Tesla – buy or sell – stock talk

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Generally I don’t like to talk about investments on this blog, my general investment strategy is linked to Andrew Carnegie quote. “The way to become rich is to put all your eggs in one basket and then watch that basket.”

Human nature isn’t good at doing nothing. So the financial services industry is built on encouraging you to sell one stock and buy another. My personal view is do stock selection up front and then do nothing.

Tesla is one of the stocks in my portfolio. I have a large position which isn’t something that sits comfortably with me. I bought the car itself as an early adopter not just because I love new technology but there are very few car makers in the world that are using a new channel dynamic (selling online). In the press this week the 20 year anniversary of the first online transaction was celebrated by stating 90%+ of us now buy online, so why should cars be any different. Sitting in your bed and comparing, checking prices and specifying something is really the ultimate consumer experience. It is incredibly convenient!

The issue with Tesla is it isn’t just changing the dynamics of car buying, it also has a truly unique product with supply side constraints that do mean it can only sell a few (keeping prices high in the short term). In the long term, it’s new battery factory will help bring electric vehicles to the middle market, and the word of mouth I have seen in the few weeks since I have owned the car is amazing. Most people in my friends and family would seriously consider the car if it cost approximately half of the current price (around £30,000-£40,000). This is still a huge premium to an ICE car (Internal Combustion Engine – geeks!) but with running costs and range anxiety gone the barriers to adoption fall.

The stock price has been on a one way movement vertically, which would warn me that it should correct at some point, but the remarkable customer service attitude that Elon Musk has to knocking down barriers to adoption keep me pretty hooked on the long term as a holder, even if their are price corrections over the years.

I would never recommend buying stocks to anyone, but it is worth keeping an eye on Tesla through the years to see what happens.

Disclaimer: This probably means the stock will bomb – and the reason I tend to invest in private companies!

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