Published on September 10th, 2020 |
by Frugal Moogal
September 10th, 2020 by Frugal Moogal
Note: Nothing below is investment advice.
At the end of the day on September 8th, I checked my phone and learned that my stock portfolio had received it’s largest single day hit in my entire life. My value on paper was down by five figures, larger than any single day drop I had experienced even at the beginning of the pandemic.
Before this point, even though I’ve had investments in the stock market for more than 20 years, I have generally focused my investments on incredibly stable companies which were focused on regular, large dividends and less on growth. I made — and learned from — some incredibly poor early choices during the dotcom bubble, but due to being so early in my life, I was scraping money together to save as I worked in minimum-wage jobs in high school, so I didn’t have much money to invest that could have been lost.
Monday, September 8th, however, was a five-figure paper loss, and I found myself questioning my investment.
An Aside on Investment Advice
Before going on, I seem to have an interesting following of commenters on my articles lately. After my last article, I had someone mention I should really add a clearer disclaimer — I guess that the one at the top and the bottom of that article wasn’t enough, so why not add another mention?…
Let’s be clear. If you’re an investor, or thinking of investing, and you come and read a single article on any website and then plow all of your money into a single investment, you’re doing it wrong. I’m actually teaching this right now to my 10 year old son, who has decided that he wants to start investing. His method is to Google things like “best stock to buy today” before telling me excitedly that someone has a $1.77 stock that may soar 311%, and can he buy that company?
And, seriously, if you Google that, you’ll find the exact company. The question, as I’ve pointed out before, is what might be the goal with writing an article like that? If you dig into the company that is being advertised, by the way, we find out that the $1.77 stock has lost about 25% since that point, so the drive for investment isn’t working. So, why might they be doing that?
If it isn’t clear, I’m not mentioning the company because I don’t want to give them any credibility. But any sensible reader should be asking the same question of every site they read which has information about stocks. In theory, I could just be a puppet (I’m clearly not a sock puppet) trying to pump up the price of my shares to sell and dump them.
In general, if you’re a smart investor, and you are looking to invest in any particular company, you should actively seek out both positive and negative viewpoints and weigh them.
In fact, when I proposed writing for CleanTechnica, I was already doing all of this research, diving into the FUD articles and trying to determine the forest through the trees. I expected to find things about that Tesla I liked, and things that I didn’t. In fact, I wrote an article about that, and how I was surprised to find that I didn’t find much of any support for the negative views. Your mileage may vary, and you should absolutely not read a single article expecting it to give you perfect investment advice. If you’re doing that, you’re doing it wrong.
What’s Changed About Tesla?
With that out of the way, let’s get to Tesla. In late March, I wrote an article about how I valued Tesla (or any company) that was affected by COVID-19, and I specifically outlined eight points that I use to decide if I’m going to invest in businesses or not.
Before I check in on my view of Tesla today, I wanted to point out that this is literally what I do for every company. A lot of the analysts that have been worried about Tesla like to compare them to the P/E of the industry, or the levels of support and wedges in the stock charts, or … lots of different things. With my early investments, I learned that if a company has a premium above what people think the industry it operates in has, so long as it continues to execute, it will continue to have that premium. Conversely, no stock chart level of support will hold if the company is having huge problems. By all means, feel free to disagree with this and create your own system, but it’s worked really well for me for the past 20 years, ever since the dotcom bubble made me take a step back and figure out what I was doing.
Let’s examine these points:
Elon Musk may be polarizing to the general public,…
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