I sold my Tesla shares too soon, for spurious reasons. It’s the biggest single investing mistake I most regret.
Anyone who picks stocks or studies active fund performance will know how a few multibaggers can drive the total return.
Indeed critics of active funds often point to such out-sized gainers and cry “luck!”
But we should see owning multibaggers in our portfolios as a feature, not a bug.
A multibagger is a share that goes up by multiples of what you paid for it.
For instance, you buy into Monevator PLC at £10 and sell at £20.
That’s a two-bagger. The share price doubled.
If you hung on and it hit £50, that’s a five-bagger to boast about on Reddit.
Passive investors, too, will see multibaggers driving returns at the index- level. Some (disputed) research suggests only a tiny handful of stocks are responsible for the majority of the market’s long-term gains.
How often in 2020 did we see charts like the one below from The Financial Times? Usually alongside warnings that a handful of giant tech firms – the FANGs – were behind the market’s advance:
Pundits warned that mega-cap multibaggers like Apple and Amazon had grown to represent a massive share of the S&P 500.
Well… good!
Passive investors are lucky their robot funds aren’t subject to the whim of a human manager musing how: “Nobody ever got fired for taking a profit.”
Maybe not – but selling winners can still be bad for their clients’ wealth.
How I messed up with the stock of a lifetime
The good news is you don’t need to pay a career risk-dodging fund manager to lose out by selling multibaggers too early.
No, with enough time, money, and stupidity you can do it yourself.
Just (please don’t) ask me about my Tesla shares.
I’ve put off publishing this article on how much I lost trading Tesla shares for months now.
Not only because at Monevator we believe most people should be passive investors in index funds – and I’m about to show you another reason why.
And not even because it’s embarrassing.
No, mostly it’s because I’ve had to keep re-editing the headline.
- When I started writing I’d lost around £388,000 trading Tesla shares.
- As I edited the draft my losses hit a peak of £436,957.
- Then the share price fell and I was only £402,000 out of pocket.
This shifting loss isn’t because I was trading thousands of Tesla shares every day on Freetrade.
And I wasn’t doing anything so dumb as shorting a great company. (That’s best left to hedge fund geniuses.)
I was a fan of Tesla for a decade and a proud shareholder for most of it, too.
So how I lost nearly £437,000 trading Tesla shares is that in December 2016 I owned shares that would have been worth that much in 2021.
But – dolt that I am – by then I’d sold them all.
Missing multibaggers
Now I know what you’re thinking.
You reckon I didn’t really ‘lose’ money trading Tesla shares – no more than your gran lost money by not buying shares in fancy pants firm Lululemon.
Or than you lost money because you didn’t buy Bitcoin in 2010.
I take the point. There are an infinity of missed opportunities out there.
But the opportunity cost I’m talking about with me and Tesla is different.
Roughly 99.99% of people didn’t know anything about Bitcoin in 2010. If you did you probably called it bollocks.
That was why you (and I) didn’t buy Bitcoin back then.
As for your 79-year old grandma getting into Lululemon…let’s not go there.
But the sad reality is I did own Tesla shares. This isn’t a hypothetical.
I hugely admired the company and I judged early that Tesla could be worth at least $100 billion someday.
Indeed I’m as close to an Elon Musk fanboy as a rational, slightly envious middle-aged curmudgeon can be.
Yet I still sold my Tesla shares.
Omission versus commission
When you’re a naughty active investor like me, the profits you miss are as important as the losses you inevitably book.
They’re all mistakes. They all count. Even if the gains foregone are hard or impossible to calculate.
As the old G.O.A.T.1 Warren Buffett says, your sins of omission (i.e. what you don’t buy) hurts your returns far more than your sins of commission (i.e. those investments you do make that go down).
The most you can lose on a particular stock is 100%.2
But the upside is theoretically unlimited – as Tesla been demonstrating:
At their peak in January 2021, Tesla’s shares cost $900, up from $48 at the end of 2015.3
That’s nearly a 19-bagger in five years!
This asymmetry in the downside of loss versus the potential for uncapped gains is why selling can be so costly.
Monster gains will make up for a myriad of flops in your portfolio.
My missing Tesla shares
The good news is I do own Tesla shares today, even after my idiocy.
The bad news is I owned many more just a few years ago.
How many? Let’s step back in time.
It’s December 2012 and I’m minding a friend’s house in the country.
It’s a big house, and it’s snowing outside. There’s even a log fire!
All very Dickensian, and like in all Dickens’ most popular novels I’m considering making an investment in an electric vehicle start-up.
Specifically, I’m reading about Tesla and how it’s hated by the market.
Some doubt Musk. Some say only nerds will ever want electric cars. Others concede electric cars are the future, but they doubt Tesla.
I see risks, too, but also immense potential.
By 2012 I’ve been tracking solar energy for years. I believe a turning point in the economics is approaching.
As for Tesla, by December 2012 CEO Elon Musk was a proven entrepreneur – something ignored by his critics, who inexplicably call him a fraud.
And Tesla’s second car, the Model S, was out to rave reviews – a fact brushed off by Tesla’s critics, who inexplicably call the firm a sham.
Technology and growth shares languish in late 2012. People are crazy for gold miners and dividend payers.
My contrarian senses are tingling.
So I bought some Tesla shares. Just a few, due to the risk, priced well below $10 a pop.4
We don’t need to be precise – because within a month I’d sold them!
Yep, I’ve bungled owning Tesla shares more than once.
Happily though, I bought back into Tesla shortly thereafter.
What I thought people had wrong about Tesla
The value of my Tesla shareholding pretty much doubled in a few months.
But I just sat on them. I ignored the controversy and the high-profile shorting and the prophecies it would go bust.
I was never very concerned about Tesla running out of money, for two reasons.
Firstly, the world is awash with cash looking for returns. Yet the fastest-growing companies of our time don’t need our money to grow.
Tech giants like Facebook and Alphabet are asset-light and cash-rich. Unimaginable profits have been made with very little capital, turning the notion of capitalism on its head.
Tesla though is old-fashioned in that it needs vast amounts of capital to build factories to make batteries and cars, as well as to write software.
This was touted by bears as a weakness, but I saw an opportunity.
Provided Tesla kept demonstrating progress, I believed capital would flood in to profit from a rare modern industrial-sized scale-up.
Secondly, I heard one of Alphabet’s founders say he thought the best use of his billions might be to give it to Elon Musk.
Many others in Silicon Valley also admired Musk as a one-off genius.
I saw this as a ‘put’ on Tesla’s solvency. I believed Tesla could go nearly bankrupt at least once, yet be bailed out by Elon’s billionaire buddies.
Rightly or wrongly, this belief was an uncommon insight (I don’t claim unique) that I had versus the market.
Of course I loved the cars and the mission and Tesla’s roadmap.
But my contrarian beliefs on funding were my thesis for being long Tesla.
How much?
I held Tesla as the cost of renewable energy fell, climate science became consensus, and as Tesla made more cars.
For capital gains tax management reasons I did trade around my position in 2016. I defused some of my unsheltered Tesla position and bought back in a tax efficient account. My shareholding fluctuated.
But my records show that by December 2016 I held 670 Tesla shares.5
Let’s count my pseudo-losses from there.
Mr Market makes a fool of me
My first mistake was I sold some shares in 2017, for reasons I can’t recall now. Most likely I wanted funds to buy something else.
But what eventually did for my entire Tesla shareholding was my growing concern about Elon Musk’s mental state.
Unlike most people nowadays, I don’t expect public figures – let alone geniuses – to live their lives without warts and all.
Have you met other humans? Looked in the mirror?
We all have flaws. The only difference is most of us are not tracked 24/7.
All the great artists, business people, and politicians of history had quirks at best, and at worst, much worse. They were lucky to be born before Internet pile-ons.
So I wasn’t worried that Musk was outspoken or eccentric.
However I was concerned that by 2018 he seemed to be struggling to cope.
Investing in Tesla for me was betting on Elon Musk. My thesis was that his friends and admirers would support him, at the last resort.
But if Musk himself was impaired then that went out the window.
During 2018 Musk trolled the regulatory authorities, suggested he’d take Tesla private in a random Tweet, and started a bizarre name calling bout with a British cave diver, among other things.
My concerns compounded. I was still enough of a believer to actually buy more shares when Musk made his infamous funding secured Tweet in 2018. But eventually I started to see his antics through the eyes of his critics.
I sold all my shares.
I’m not going to dwell on my reasoning any further. I made lots of bad investing decisions in 2018 and most of 2019. I had a big mortgage for the first time in my life. It screwed with my judgement for a while, I suspect. It made me fearful.
The bottom line is that by June 2019 I was completely out of Tesla.
Oops! There goes a 100-bagger
Turned out I’d pretty much bottom-ticked Tesla’s share price fall. It began to recover right after I sold. Good news seemed to come daily.
Even better – especially if you hadn’t recently sold all your shares in his baby – Musk was stabilizing. Still eccentric and insufferable to some, but to me he looked like he was having fun again.
And so the pain of trying to buy back into Tesla began.
Probably the only thing worse than selling out of a multibagger is regretting doing so just as the price goes parabolic.
That Tesla graph again, once more with feeling:
Buying most of the way up Tesla’s ascent was profitable – with hindsight.
But good luck biting the bullet if until relatively recently you had a cost basis of under $10 a share. The struggle is real.
I dithered for months but did eventually start to buy back into Tesla. I paid as much as ten-times the price where I’d sold. Or nearly 100-times above where I’d first bought Tesla in late 2012.
For a while I also had exposure via Scottish Mortgage Trust, which I bought during the Covid crash. It owned a garage full of Tesla, and rallied hard, too.
Exaggerated accounting
I traded around my new Tesla position and I’m up well into five-figures from its crazy stock price rally, all told.
So my talk of a £436,957 ‘loss’ from trading Tesla shares isn’t really accurate.
Especially as I’ve also ignored the gains I made from initially selling Tesla. I didn’t sell my shares for nothing!
I’ve also not accounted for what I made from reinvesting that liberated money. Most boats have risen over the past couple of years, after all.
But life is too short for all that maths when this is a story, not an academic paper. My aim was to give an illustration of the cost of missing multibaggers.
These things happen if you invest actively. You’re hearing from a man who once sold ASOS at around 30p. Today it’s more than £55.6
But the fact remains I really would have more than £300,000 in Tesla right now – even at today’s much lower stock price – were it not for my mental wobble.
That would have been enough to buy half-a-dozen Teslas. From investing less than £20,000.
Let that be a lesson to you – and me – and all that malarkey. Harrumph.
Luckily I’ve managed to hold on to other stocks that have multiplied in value, so don’t miss my follow-up on multibaggers. Subscribe to ensure you see it!
- Greatest Of All Time. [↩]
- Assuming you’re not levered – that is, you’re not borrowing to invest using margin. Leverage is a right/wrong multiplier, so you better not be wrong! [↩]
- Tesla shares were split five-for-one in 2020. This split has no direct impact on valuation. Shareholders got five times as many shares they previously had, and the share price fell 80%. The idea of such a split is to make the shares more liquid. I use split-adjusted prices throughout this post for simplicity. [↩]
- Again, as throughout, split-adjusted. [↩]
- Again, as throughout, split-adjusted. [↩]
- Disclosure: I hold. [↩]
Comments on this entry are closed.
I am going to have to read that again, that’s quite a hard read (or might because because I had the AZ jab about 30 minutes ago)
Excellent post, TI – thank you for sharing. I feel your pain because I have a couple of similar stories to recount.
Having said that, I generally do not sell out completely from a ‘you’re never wrong to take a profit’ stock. Something my current focus on anti-complexity will challenge, but hasn’t yet. Did you consider keeping a rump holding, either to help you pay attention or as some form of ‘anti embarassment’ hedge?
I also find it interesting that at no point in this post do you describe the stock’s fundamentals – revenues, profits, etc. Your investment thesis is all about ‘Musk will make it bigger still’, paraphrasing harshly. That is more of a speculative/trading approach, than an investing approach, to my mind at least – though an approach which can work very well in markets like the last few years.
@Simon T — Well it’s certainly a long post. I don’t imagine it being very interesting to 90% of readers. 🙂 (Why I need to get my active stuff behind a membership wall or on a mailing list, again. 🙂 )
@Fire V London — Yes, I often keep rump holdings and the like, much more nowadays then a few years ago (I own many dozens of different stocks and trusts, and from time to time weirder stuff).
And as I allude in the piece I also often trade around positions. But it’s hard for me to explain to other private investors quite how much I trade. For example, the excellent blogger Maynard Paton talks about doing 3-4 trades a year. I have done more than 1500 trades in a year! Often in and around the same stocks. (And yes, this is expensive. And yes, it’s all counted in my unitised record. 🙂 )
So when I exited Tesla, I didn’t turn my back on the company by any means. I presumed I’d buy back in if my worries abated and the story (/stock) picked up again. The trouble was it happened so, so, so fast!
In terms of fundamentals, with these sorts of companies I don’t spend any time worrying about say the operating margin when Tesla’s making 20,000 cars funded almost entirely be external capital. It is, frankly and rounding down, pointless.
This is IMHO where people went wrong with growth stocks in the aftermath of the Dotcom crash. Value did extremely well afterwards, and nearly everyone — including me — became a value investor. We then tried to push growth stocks into a value-peg hole. That’s a great way to miss the best stocks of your era. 🙂
Far more important to me — as everyone now says, because in contrast to 2010 everyone is now a growth investor — is total addressable market, sales growth rate, access to external funding, tech advantage, price-to-sales, levers to pull on operational gearing, etc. If I can see a *great* company can scale with funding because it’s producing a *great* product/service, then I presume eventually profits will take care of themselves.
With that said I wasn’t oblivious to the financial drivers of Tesla’s profit and loss and cash burn, nor the state of its balance sheet. However that was mostly all very well known to the market. (Mostly because I still think people underestimate how Tesla has been built to rollout a copy-and-paste production line versus traditional auto makers, again massively generalizing). The thing I judged different was the balance sheet. I saw very little chance — provided it kept making great products — of the company going bust. Dilution was a risk, but given Musk was an enormous shareholder and it’d be his friends bailing him out I didn’t think he’d be totally screwed over.
That thesis doesn’t hold at all now the company is so large, of course. It was like a boutique firm back in 2012.
Finally, I’ve kept saying above “a great company”. As you know most growth stocks prove to be overpriced chimeras and in general (until recent years anyway) value has triumphed over growth for that reason. So it all ultimately comes down to how well you can select “great” versus “average” or “bad” growth stocks.
If you get that right then IMHO and crazy as it sounds, most of the time price and fundamentals don’t matter much for a long while.
It is hard to accept missed gains. But the reality is that unless it’s just a game or you never need cash, then at certain points you have to decide whether to realize some gains.
What if you still held them all now, so would you still not sell some, half of them, most of them? If not now then when? You could have made a lot more, but even if you held them all now you’d still have a sell or hold dilemma and could still regret either choice 10 years from now. Missing out on gains is inevitable and most active investors will understand your pain.
Great post thanks TI
You state that 90% of readers wouldn’t be interested. I disagree as I think that amongst this passive community there are many with (dare I say secret) stash of single name shares (the so called play portfolio).
I empathise with your Tesla regrets but not sure why you feel the need to beat yourself up – rather you should just move on. I was previously in the habit of keeping a record of all my sales in a virtual portfolio. This was on the basis I was going to analyse why I made the selling “error” in those cases where the SP and or company fortunes rebounded e.g. ITV which has recovered 69% since I sold it…..but this just got depressing as the list lengthened.
I still plan to hold individual shares but the challenge is that finding multibaggers requires more than just solid number/analytical skills but rather being able to identify entrepreneur wizards and their fairy dust ideas.
Hah, I basically did the same thing, except I don’t regret the decision. It became apparent all at once that the man is sort of an asshole, despite his great accomplishments for humanity. I sold same time as you, his behavior continued into 2020 as he adopted a flippant attitude toward covid restrictions at the Fremont plant and threw a tantrum by moving the business to Texas.
Good riddance, I do like money but I like keeping my hands clean of people who act like this even more. Great post, cheers!
Perhaps you can tell yourself you bought your bitcoin with the Tesla stock you sold 😉
Count me in the 90% but like @MR I’m curious whether you would be (are?) still buying in at the current price or getting out. Can’t help think of your “know when you’ve won” quip on the GME caper.
Stock picking is a trivial “I can afford to lose it” part of my portfolio. It has mostly taught me that it should stay that way. There’s a lot of red ink there, blotted out by one lucky choice.
Well you’re certainly not alone, @ti – don’t imagine the average fund manager did better, the market’s opinion changed, so everyone who priced Tesla back then (or amazon, or bitcoin, microsoft, etc) was proved wrong
But it’s hard to pick winning horses, theres no reason to have thought we wouldn’t be using Netscape browser and Lycos search engine, no reason to favour Tesla as such – I think these things sometimes catch the speculators eyes, and personality cults help do that – but they are fickle – we can’t time peaks as you know
I think traders, like sports bettors, sometimes do best in their own optimal trading weather so to speak when their particular tactics are more likey to work – not necessarily trading every day. One advantage you have, @TI, is the freedom to not feel expected to trade when your crystal ball looks cloudier than usual, and freedom to stick to fields you know personally
I find this hard to relate to. First, because I just impossible to believe with conviction that somehow I have more insight on anything (macro environment, company etc). It’s always so damn grey out there. To have such conviction just reeks of self-delusion. It’s more religious belief than rational analysis.
Second, to hold on to these multi-bagger types trades is basically an exercise in poor risk-reward. The game is about locating strong return asymmetry but, as those trades work in your favour, they cannot stay asymmetric. Trimming is the only rational option. The alternative, is again, to believe your view is superior, bringing us back to self-delusion and belief.
I just don’t think investment is ever about nailing multi-bagger trades. The first rule is just don’t lose money; the second is just remember the first rule. It’s about managing downside, dodging the big bullets, not being stopped out. You don’t get fired for taking profit, and anyway, the next potential multi-bagger is always just round the corner. If you play long enough without blowing up, then your statistically guaranteed to have plenty of multi-bagger trades just by luck, market volatility and the wonders of leverage.
I feel your pain TI, although at a much lesser scale. I too am an Elon fan-boy! I remember arguing with petrol heads about how the world will be fully electric soon before the model X got released after consuming Ashley Vance’s biography on him and all of Wait But Why’s posts.
I originally bought into Tesla to give me something to write about on my blog posts as index investment tracking was getting a bit dull, I vowed to hold my measly 1k until it was enough to buy a Tesla! It was up to 10k before I decided to sell and realise my gains as I was imminently moving to Sweden and I didn’t want the greedy beggers to get 30% of my profit if I sold over there, it took THREE DAYS for the money to leave the platform, after-which it had shot up beyond what I thought reasonable to buy back into again. That would have been worth 50k now more or less, I’d have been ordering my Tesla…
Great post, although now I have a sour taste in my mouth! 🙂
Great story. Thanks!
Have to say, after seeing what those Baillie Bifford ITs (SMT, EWI) and Tesla did over the last year, really thinking of getting into the bagger game…. 20% of portfolio max…. Will research intensively and wait for the downturn..
@FirevLondon — On my daily walk I realized what I’d written could be read as “price doesn’t matter”. I’m not saying that, I’m just saying it doesn’t matter as much as I certainly used to think, with the best growth stocks. Looking at today’s market — particularly pre-mini growth correction — I did find it hard to buy any SaaS companies, for example, where trading at 40x sales now seems to be the norm. I still remember when 10x seemed expensive and New Economy-ish! With that said, and following up what I wrote above, I am sure a handful of these new SaaS outfits will be good investments long-term even at 40x sales. The trouble is I’m alas not at all sure I know which ones, so I need a margin of safety, even with my Philip Fisher growth investor hat on. So I’ve just nibbled at a couple after the falls, and will hope for either more falls, more sales, or for ratios to come down.
@G — Hah. No, by this point Tesla had been mostly shuffled into an ISA whereas the Bitcoin position is (alas) un-sheltered. New assets, same problems! 😉
@Jake — Yeah, I have several friends who loathe the guy these days, including a couple of Tesla *car* owners! I don’t, but I can see the reasoning.
@Learner — Fair enough! 🙂
@Merlotman — Cheers! I’m not hugely beating myself up; I write a blog, so produce content based on what I’m going through. I probably wouldn’t have written 2,000 words on it if I had no blog. With that said, I do log all my trades (all 1500+ a year haha) both when I buy and when I sell, and jot down a few reasons for my thinking. That’s enough to help keep me humble, as much as anything else. (Something this post will do, too). Finally this was originally a post about multibaggers but the Tesla sob story ballooned. So I decided to give Tesla it’s own post and to keep the more constructive post separate. In that one I’ll discuss at least one more successful multibagging experience; I have a feeling any more than that and readers would realize they preferred the self-deprecating stuff! 😉
@Algernond — SMT was going at a 17% discount a couple of weeks ago… You had to be quick though!
@SavingNinja — Yes, it was incredible how quickly it moved once it started. Also it’s frustrating how often taxes have influenced my own trading decisions, though for probably my best single investment trying to slowly defuse down CGT I’m sure kept me invested for longer than I would otherwise have been, if I’m honest.
@ZXSpectrum48k — Yeah, you and I are engaged in a very different game, as I’ve remarked before. I’m entirely an old school stockpicker and share shuffler, and sometimes I do believe my view is superior (to consensus as represented by prices, not to everyone obviously). But I totally understand where you’re coming from. I rarely discuss my investing or returns with more than a handful of people (Lars, @TA, a couple of others) — I don’t even discuss returns on this blog — but when I must I try to tell them about shares that went wrong, or I warn them it could all be luck. (I have some friends who must think I’m the worst stock picker of all-time!)
I’m resigned to never knowing in my one lifetime if beating the market is down to luck, but these days I don’t lose much sleep over it. That existential question is partly what kept me out of the industry, though. Despite a fairly scientific education I don’t have your maths, so this humble path is the one I must follow. 😉
It’s been a while since I read anything quite that enjoyable. As Gore Vidal said, it’s not enough to succeed, others must fail.
However maybe the take away should be that if you make your best decision at the time move on and don’t look back. We could all turn our lives into torments of regret if we revisted each and every action and decision. Or perhaps it’s just me……
I love these kind of stories. Ive got just shy of six figures of Revolut shares across family accounts and low five figure Freetrade shares from very low initial money punts. I aim to Hodl for dear life. If I’m ever going to be one of those filthy millionaires then I wont have many better opportunities than either of this pair as a multibagger.
A brave and honest report from a investor/speculator/trader
With instruction for us all
I had fun with this sort of game many years ago in my youth-even made a pound or two-but it was in a rising market where everybody wins
Now my only pleasure is reading these sorts of stories which satisfies my investment cravings while my two or three index trackers do all the required heavy lifting without any great input from me-boring!
However these constant repeating tales of what might have been ,very nearly was but always always ending in tears continually remind me to go outside and do something and leave my investments well alone
Thanks again for a great investing lesson
xxd09
I enjoyed this. I’m buggered if I have any idea of whether tesla is a good investment, but I do know from any/everything I have heard of him that Musk is a twat of the first order.
If that is what success looks like, humanity is stuffed, in spades. For all that, sure you should have stuck, not twisted. But hindsight in a wonderful thing, and as long as you are ahead of the game relative to the index on average as I suspect you are, so what? Let it go.
> I have done more than 1500 trades in a year! Often in and around the same stocks.
Wow, my head hurts. I’d not sure I’ve shifted that many in an investing lifetime. But hey, chapeau to you sir, and here is to more intriguing stories from slightly beyond the event horizon….
DCA VWRL is fine. But it lacks passion, IMO 😉 More of this, pray, and don’t spare the horses…
Sadly a case of ‘me too’! Not by such a big amount, but I lost out on about 20k worth. At the time they were just sitting doing nothing and due to exchange rate fluctuations I’d made a small profit so go out. What a bad move in retrospect! Still really like my Model 3 car at least 🙂
Great read for us passive investors. Please keep these stories available to all even if active insights go behind a subscription wall (for understandable reasons). It’s thought provoking stuff.
Your opportunity cost is even bigger than that – imagine if you had also made perfect career choices, and then traded perfectly on top of that, with leverage…
Really enjoyed the article, and fair play to you on your confessional. Much like the horse track, investing discussion is full of people shouting about their winners, and deafeningly quiet on the losers.
I’ve been a reader of the blog for a while and enjoy the active articles. I know Monevator sensibly pushes a ‘passive’ indexing approach, but the active side makes a welcome change from the tedious ubiquity of ‘passive’ indexing dogma which now dominates contemporary investing/personal finance chat. Let’s be honest, ‘passive’ investing is rather dull and simple, which it ought to be!
Anyway, I’m just wondering if you have ever discussed your stock picking approach/style on this blog? I don’t recall reading how and why you choose a certain company to invest in. Do you have a framework you follow?
Thanks @TI
I have no real knowledge on Tesla as an investment these days, less so Musk, but I tend to lean on the side that it’s increasingly a bubble about to burst, after doing reasonably well out of it over the past few years. My mind says it’s overvalued, but who knows? I don’t! There was a good IC podcast on it a while back, that was pretty scathing about it from a business point of view. I held a very small amount of Tesla directly from around 2016, selling at a small profit, a similar time to you in 2018 @TI. But I don’t really regret it too much (I was just getting into investing then, it was one of my first ‘picks’ but I needed to and have learnt to shift and spread risk and build up the core rather than go all-in with one investment, but no point dwelling on the past – still don’t think I’m at the point to have some speculation plays really), but do still have some Tesla holdings personally, but like many, only in tracker funds and a very small % in things like the BG Discovery Fund as a fraction of my overall portfolio. I’ll let the fund managers/markets make the calls now I think. Although I’m mainly a passive investor, I do have a few active holdings (generally funds and a few very boring individual staples), and this week I sold my relatively small holdings in Baille Gifford Positive Change into something else, only for the reason that Tesla was nearly 10% of the total fund – too much for me really but I liked the fund. (It’s about 3% in the BG Discovery fund, I think) Interesting to see James Anderson (no, not that one) announce he is leaving Baille Gifford and the management of the Scottish Mortgage Fund, they are very big fanboys. Short answer is who knows, I certainly don’t….. Will stick with spreading my risk, mainly passive with a long term approach rather than individual stock pickings.
But to add to the above, I appreciate saying ‘let the fund managers’ decide and then selling a fund I think is overweighted is a contradiction! 🙂
Great article @TI – thanks for sharing. As Chris says above it’s partly the great combination of you and TA that makes this site so great. And if you do decide to move to a sub model count me in.
Thanks to finding this website 5 years ago , reading the articles and comments every week and having just finished Tim Hales Smarter investing not sure what to make of this post but thanks for sharing lol ! I talked a friend out of buying Bitcoin 4 years ago (ouch) and look at Tesla shares with horror !! I fundamentally can’t buy into anything I don’t think makes financial /ethical sense. I think it’s making me realise just how individual investing is and any investment strategy has got to be the right one for the individual it’s not one size fits all (albeit the core financial fundamentals apply !) . I probably am never going to make a fortune picking shares . I have however enjoyed this journey so much I have just started a DipFA towards becoming a financial advisor at the age of 50+ with a very well paid job in a non financial sector . So thank you for the continued education and everyone who makes this site so brilliant !
@lance – although what you do with passive seems dull, a lot goes on under the hood – companies automatically rising/falling in prominance in the index with their success/otherwise, its the distillation of many peoples years of trading experiences – ie avoiding costs, the difficulty of timing or valuing, it’s owning thousands of companies – nearly everything, in an instant, it’s the psychological challange of sitting on your hands and the psychological challenge of humility – lots of thought went into what appears to be a simple package
And in addition to that the impact that investing has on company growth and global development, the advancement of technology and mankind, etc
All I have to add is “There’s no point crying over spilt milk”.
Why waste your timing mulling over something that’s happened and you can’t change. You just have to move on!
(Easier said than done).
@ Matthew
A good point well made, and you’ll find no argument here.
To be clear, I’m not against the ‘passive’ approach by any means. Indeed, I use the ‘core and satellite’ approach myself. The bulk of my investing goes into Vanguard funds. Only once I have met the saving minimum I set myself do I allow myself to dabble into a bit of stock picking with any further savings.
However, once you accept the premise you have no edge and should therefore be content with market returns minus fees, and have set up your portfolio to your personal preference and are now in ‘set and forget mode’, there isn’t really any more to it than that until you come drawdown, bar some rebalancing. In fact, any over thinking/tinkering beyond this is more likely to harm your returns.
In this sense, the small active portion of my investments makes a nice ‘neurotic lightning rod’ to divert my attention away from my funds, which are very much best left to their own devices. Since I started stock picking I have barely logged into my Vanguard account.
@lance – indeed what I love about investing unlike other hobbies is that the less you try the better you do – other hobbies I had – karate, swimming, stock car racing, even gaming I quit because it got too serious, but with this it doesnt impede on our time or other commitments and we get to philosophise about the world with likeminded people, and feel like we’re getting some kind of negligable cashback at least when spending! lol I like the thought of owning the supermarket, owning the cogs of industry, owning the banks, etc
Like you say though some kind of controlled vent for speculative behaviour and philosophy is good – perfection is the opposite of good
And we’re still trying to master sitting on our hands! And also if we derive some pleasure from a dabble (like gambling too) then as long as it’s controlled that thrill is a hidden return itself (like with premium bonds)
It feels good to know a lot of people here do more with their money than hoard it Smaug-like in Mount VWRL. My naughty active portfolio (currently 10 names, 5% of the portfolio) reads like a graveyard of investing failures.
Northern Rock? check.
VXX / UVXY? check, and a lesson on vol and decay I will never forget.
Woodford Patient Capital? check, damn you HL marketing department.
Still, I made a bit back on other things (up 5x on GME for instance) and the main portfolio (80% Dev World ex UK) covers a lot of sins after all is said and done…
I definitely regret not owning some shares of Tesla earlier. But my bigger regret is just not keeping an eye on my portfolio. For a long time I let my money manager handle everything and I had literally no idea what I was invested in.
On top of all this I was aware and believed in block chain technology as far back as 2015. Yeah instead of even throwing $100 into bitcoin at that time I turned a blind eye.
But to your point we all make mistakes and the best thing you can do is investor is let it go. There will be more opportunities in the future.
I’m hodling my 0.0267 of a Tesla share in freetrade, was 300% up for a time.
A freetrade account and posts like this serve a valuable purpose for the sensible index investor. Bit of vicarious living. We all need a bit of entertainment in constrained times.
I *almost* bought a flat in Ealing in 1993 for not a huge amount, but decided to save up more deposit first ‘just to be on the safe side’ I’m still renting now.
Oh well, I console myself by thinking;
Someone must be kicking themselves for selling then, for not a huge amount
If I’d have bought it my life may have gone in a completely different direction and I may have been run over by a bus etc
‘The Moving Finger writes; and, having writ,
Moves on: nor all thy Piety nor Wit
Shall lure it back to cancel half a Line,
Nor all thy Tears wash out a Word of it’
I think it’s so important to share these kind of stories. The non-glorious ones. The ones we’d like to hide under the carpet with all the dust.
But it’s these which really help people. I have way too much natural contrarian streak in me too. Sometimes it’s useful – sometimes not so much. Had my first share ever crash & die in 2018 – it wasn’t big money lost but it was enough to be a painful lesson still.
A lost opportunity cost is a different beast to deal with. No actual harm done but at the same time, you just know.. But hey, you did what you thought was best at the time. You learn. You move on!
Thanks for sharing – appreciated.
Monevator is a site to come to and learn about investing
Losses as described above are much more instructional and have much more impact than stories of gains
Losses are felt much more keenly than the temporary euphoria of gains
This is biologically hard wired into our evolutionary systems
On the plains of Africa a gain (successful hunt) gets us to the next day-a mistake and we are dead
So it can be with investing
The successful investor makes less mistakes -hopefully none at all
I will leave it to others to draw conclusions of what to actually do as there are many successful investing techniques
Many of them can be learnt at this site
Keep up the terrific work!
xxd09
“ Why I need to get my active stuff behind a membership wall or on a mailing list, again”
Interested to know when that’s going to happen
PS: Feel for you, that must keep you awake at night about what could have been!
Hey TI. That’s an interesting story for sure. I agree that it’s not quite the same as missing out on Bitcoin because it would only relate if you 600 bitcoins and then sold them for pizza kind of thing when they were 50cents each or sold at $100…but that brings me onto the point of well, would you really have actualised those gains? Do you think you would have held that whole time? I often times think that even if I had 1000 bitcoins if I mined them in 2010 for example. I would have probably sold them when they were worth £10 or maybe £50. There’s no chance I would have held until £43,000 that they are as I write this.
I just wonder at what point you would have sold along the way? Or would you of simply held even until now?
TFJ
I’m more of a passive investor in general but I also held TSLA for a while, bought some around the same time I bought a Model S (not the wisest investment). I also sold them at almost completely the wrong time just before they shot to the moon.
The lesson it taught me was to stick with passive investment as I am not good at handling the stress/annoyance of timing it wrong with individual investments.
Bitcoin is my biggest mistake, at one point I held around 50, that would be a couple of million £££ now 😮 I’ve taken some profit along the way and still have a small amount, but I’ve still likely got a good 15 years of working left instead of being ready to retire now!
I guess you can always have regrets, as long as you took profits then you cannot complain too much. I’m sure there are people who have sold Apple, Amazon etc, you cannot expect to time single investments right.
Good article and educational. Yep also held Tesla since 2016 and more via SMT.L indirectly. Like you got fed up with Musk and his antics but fortunately sold out in 2020 at a good profit. Bought back in in 2021 mainly to have as a cash alternative but this part is not going great so will hold for a period. Cathie Wood of Ark Invest reckons by 2025 Tesla will hit $4,000 so that seems to be the likely timeframe to hold. Believe strongly in multibaggers and have a significant number in 3 portfolios (35 shares) of mainly US shares. Bought SMT at $2.60 so it’s a multibaggers today but again down a good bit in 2021. Tend to buy US IPO stocks which can become multibaggers very quickly. UK shares have been performing badly for a number of years and nearly every one has disappointed so only have 3 Trusts. Hold 4 of the 5 FAANG stocks but have some other good stocks in Visa, Danaher,Nike, SPGI,PayPal, SVB Bank. Hold 16 US IPO stocks (some multibaggers) and 3 Semiconductor stocks. The downturn recently in the Nasdaq only makes me want to buy more growth stocks with potential so will have to trim some of the other holdings. Run everything through my share/stock dashboard before buying but still buy lemons in some cases. So I think your advice is spot on and believe with a disciplined approach and screening well that one can end up with great multibaggers. As the story goes it is time in the market not timing the market that counts……
@TFJ
My cousin did exactly as you say. He started a computer science degree at Bristol University in September 2010 and graduated in May 2014. He was studying just the right course at just the right time to be very aware of Bitcoin very early. He along with numerous Computer Science nerd friends did exactly as you say and mined thousands of them on home equipment which were always exchanged and spent and never hodled. Even to this day him and his friends have hardly anything hodled as the tempation was always too high to exchange and spend. The lucky ones are probably those that lost hard drive access but gained it again years later to find a lucky long lost stash. Through my cousin and my own geekiness I was first aware of Bitcoin around 2012. By 2013 I thought they might be worth a punt (I didnt execute) and over following years thought a boat had been missed. By 2015 ish my brother was buying around 4-5 Coins for around £1k total and I still thought the ship was sailed. My brother has been lucky since and got off and on again at just the right times so has banked some serious Fiat and still holds a coin or two. I got a couple of coins this time last year and will hodl. They can go to zero and it wont bother me but im a convert somewhat and am now fully signed up to the stock to flow models and idea that bitcoin is a private money global reserve asset that has entrenched unsurmountable network effects.
I’d gladly replace your losses in exchange for lost profits which have eluded me for selling my Apple shares way to early.
And yes, it feels very different than never chosen jackpot numbers.
So welcome to the club…
Everyone wants to get rich quick thesedays
Lol, I bought my shares at an average cost if $45, then forgot them until TSLA appeared in the news at 2020. Turned $60,000 into $260,000! I guess sometimes being lazy beats being an active investor lol!
You didnt lose £436,957 ! You never had that amount of money in the stock. You sold before it hit that price. I know youve kind of tried to sum that up but you never lost it.
Tesla’s shareprice is built on hype and very devoted fans but not the reality of what the company is actually achieving r is worth, and with established car manufacturers starting to inhabit that space at some point a readjustment will inevitably occur. I guess it’s all about confidence Musk has made a lot of promises but as they fail to materialise that may falter and the price could yet collapse. Musk’s Companies are very heavily subsidised by the the US Government, I fear Elon is a modern day Delorean inspiring and talks a good game and genuinely has an exciting product but ultimately the numbers and hype won’t add up.
Musk has snuggled away enough $$ from Tesla shares at this stage that whether it goes well or not does not matter a lot. He is a first investor in a lot of startups including Spacex and Stripe that even if Tesla goes belly up from competition he has the new ones particularly Spacex to exploit for his own gain. The Collison brothers at Stripe have been cute enough to keep control in their hands and not with Thiel, Musk and Seqouia Capital. Personally think even though am an investor in Tesla that car sales eventually will be crushed by the big marques particularly German, Japanese and Korean who also are invested in battery technology. The Chinese will not allow Tesla to control the EV market there so more competition. What I can’t get my head around is that Cathie Wood at Ark Invest and James Anderson of BG have put up with Musk’s behaviour at Tesla. Cynics will say he makes them a lot of money even if only from hype not reality but like everything there comes a day if reckoning and will they have timed their exit? Just hope that I get out unscathed personally and via shares in SMT.L from Tesla. There were a lot of Puts put in place on Tesla recently so we are probably in for a period of share price volatility!!!
IMHO the writer isn’t an active investor at all, he is really an active gambler on the stock market, he really needs treatment for his addiction and an education in the difference between investing and gambling. His sort of activity causes volatility and is ultimately the cause for his own “losses” .