Today, Tesla stock makes up over 90% of my stock portfolio by value and my average cost basis is in the mid $200s. I’m an opportunistic investor. Most are not. Most investors prefer someone else to do the thinking for them. But I’m not most investors. I’m also not giving investment advice, just sharing my investment thinking and my reasoning.
I’ll share what I’m doing with Tesla stock. Not what YOU should do. Instead of boxing myself in and never deviating from my plan, I continually reassess and look for opportunity. Rather than being spoon fed my beliefs, I seek out my own information and form my own conclusions. This led to me investing aggressively in Australian real estate from 2010 to 2015.
While everyone told me I was mad and would lose everything, I acted with confidence because I had done the homework, ran the numbers, and drawn the conclusion that there was no greater opportunity at that time. I laid out my plan and executed. It worked out so well that people noticed and started to ask for help. LOTS of them. Hmm, another opportunity I thought. This time in business. So, I quit my job as a designer and started a finance business to help others invest in real estate, like I had. I went all-in and worked my f**king face off doing 80+ hour weeks for a few years, helping hundreds of people grow their wealth and winning some awards along the way. Notice a pattern? I pursue opportunity. Wherever it is. Aggressively.
I’d also been following Tesla since the 2008 Roadster. By 2015 it was becoming increasingly clear that Tesla was uniquely positioned to DOMINATE the EV market but still had major execution risks. In early 2016, not long before the Model 3 unveil, I began buying Tesla stock. Along the way I added Google and Amazon but as Tesla ramped production, my confidence in Tesla continued to grow and my position along with it. As I built out my position, the case for Tesla continued to become more compelling. In 2018, I reached my target number of shares. Then I retired and began travelling. I kept a close eye on things and it became increasingly clear that Tesla had WON. I did not know of a greater investment opportunity anywhere, PERIOD. Not even CLOSE.
So what did I do? I bought more Tesla stock and set a new target number of shares. What else was I gonna do? I mean, cash is trash. In early 2019 Tesla stock began tumbling due to Wall St and the finance media literally not understanding their Q1 earnings. Another HUGE opportunity. So I scrambled to buy more -- selling a bunch of other stocks and following it all the way down to $185. The opportunity was too good to ignore. I reached my new target number of shares. Then 2020 happened. Out of nowhere, global panic driven by fear and misinformation. Next minute, stocks fall off a cliff, I calmly assess the situation, determine an ENORMOUS opportunity, make multiple videos explaining what’s going on, get destroyed in the comments, buy loads more Tesla stock in March and April and well, we know how that worked out. So why the history lesson? To make a point.
I’m an opportunistic investor. I don’t pigeonhole myself. I don’t decide “I’m only investing in this asset class, or this company”. F**k that. I seek out opportunities. I don’t care where or what they are. My YouTube channel is another great example. I started it for fun 6 months ago and it unexpectedly blew up. Another opportunity. And guess what? I’ve made the most of it. And what am I doing with this newfound income? Buying more Tesla stock. Why? I still can’t find a better opportunity anywhere. I don't WANT to be buying more Tesla stock but I’m not a fan of diversification for its own sake. To me, that’s just insurance against ignorance. And I’m confident (or arrogant) enough to back my investment decisions.
In May 2020 I’m investing heavily in just two assets. One. Attention. And two. Tesla stock. ALL my time is focused on my channel. ALL my money is buying Tesla stock. If Tesla stock ultimately makes up 99% of my stock portfolio, I don’t care. If tomorrow I discover a greater investment opportunity and abandon Tesla, I don’t care. But for now, I have a new target number of shares -- more than DOUBLE my original goal. And I’m working relentlessly towards its attainment AS SOON AS POSSIBLE.
I’m a LONG TERM investor. I mean multi-decade. I make my decisions through that lens and I see Tesla stock marching steadily toward a multi-thousand dollar price this decade as they continue to execute and scale. “Tesla stock price is too high imo” Elon Musk recently tweeted that Tesla stock price was too high. This isn’t the first time he’s made such comments but when pressed to clarify, it turned out Elon was really just trying to send a message to the haters: “F**k you. I don’t care about money, watch me destroy billions of my net worth with a tweet, b**ches. p.s. I’m selling all my possessions too. What are you gonna do now?”.
The stock tumbled over 10% and of course, I bought more. Thanks for the discount Elon. A week later and the stock is ABOVE the level it was before Elon’s tweet. How easily fools part with their money. Buying At All Time Highs I know many of you are a little frustrated. You want to buy Tesla stock. It’s approaching all-time highs. You’d rather pay less. You’d rather wait for it to dip. While you wait and hope, I’m buying more because I am confident in my reasoning.
The case for Tesla has become successively more compelling each year. As I mentioned, my average cost basis for Tesla stock is in the mid $200s. Today, I’m buying at more than triple my cost basis and I still believe the stock is cheap. Through the eyes of a long term investor, 2020 prices are a JOKE.
Do yourself the favour of looking at Amazon’ stock price over time. Literally every single person who ever bought Amazon stock at an all time high would be up today. This is what a growth company looks like. In my opinion, Tesla is following the same trajectory. Sure, in the short term, the stock could do anything. In the past year, Tesla’s stock reached highs of $968.99 and lows of $176.99. But over the long term, the trend is inevitably up. Much like Google’s dominance in search became an undeniable truth, just as Amazon’s dominance in retail became an undeniable truth, just as Apple’s dominance in consumer electronics became an undeniable truth, Tesla’s dominance in this new world of computers on wheels is a done deal. Everyone Else Is F**ked And That’s Good For Tesla Even before the global virus panic I was publicly declaring most legacy automakers wouldn’t survive the decade without going bankrupt, merging or being acquired. This process has been dramatically accelerated. We’ve seen automakers draw down billions in lines of credit, go to markets to borrow more, have their debt downgraded, cancel EV plans, cancel new factories, cancel dividends, slash sales forecasts, let go of employees, warn of multi-billion dollar losses and more. Meanwhile, Tesla is full speed ahead and still selling every vehicle it makes. This global s**tstorm has presented a gift from the gods. While everyone else is cutting back and slowing down, Tesla is growing fast and speeding up.
Tesla will gain enormous market share during this global downturn and this fact is becoming obvious to all but the thickest of thick. Everyone is getting it now. The finance media. Wall St analysts. Armchair investors. Big institutional money has been flowing into Tesla. Analysts are constantly upgrading the stock. Everyone is talking. Millenials are buying. In my opinion, what we’re seeing now is the “Oh s**t” moment.
Tesla stock is crossing the chasm of mainstream perception from “terrible” to “obvious” much like Amazon and Apple did years earlier. As this happens, I believe we’ll see big retail and institutional money abandoning fossil fuels and legacy automakers in favor of the future aka Tesla. It’s kind of absurd, but if you want to invest in solar, who better than Tesla? If you want to invest in storage, who better than Tesla? If you want to invest in electric vehicles, who better than Tesla? If you want to invest in clean energy, who better than Tesla? If you want to invest in AI, big data and autonomous driving software, who better than Tesla? If you want to invest in a company that makes vehicles of any kind, who better than Tesla?
S&P 500 Inclusion
Tesla is a good chance for inclusion in the S&P 500 this year. This really matters. Should they meet the criteria, huge amounts of institutional money will flow into the stock as funds seek to match the index putting upward pressure on the stock price in the lead up to--and in the wake of--its inclusion. While not certain, odds are better than even for Tesla’s inclusion in the S&P 500 later this year.
What If Tesla Stock Drops After I Buy?
Great! The cheaper the stock is, the more I can buy, and sooner. For some reason, a lot of so-called “investors” think it’s bad if a stock you buy falls below the price you paid for it. Why? Nobody’s forcing you to sell. If you turn up to the grocery store one day and discover your favorite brand of milk is half price, do you go cry in the corner for all the milk you’ve ever bought at full price? Or do you buy your discounted milk with a big smile on your face? Or worse, are you so stupid that you would decided never to buy milk again unless it’s even cheaper than it’s current price? Something to think about.
My Buying Strategy
So, how am I buying? It’s pretty simple really. When I have money, I buy. I’m not waiting for “the perfect time”. If I have money, I buy. I will keep buying until I reach my goal. The end. Admittedly, I have half a dozen income streams flowing into my bank accounts every month so this gives me more-than-weekly buying opportunities. The point is, while many others are “waiting for the dip” because “Tesla stock is so expensive”, I’m seeing Tesla stock as dirt cheap because of my long term investment perspective and buying every time I can.
Imagine it’s 2030 and you and I are having a conversation. You tell me you were interested in Tesla stock in 2020 but $800 seemed too high so you decided to wait for a dip. But it never came. So you never bought. Tesla is now doing 10 or 20 million vehicles a year, completely dominates robotaxis, solar and storage, has industry-leading margins, is banking tens of billions in quarterly profits and shows no signs of slowing. $800 looks very cheap now, doesn’t it?
The whole idea is to encourage you to think for yourself by showing you an example of how ONE investor goes about his business. So I’m being fully transparent. I am currently buying Tesla stock every time I have money. I don’t care if I pay more or less than yesterday or last week. I don’t care if the stock tumbles 50% tomorrow. None of that matters. The ONLY thing that matters is Tesla executing their plans. And if Tesla keeps executing their plan, I’ll keep executing mine. I’ve run the numbers, shuffled a few things around and feel confident I can reach my new target number of Tesla stock around mid year. Vote in the poll now to let me know if you guys would like to see how many Tesla shares I own. If enough say yes, I’ll reveal all when I reach my new goal.
One final thing to mention is Tesla’s upcoming battery investor day -- later this month. Tesla will blow our minds. Of this, I have no doubt. How quickly the market will understand the implications however, is anyone’s guess. But I’m not waiting to find out. Once again, this isn’t investment advice. Just what one investor is doing. Let me know your thoughts in the comments below. Are you buying Tesla stock? What is your investment strategy? How many shares do you own and plan to own?