructure
  3. opening up in new markets
  4. the big one: giving away their technology for free (Googlean?)
59

This doesn’t even attempt to answer my question. How many cars do they need to sell just to support the current price? The stock might double but it’s not being supported by any sort of fundamentals. The price right now has tremendous and possibly impossible growth already factored in. Basically right now it’s being driven by hype (deserved). At some point they need to deliver earnings that support this level of market cap.

60

There’s no way to answer your point, there’s no exact number the stock should settle at vs. sales numbers. If they sell a lot more cars, and keep their lead vs other manufacturers, it seems likely their stock will shoot up lots more, that’s all I can predict. How long it will then remain at the highs, probably will depend on how quickly the big companies could catch up. Merc and BMW and Ford are at least 5 years behind Tesla. Tesla is also preparing their future production plans, who else would be able to ramp up without depending on Tesla’s battery packs?

You know how well Tesla have done?
usatoday.com/story/money/car … /17827533/

Ford have just sold 1,500 of their electric Focus so far (Tesla has sold 50,000 Model S), all they can do is CLAIM they can make a Tesla like car. They are trying to play catch and it’s not really their game. Their game is to sell loads of trucks and hybrids and regular sedans. What’s Ford going to do, make an electric Lincoln :roflmao: (according to this reporter). Who would want to buy that? The problem for a company like Ford is the more electric vehicles they sell the more money they will lose!
time.com/money/3529146/cheap-gas … ctric-car/

Mercedes and Porsche…same situation. They are too big and too slow to turn around their business model.
engadget.com/2014/10/26/pors … la-rivals/

Are their CEOs really prepared to risk billions, with their jobs aswell? Or are they just going to put a couple of token models out there to say they are doing something?

Eventually the other companies may catch up, but it could be 10 years later according to current developments. By then Tesla would have created the next big car company (or at that stage driverless vehicle company). Also there are surely many very large companies like Apple or Google with billions in cash who would love to get a piece of this pie by investing in Tesla. Tesla is going for an Apple strategy overall and will do well with just a few % of the market but a complete solution (great electric cars and charging infrastructure and cool brand) the other car manufacturers will really struggle to compete.