Featured Hybrid sales picking up in 2023

the sky is falling

 

Tesla Q4 numbers in eight weeks.

Bob Wilson

 

Production & Deliveries in about 2 weeks ;-)

 

But it will be a soft landing!

Mike

 

You really need to diversify your stock investments. Concentrated positions can lead to financial disaster.

Here is an excerpt from an old WSJ article that explains the psychology behind why people invest in concentrated positions.

Why it's wrong to hold too much of one stock
by Jilian Mincer
Sept. 4, 2008, 12:01 AM ET

Three years ago, a client came to financial adviser Sammy J. Grant with a $500,000 portfolio. The man didn't work at Home Depot Inc., but 85% of his portfolio was in the company stock.

The investor lived in Atlanta and liked Home Depot, which is based there and has a strong presence in the community. Fortunately, Mr. Grant said he persuaded the investor to diversify the portfolio before the stock plummeted.

The scenario isn't unusual. While many consumers invest too much in one company because they have inherited the equity or collected it from an employer, individuals frequently overinvest in local companies. They drive by a company's headquarters, have neighbors who work there and believe it's a sound investment.

They think they're reducing risk and optimizing gains by following the adage, "Invest in what you know." Yet too much concentration in one stock actually increases risk as a lot of investors in Home Depot, Starbucks Corp. and Washington Mutual Inc. have discovered. Fortunately, this is a good time to diversify your portfolio. Stocks prices are down, and the federal tax rate on long-term capital gains is the lowest it may be for a long time.

"It is a well-known phenomenon," says Stuart Ritter, a financial adviser at T. Rowe Price Group Inc. in Baltimore, Md. "We think we know more about things that we're familiar with."

David Hirshleifer, a finance professor at the Paul Merage School of Business at the University of California, Irvine, says people have a natural tendency to like things with which they're familiar.

Why it’s wrong to hold too much of one stock—WSJ

 

With the gas prices falling, expect buyers to rapidly turn back to gas-guzzlers in 2024.

 

Low gas prices haven’t put much of a dent in EV sales. There are just so many advantages that the gas prices are only a minor factor for the market as a whole.

Personally, my fuel savings are range from 85% (2 dollar gas) to 93% (4 dollar gas). I really don’t care if gas prices fluctuate.

 

I moved my 401k money to a brokerage account and tried:

• 50% gold stocks
• 50% Tesla

The gold stocks flatlined while TSLA gained value. So I moved the capital from the under performing investment to the better performing. So I caught a 3-to-1 stock split and later a 2-to-1 split, effectively 6-to-1 stock growth.

So what non-Tesla stock do you recommend and why?

I prefer companies run by engineers, not MBAs. The higher the tech and better job they do staying at the bleeding edge, the happier I am. In the past, I only succeeded by investing in companies that hired me and sold their stock when I left. The one exception was Apple that doubled until I needed a house down payment.

Bob Wilson

 

microsoft has been good to me, but too high now. i was doing well with facebook, but sold it on principle.
energy companies have been great with dividends. i thought 3m would be a good buy, but they got hammered on lawsuits. it's all a crapshoot

 

I would normally recommend the market index. Tesla could still beat the market, but a concentrated position has always the risk of something unforeseen coming. So does the market index, but the risk is much lower and the recovery usually takes less time. As it was the WSJ article's main point, we all like to invest in companies we like, but that is usually not a good investment strategy.

 

Ask yourself which is more affected by government policies?

Think war, tariffs, industrial policy, nationalism. Is it it broad market holding or one which is dependent on a specific region for inputs, production and sales.

I'm almost 81. We continue to buy stocks but only in index funds. We hold less than 10% of our assets in 2 individual stocks that have been held for 50 years each. We use VTSAX as our stock holding fund.

 

While I think diversification is a good strategy, I'm sure the investor might be mad at Mr. Grant today. I believe the high before the "crash" in 2008 was around $31/share in 2007, friday home depot closed @ $355 or more than 11 times higher. It took until 2011 to go over its 2007 value, but then shot up considerably more than the indexes. It was one of those really well performing stocks, but of course there is volatility. You could have picked AIG which is less than 10% of its value

 

I would agree that it is dangerous to put all your eggs in one basket/stock.
It can be exciting in those very rare instances when one stock does outstandingly well but there are many other instances of just the opposite happening to stocks or the outstanding preforming stock trying to sustain their flash in the pan returns.
Think Enron, Bernie Madoff, GE, International Harvester as well as a host of other sure fire high performing investments and ask the investors who put all their eggs in those baskets if it was a good idea.

Also another point - due to the cyclical nature of stocks over performing and crashing - it is nice to have a whole basket of stocks that balance out each others ups and downs and in the end providing the holder of the basket with a consistent dependable return.

As the rise of online wagering, the lottery etc. illustrates many are addicted to the thrill of gambling and the thought of hitting a home run on Wall Street is irresistible - individual stock picking is not going away anytime soon. I would be inclined to go with a blindfolded dart throwing baboon rather than an experts individual stock picks - the baboon has been proven to be more reliable.

 

stocks, bonds, real estate, gold, priceless artwork, am i missing anything? eggs?

 

Don’t forget the most valuable of them all, TP!

 

NFTs, bitcoin (and all other cryptocurrencies)
Vintage cars...pick any ICE and hold for a decade or two.
Beenie babies.

Mike

 

Meds .... Ammo .... Food & booze - they all trade well

 

crypto, cash, wheat.

The last one because I have a friend who's brother is a devout Mormon and he store's wheat in case of emergencies, large amounts. I thought it was funny, because they are so poor they qualify for food stamps and free school lunches (they don't take them as they are proud and can make it). Then the pandemic hit and the brother told her this is why. It still seems strange that people don't have enough will spend on storing wheat but there are worse things. Luckily our stores worked. Another friend's parents were holocaust survivors, they became rich in Venezuela. His father bought real estate in the US and Europe and hid money and valuables in case they needed to flee, but never made a list or told the children where things were hidden. After he died they could never find some of the hidden wealth.

I'm sure bob is doing fine even if tesla crashes. The investor is the story likely would have more money if they kept most of the home depot stock as it outperformed so much. Still less than 5% in any one stock is a good rule of thumb. I diversified my mother's portfolio after my father died from the 40% he had in the company he retired from, but he kept it there because he did not want to pay the capital gaines tax (mom didn't have to after his death because of IRS rules). The mistake I made was following the brokers advice about diversifying to internation and small caps, which greatly underperformed. Still I put her in nvidia, amazon, costco, home depot, and tesla which more than made up for the international and small cap under performance.