The heartache and joy of owning Tesla stock

It’s been a wild roller coaster ride in my two years of owning Tesla stock.  Let me fill you in on the details!

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I’ve put off writing about owning Tesla stock for quite a while because thinking about it gave me anxiety. The anxiety recently changed into something quite different, so it seems like the right time now to bring you up to speed.  Here’s my Tesla story.

The beginning

I bought my first shares of Tesla stock for $279 in May of 2018.  This was notably before I started this blog and also a couple of months before I bought my Tesla Model 3.  Over the course of the next year, I bought about $10,000 of Tesla stock at an average price of $294.  

It was an interesting time to be an owner of the stock.  I didn’t tell many people about the purchase because it was such a polarizing topic.  Either I was praised for my investment into a potentially world-changing company, or I was ridiculed for throwing my money away.  

I bought the stock because I believed in the mission of Tesla:  “to accelerate the transition of the world to sustainable energy.”  I also saw that anyone I know who owned a Tesla car loved it.  The loyalty I saw in Tesla owners was something else.  As soon as they bought a Tesla car, they became fanatics of the company.  

As a percentage of our assets, $10,000 was a relatively small amount, so I felt comfortable risking it on an individual company. (Or at least I thought I felt comfortable…)

With individual stock, there’s always the chance that the entire investment could go to zero.  Although I knowingly making this choice, this investment in particular caused me no end of anxiety for the first year.

During the tumultuous ramp up process, when Tesla teetered on the brink of insolvency, my stock ownership caused me a lot of grief. I’d read investor reports in between patients at work. I’d check the stock price multiple times a day.  From the amount of attention I put into this investment, you’d think it was 100% of our net worth, as opposed to a small chunk.  

The heartache of owning Tesla stock

Tesla’s production ramp up with the Model 3 car proved to be incredibly difficult. As word of these woes leaked to the press, the stock price fell almost 40% to $185. 

I became resigned to my bad investment and tried to put it out of my mind. But to be honest, my apparently bad investment bothered me. It bothered me a lot. It became a source of embarrassment. The Dr-ess would poke fun at me over it and I would scowl, grumble back at her and change the subject. 

The recovery

I stubbornly stuck with the investment and thankfully the stock started a long road to recovery in mid 2019.  

By the time I had my epiphany about the tax benefits of real estate investing, Tesla stock had recovered to the low $200s in value.  I held onto the Tesla stock, but sold the other individual stocks in my portfolio: Amazon, Alphabet, and Apple.  These stocks, plus money from the sale of some index funds, formed the seed money for my first rental real estate purchase.

I watched over the following year as the tide turned and my Tesla stock recovered to my initial purchase price and then passed it!  By February 2020, the stock was worth $886 a share, and another do-gooder company, Beyond Meat, caught my eye.  

To lock in a profit and reduce my exposure to a volatile company, I sold $5000 of Tesla shares and moved it into Beyond Meat stock.  (Beyond Meat has the goal of converting the world to plant based protein to address four concerns: “human health, climate change, constraints on natural resources, and animal welfare.”)

After I did this, I felt myself relax. I had diversified my investment and reduced my exposure to Tesla stock. I left the rest of the my Tesla shares to marinate in the market.  

The Covid-19 slump

Tesla stock plunged along with the rest of the market in response to the Covid-19 pandemic to a low of $361 a share.  But Tesla sales were remarkably resistant to the pandemic slump, and its stock started to rise… and rise…. and rise.

The joy of owning Tesla stock

Tesla stock performance since my purchase in May 2018

Last week, the stock rocketed to $2213 a share, then split 5:1.  Right before the stock split, I sold 3 shares and cashed out another $6600.  

The recent stock run up defies logic and is over-exuberant. It’s clearly in a bubble, but confidence in Tesla couldn’t be higher. The Tesla factories are humming along at full speed, and new factories are going up simultaneously in Texas and Germany.  The Tesla Model Y has been released, with the Semi and the Cybertruck coming down the pike.

Despite all this good news, Tesla stock will definitely take another dive at some point. With this company (and with this CEO), it’s almost a guarantee. I’m sure I’ll experience some heartache when that happens. 

But for now, I’m just enjoying the ride.

Playing with house money

Without any additional capital, my initial $10,000 Tesla investment has grown into a $37,000 portfolio.  It’s now in three parts:  $24,200 of Tesla stock, $6200 of Beyond Meat stock, and $6600 of cash.  I’ve officially cashed out my $10,000 investment and feel like I’m playing with house money now.

Of course, if I had just left my initial $10,000 investment alone for the full duration, it would be worth over $70,000! But reducing my exposure to the stock did wonders for my anxiety level.

Conclusion 

Our index funds and rental real estate form our true investment portfolio.  The Dr-ess and I intend to let those two investment vehicles do the heavy lifting in our journey to moFIRE.

Read our SMART goal to get partially financially independent by 2025!

At the end of the day, individual stock ownership is just gambling.  But sometimes gambling can work out in your favor.  In this case, owning Tesla stock was a gamble that turned out really great (so far).

I look forward to gambling again on another company with the $6600 I cashed out of the Tesla stock.  I’m leaning towards putting it into the much ballyhooed Airbnb IPO.  Any thoughts, my readers? 

-TDD

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Medimentary
2 years ago

TDD,

I have several friends who are Tesla vehicle and stock owners. They are absolutely giddy about their current valuations. The stock usually makes up a relatively small portion of their portfolios and they enjoy some risk-taking. At this point for you, it’s house money so it’s been an interesting experiment on self-reflection and understanding what your own risk profile is. I’m glad it worked out for you.

I don’t have any experience with individual stocks but I used to be a business owner and I suspect it feels the same way. One needs the right personality for the ups and downs. Thankfully, I learned a lot and I’m much happier being a w-2 employee and owning index funds. I even own a healthy allocation of bond funds for my loss aversion. I don’t need a grand slam, I just don’t want to lose the game!

thestockmd
2 years ago

Hi,

I buy and sell stocks. I think I do ok with them.

Congrats on your TSLA windfall…. well done! Although the FOMO will always be there, you should be commended on booking at least some profits on a stock that has appreciated so quickly.

Side note: I dislike the term “individual stocks”. You aren’t alone. Everyone else in the world seems to use this too. Why use two words when 1 will do just fine? Stocks! Just stocks! I wrote an entire paragraph about this and erased it so you wouldn’t think I was crazy (sorry, rant over…).
thestockmd recently posted…Lazy Saturday morning wake up call: making money while you sleep.My Profile

carl
1 year ago

I hope that you continue to hold on! Tesla is one to hold for a long time, but it will be a roller coaster ride.

Elon has stated that there is a chance Tesla will be the biggest company in the world. If Tesla was just autos, this would be silly. But with energy production (solar panels) and grid-level storage (megapacks), battery tech (maintaining a lead here is critical and it all comes down to the 4680s), and services (charging stations and insurance), there is soooo much potential! Note that I didn’t even mention FSD. If Tesla nails FSD first, this alone is worth north of 100 billion in market cap.

I see two potential negatives:

  1. Someone else nails FSD first and cars-as-a-service starts to replace auto ownership.
  2. Someone else has a big, scalable, battery breakthrough.

I’m holding on because I think Tesla has a decent chance of becoming a multi-trillion dollar company this decade.

The Tesla Daily podcast is by far the best source of information: https://podcasts.apple.com/us/podcast/tesla-daily-tesla-news-analysis/id1273643094

Finally, I’m so excited to get my Texas built Model Y sometime in 2022!

Cheers!

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