After the recovery we just saw in the stock price, and almost looking like it was headed
back to 800 at one stage, what emotions were going through your head?
Something along the lines of "how did I not buy more shares, Tesla was in the low 600s
at one stage, obviously it was going to recover, and then the split is coming too" and all
these other major events around the corner, and that's just whats happening this year.
Were you kicking yourself a little for not being more greedy, when others were fearful?
Right I am sure most of you probably did buy all you could on this fire sale, and were
limited by available funds, and were sensible enough not to use margin.
Well I'll be a little bit honest with you, I was regretting not buying more on this dip,
when it started to recover again.
STRATEGY In fact I try and stay very in tune with my
emotions during these periods.
I check in with myself, and ask what is going through my head.
Why am I not buying more shares, what will happen if it shoots back up next week, how
will I feel?
I then try and make a memory of these emotions, so I can remind myself of what was going through
my head, when the stock does rebound.
This way when I say to myself, what was I thinking, and kicking myself for not buying
more, I can remind myself of why.
Investing is highly emotional and you are playing with money, it can get to you psychologically,
and you also lie to yourself too, to make it even worse.
It's very difficult buying at the bottoms and selling at the top, you can't keep beating
yourself up about missing out on trades.
I good investor needs to find ways of coping, like what I am suggesting.
This is basically my inner bear and bull trying to discuss investing strategy together, to
see if we can actually work out who might be right.
From here I try and adapt my investment strategy accordingly.
Investors can be extremely fickle, it can take on headline for some investors to rethink
their entire investment strategy with Tesla.
I try really hard as to not let all the doom and gloom, or click bait headlines affect
my decision, and instead work out the environment best I see fit, taking in all the facts, rather
than having opinions shoved down my throat by a talking head, who doesn't even know what
he's talking about himself.
Even people you might deem credible, intelligent, or successful, they may be telling you something
bad is coming too.
But they don't have crystal balls either, and rarely even predict the future right.
Also they are not telling you what is best for you to hear, they are telling you what
is best for them to say.
They have their self interest at heart, not yours.
For example they may want more people to panic sell, so they can buy even cheaper.
MACROS Alright, everyone, once again, we were in
the low 600s, last time we were there, we had so much less as a company.
But it's macros, and they are in charge of the game.
Anything can happen with the macros.
Of which we are playing around with right now, as we have this wave of inflation among
us, that needs to be fought.
Except the FED have a very small arsenal for such a battle.
They need to appear much bigger than they are, and use fear tactics to suppress the
economy.
They want to put it into a recession, in order suppress spending to fight inflation.
Part of the inflation we have seen has been as a result of too many dollars chasing too
few goods.
Now this is known as demand pull inflation, and has resulted from supply chain issues.
The goods were not able to be produced or shipped within time to meet customers demand.
This part of inflation should eventually level itself out, along with shipping prices.
Therefore, perhaps part of the FED's strategy is to just chill the economy at least, for
as long as they can until the supply chains are back in full working order.
The same is true with the war, if the FED can just put inflation on ice as much as possible,
until the war is over.
Realistically it seems very unlikely that it could go on past this year, wars are incredibly
expensive, and Russia is not rich.
Anyway, obviously the end of the war, would also relieve inflationary issues a massive
amount.
The extra cost at the gas pump, is majorly eating into expendable income.
So I think part of the FED's strategy might be just buy as much time as possible when
these major issues are alleviated, and they are obviously playing major factors into inflation.
But let's not be naive and ignore all this additional money that has been added to the
money supply through covid.
There are concerns that QE will cause rampant inflation, and potentially enter hyper inflation.
In my honest opinion, this is definitely a possibility, and will depend on just how good
a job the FED do.
I am pretty sure there is no way getting around a lot more inflation to come, the question
is will they eventually be able to keep a control on it, this is the US dollar though,
not your typical currency, and they do have options.
For example they can renege on foreign debt.
Sounds extreme perhaps, and will affect the US dollar's reputation, but at least there
may still be a US dollar.
It may be that desperate.
Oh and by the way, it's not the first time the US has reneged on foreign debts.
In fact every single foreign debt they pretty much had, Nixon wiped off the balance sheet.
So this feels somewhat like FED scare tactics, appearing to be more powerful than they actually
are.
I think the FED are bluffing, and eventually the market will call their bluff.
Because the FED don't really have enough power to force a recession, without creating too
much interest, that the government wont be able to afford to pay.
Not to mention all the citizens have too much debt, and would struggle with mortgage payments
if the interest rose much higher.
BUYING Alright, so I am trying to get in check with
my emotions, and after this crash we just had, then a slight recovery to remind us just
how quick these things can turn around, and then back to dipping.
I think my emotions, or perhaps instinct, are telling me I should have bought more on
the last dip.
I have more cash too, and a buffer for in case things get really bad, but that's to
cover my mortgage not buy cheap assets.
I've got to say, it is really annoying the stock price being so high, and I do meant
the stock price itself, that arbitrary number, not the company valuation.
Once the stock splits then the prices of options will come down significantly, making it much
easier for a diversified options approach.
We just don't know if we will see another dip after this split.
The stock price might end up ripping away and may never look back.
WAS WAITING FOR Q2 We are also potentially waiting for these
Q2 numbers to come out, my guess is they will be below expectations.
This could effect the stock price at the time, but the financial reports will not be available
until the end of July.
The problem with that is we are getting close to the shareholder meeting and the split.
There is likely to be a much more powerful run up to the split, than there would be drop
in stock price for a disappointing Q2.
I think the market is all well aware that this Q2 is just a one off, and no need to
look into it further, so they will get over it.
But will be less forgiving when it comes to Q3.
I did somewhat think of saving some of my funds for the a Q2 dip, as a back up to buy,
if I didn't purchase enough on the last dip.
But thinking this through now, I think the split will supersede the negative energy of
Q2.
Implying there may not be another chance for a dip.
With that in mind, I am going to put some orders in next week and if we drop below 700
again next week, I am going to start buying up again, and will take an overweight position
in options and LEAPS with Tesla.
I then plan on shedding some of those around the split.
Watch this space then, to see if I can pull off some really impressive trades over the
next couple of months.
Please let me all know what you are thinking about my strategy, and if you also have something
planned.
Remember, my strategy is to continually adapt and evolve now, and I am explaining to you
what goes on in my head on how I reach these decisions, rather than telling you what the
strategy is.
I mean if someone tells you their investment strategy, it might work on the first trade
or 2, but what happens if they aren't around for your next trade.
You need to learn for yourself and know for yourself when you think its a good time to
buy.
OPTIONS As you know, I went big around December on
options, and made a great return until it collapsed, and I lost all of those short term
options.
But as I was buying them, I was even saying there is a good chance I can lose all of this,
but it is an asymmetric investment nonetheless.
Now after losing a reasonable amount of money, obviously I learned a lot again, but I am
not sure I learned to stop yet.
I think this could be another asymmetric investment again, so I might try timing this split with
some short term call options.
If any of you are too, then please let me know.
Now this is money I can afford to lose, like I always say with call options.
And although I may have lost on my calls, I actually made quite a bit on some LEAPS
I sold, so I am back playing with house money.
Anyway, I still wanted to pick up two more LEAPS on the last dip, as I was buying slowly,
so I think I will do that.
I was also looking at some much further out the money LEAPS, which I will discuss in another
video.
And I also want to get some September calls, I think around $800 strike price.
I might buy 2 of them.
SUMMARY It can be hard to think straight, when there
is so much fear or excitement in the markets, so try and remember how you felt when the
opposite was happening, and try and be honest with yourself, and ask yourself then next
time it's below $700, is this an absolute bargain, am I looking a gift horse in the
mouth?
You might think investing is about numbers, and of course you need to know your numbers,
but it's the psychology and emotional management, they don't teach you as well.
Anyway, I thought that we might have gotten a 2nd chance of a dip with Q2 financials but
I think the split will take the limelight.
The delivery numbers will be out in a month though, and will probably be disappointing,
but I think it's priced in.
If we get another sub-700 dip, then I think I am going to go big, depending on how low
it goes, I may even sell off some more shares and get options.
I don't think the FED are going to be able to stay on top of the markets enough, and
think the markets may bounce back still.
Anyway, there are so many moving parts right now, my strategy may have changed next week.
And as usual, I like hearing how all of you are tackling these opportunities.
In fact the reason I sold 75% of the options value before this crash, was because I realized
I should have sold some when the stock jumped past 1200.
Only for it to crash down, and then miraculously recover somewhat.
I wasn't going to make the same mistake twice, especially with this dire Q2 ahead of us.
This is my inner bear and inner bull trying to discuss a pragmatic strategy that ignores
all the noise, and noise can get very loud at times.
And since I have adopted this strategy I doubled the money I was playing with.