As a shareholder of Tesla only since 2H2018, I wanted to share my thoughts on whether to buy, sell, or keep holding Tesla stock. The share price has risen meteorically. Since reaching a record-high, it has since corrected by 30%+. Personally, I'm holding on and buying more!
I bought Tesla stock in 2H2018 after I met Elon Musk at a wedding. At the time, there was all type of media hoopla about him being unstable, smoking marijuana on Joe Rogan, sending out missive Tweets, and so forth.
I wanted to see for myself whether Elon was indeed unstable, or a stable genius. In the end, I decided he was the latter. The media was blowing things way out of proportion. I bought 300 shares in multiple tranches between $280 – $310.
The stock did well and then started to plummet in 2019. When it recovered to the $400 – $420 level, I decided to sell half my shares and lock in a 30% gain. At the time, I felt good because I was down about 30% at one point. In retrospect, selling was a mistake.
What Should I Do With My Tesla Stock In 2022+?
If you're lucky enough to own Tesla stock before the incredible ramp up in price in early 2020, you may be wondering what you should do now? Buy more? Sell Tesla stock and take some profits? Or just hold?
In general, I don't recommend any one stock position be greater than 20% of your entire portfolio. Therefore, if your Tesla stock is greater than 20% of your entire portfolio, I recommend taking some profits down to 20%.
But if Tesla stock is well under 20% of your portfolio, I suggest riding the shares out. The ride will be extremely volatile, but here are some reasons why:
In 10 years, there is a chance that Tesla extends its electric vehicle lead, lowers production costs, builds an autonomous global transportation network, becomes a power conglomerate, creates new efficient modes of transportation, turns into the next Amazon, and also becomes highly profitable. Just in case Tesla does reach all these goals, I don't want to miss the electric bus.
Do you really want to miss the electric bus if Tesla becomes the next $1 trillion market capitalization company like Microsoft, Amazon, Google, and Apple? I don't think so.
Clearly, Tesla stock is priced to perfection. Any execution missteps or earnings misses will cause the stock to tumble. Heck, the stock could easily correct 30% on no news one day given how quickly the share price has risen.
Bullish Case For Tesla Stock
If you want to look at the Bear Case and Bull Case for Tesla stock, take a look at ARK Investment's projected 2024 model for the company. Even in a bear case, it looks like Tesla is more than a double from here.
If you're not in Tesla at the moment, I think it's worth buying just 1 share in a correction. Just in case Tesla does become even half of these projections.
When investing, it's important to invest in an entrepreneur and leader who is brilliant and constantly looking into the future. I think Elon Musk is one of the best people to look and plan ahead.
I'm hoping Tesla corrects so I can buy more. If not, I'm just going to hold onto my 150 measly shares. Let's see what Elon has in store for the world.
As of 1Q2022, Tesla stock is down to the $800s. The stock market is going through a difficult time due to the Fed hiking rates. Alls of technology is getting crushed as rates go up. However, I am a buyer of Tesla stock in the $800s and will hold long term.
Diversify Your Investments Into Real Estate
Stocks are very volatile compared to real estate. And Tesla stock is especially volatile. Therefore, if you want to dampen volatility and build wealth at the same time, invest in real estate. Real estate is my favorite asset class to build wealth.
The combination of rising rents and rising capital values is a very powerful wealth-builder. By the time I was 30, I had bought two properties in San Francisco and one property in Lake Tahoe. These properties now generate a significant amount of mostly passive income.
In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common.
Take a look at my two favorite real estate crowdfunding platforms. Both are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the easiest way to gain real estate exposure.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
About the Author: Sam worked in investment banking for 13 years at GS and CS. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments. They now generate roughly $300,000 a year in passive income, most recently helped by real estate crowdfunding. He spends most of his time playing tennis and taking care of his family. Financial Samurai was started in 2009. It is one of the most trusted personal finance sites on the web with over 1.5 million pageviews a month.