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Thursday, January 16, 2020

10 Years of Trading Tesla (TSLA)



Tesla's stock has been on a tear recently. I've been buying (and occasionally selling) the stock since its IPO in 2010. Below is a brief history of my trading activity.

Of course, I have no way of knowing what the stock will do tomorrow, so don't take this as stock advice.

I bought my first shares soon after the IPO. The stock opened at about $20 and had a dip over the next few weeks. In late June and early July of 2010, I bought at $18, $17.84, and (the best price I picked some up was) $16.01 per share.

I held these shares for nearly 6 years, until early 2016. Why did I sell them then? Two reasons. First, after a stock has had a good run (from $18 to $249 (or ~1400%) in this case), I like to take out my initial stake so that no matter what happens to the stock after that, I will always be net positive. The second reason I sold was that we were going to buy a new car in 2016. I didn't sell all of my shares.

My timing to sell was great. The stock dipped later in 2016 and I was able to buy the shares back at a lower price.

After taking delivery of the car in the fall of 2016, my view of the company changed. This was not my first EV (it was my 3rd actually). I knew that EVs were the future of personal transportation, but Tesla was lightyears ahead of everyone else. There was no other car that could compare. After owning a Tesla, all other cars (electric or not) seem like relics from a bygone era. They did unlock as you walked up to them, you had to push a button or turn a key to start it and stop it, they had tiny screens, they didn't have vast free Supercharging networks, they didn't have 200+ miles of range, they didn't receive firmware updates over-the-air...

Based on this two-pronged belief (1: EVs are the future. 2: Only Tesla has cracked the code), throughout 2017 and 2018, I was buying TSLA whenever the price dropped below $300. At the end of 2018, I sold a portion of my shares at $375. The reason we sold this time was once again, to buy a Tesla.

Again my sell timing was lucky. We sold near a local maximum. Soon after we sold, the SEC became concerned with Musk's infamous 420 tweet. This, and other concerns, drove the stock price down in the first half of 2019. This allowed me to buy shares back in the $200s, I even picked up some in May of 2019 for $185 per share. I had just sold for $375 and now I was able to buy it at half that price. How great is that? I understand that an investor would not be happy if they had bought at $375 and saw their investment halved. I, on the other hand, was convinced that this slump in the stock price was temporary. Issues like this get resolved and Tesla still made the best vehicles in a fast-growing category.

Now, it's early 2020 and the stock is over $500 per share. Again, I am taking some profits for the same 2 reasons I did initially. One, to remove my seed funds. Doing this allows me to sleep soundly at night. TSLA is a volatile stock. If it goes up, I still own shares and I'll share in the rewards. But if it goes down, I'm not concerned. By removing the money I initially put into it (plus a little), I am guaranteed, that (even if the stock goes to zero) I've made money on my Tesla trades. And the second reason is to again buy a Tesla product. This time we are getting Powerwalls installed on our home. More on that in later posts.

It only seems right that after making money on their stock that I should share the profits with them by buying their products. I've certainly done the same with Amazon, Netflix, and Google.

I'm still holding TSLA, I'm long the stock.

http://ts.la/patrick7819

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