Investing 102

[CRCRFT78]

I saw the reports this morning about the Tesla vehicle battery fire and the reaction the market had against it. Didn't watch the whole news report but does anyone have an opinion on this and how it may or may not affect your future investment decisions. How some may handle this negatively or positively and the influence it may have on your buy/sell decisions.

I DO NOT hold a position in Tesla but based on the little bit of information I have heard about this, I may look at it as a buying opportunity if I did hold position in their company.

Any opinions?

[Vince@Meanstreets]

I read that it was a result of the car hitting a large piece of road debris that ruptured the battery compartment which started the fire.

As a long investor I believe it should not affect it much. Note, I mainly look towards dividen stock but did purchase Tesla stock a few weeks after its IPO. If you have money sitting around buy in if it's drops under $130.

[GregWeld]

Originally Posted by CRCRFT78

I saw the reports this morning about the Tesla vehicle battery fire and the reaction the market had against it. Didn't watch the whole news report but does anyone have an opinion on this and how it may or may not affect your future investment decisions. How some may handle this negatively or positively and the influence it may have on your buy/sell decisions.

I DO NOT hold a position in Tesla but based on the little bit of information I have heard about this, I may look at it as a buying opportunity if I did hold position in their company.

Any opinions?

TESLA (TSLA) is a "priced for perfection" stock.... it's run way ahead of the actual fundamentals --- i.e., it's P/E ratio (price to earnings) is a big "DASH" -- because it has no earnings..... it might in the future - but as of this writing = it does not. It currently is valued at HALF the market value of General Motors (GM)... which has a P/E of 12.66 (so P/E Ration is the stock trades at 12.66 TIMES the current earnings).....

When a stock is priced for perfection -- a small "hiccup" can have a LARGE inversely disproportionate effect on the stock. People tend to be lemmings and they panic 'enmasse'.... They really don't "invest" in the shares as much as they gamble in the price appreciation and the first time they have an "event" -- people run for hills.


I personally don't own Tesla --- and frankly --- I'm not really sure what to make of it as a STOCK --- which is completely different than it as a company!
I like the company -- but thought their first car was an overpriced "cult" car that had relatively poor quality - and was pretty much useless.... the "S" on the other hand is very high quality -- is really a neat car -- and is selling like hot cakes.


BUT --- here's my issue with the STOCK --- is it gambling with it's pretty meteoric run up in price.... and will I get crushed if they have earnings misses or come out with a new model that doesn't sell quite like everyone "expected". OR --- Do I really believe they know what they're doing and it's all uphill from here.... So then my choice is to buy FORD which was cheap - and collect a dividend...

NOBODY KNOWS WHAT THE FUTURE IS..... your guess is every bit as good as mine -- or anyone else's that THINKS they know.

If I was younger --- and had some spare dough --- I think I'd be a buyer on the dip. I wouldn't buy much (it's ALL RELATIVE)... for me -- that might mean I'd put 100K (or maybe I'd just buy 500 shares -- something like that) into it.... someone needs to make those calls based on how much they have to invest and how much they can afford to gamble.

If you invest in a stock like this -- you're just gambling -- it's a new company -- it's new technology (the batteries) and you just don't have a crystal ball.... but you might be buying a company that just turns out to be a leader and grows like crazy and has big earnings --- and who the hell knows. Sometimes it's just FUN to own stuff like this. WTF. Nothing wrong with that. Just don't put your kids college funds into it.

[GregWeld]

BTW --- Tesla (TSLA) is UP 411% Year to date.... on big volume - but if you look at the volume as the price has risen -- the volume traded is going down (not huge but trending down) as the price has gotten up there. There could be a couple reasons for that --- over 100 a share lots of people are "priced out" of betting or trading the shares --- or that as the price has risen -- people just aren't as confident of turning a buck in the name.


I would NOT let the big run up turn me off.... LOTS of stock have lots bigger runs than that -- and do so for a number of years.... Microsoft -- Dell -- Cisco -- Apple - Oracle....

I would instead -- concentrate on how much you have to "play with" --- and go with that and just think of it as playing black jack or roulette.... you'll kick yourself if you didn't get in on the fun when you hear all the people screaming EEEEEEEHHHHHHAAAAAAA..... and you'll learn a good lesson about who you are and what kind of investor you are if you loose your ass. And maybe somewhere along the line - it doesn't go as far - but doesn't tank - and therefore you'll live to gamble again. Does that make sense?

[sik68]

I'd like to put my "train of thought" out there on WD-40 (WDFC) to show the conclusion I came to for myself.

My first instinct is that it's cool WD-40 is on the exchange, it is a gearhead stock. So emotionally I'm attached to it already, which is not always a good thing when objectively looking at investments. So to detach myself, I pretend that it's something more boring, like air freshener. That helps me remove the rose-colored glasses

Share Price
**5-year chart, it looks pretty darn impressive since '09, return of 278%.
**10-year, it looks pretty flat since '03 but is a spitting image of KO, which is one of my "standard" comparison stocks. So that's a good sign.
**20-year, it looks pretty good and solid, until you compare it head-to-head with our large cap "steady eddies". You can see that the share price is only up ~300% over 20 years...which honestly is unimpressive.

Dividends
Current dividend is 2%. However, the dividend payouts fluctuate throughout the years and used to be up over 4%. So it doesn't quite have the impressiveness of a company that has been increasing is dividend forever.

Company
Given the recent 5 year price surge, what has the company been doing in the last 5 years that it wasn't doing in the other 30+ years? This article seems to provide a pretty good summary of what the air freshener company is doing now. They have several subsidiary brands that are expanding into more household-consumer products, and are focusing more internationally. What I like about this is that the WD-40 brand name resonates VERY well in the male demographic. Given that men do more of the household shopping and cleaning these days, I can see that guys would like to load up on more "masculine" products for the household and under-the-sink.

Conclusion
It looks like the company has recently been going in a new direction. The new direction seems to have some love on wall street. Perhaps the 5 year gains are only the beginning for this small-cap stock to become a huge global brand. I don't know that, but there are signs that WD-40 is leveraging its existing strengths and using them to grow.

I think I will dig a little deeper on WD-40. I want to know more specifics about what has changed in the last 5 years. New management? How much brand recognition they have globally?

I'll give myself a week more to learn, then pull the trigger (or not).



I'm all ears on what others see!

[GregWeld]

All good thinking Steven....


EXCEPT.



Yeah -- except that you have to remember why we invest. We invest to MAKE MONEY... We invest for TOTAL RETURN.

With an under 2% dividend -- then you're going to need some capital appreciation.. and that's been lagging in this name -- and really the "growth" is a spurt from 2009 til now. So the last 3 or 4 years accounts for most of their growth ----- and that's what you've said so good for you for recognizing that. Now what you have to get your head around is --- what's fundamentally changed -- or is that just market forces.


Personally -- I'm going backwards with a 2% dividend... because inflation is always that much.... so without the growth in share price... then ya have to ask yourself what ELSE could you invest in and do better. Remember - we always have choices.

For fun - 'cause we're car guys I compared SNAP-ON (SNA) to WD-40 (WDFC) and they were basically neck and neck... I could see no reason to own either (even though I'm a diehard Snap-On guy!).

[GregWeld]

I wish I had something to add in a constructive way --- but I will tell you all -- THIS is a more NORMAL market.

When this tread started -- and during most of it... it reminded me of the late 90's when every day there was a new IPO that tripled it's first day of trading - and or there was a split 2 for 1 and then that doubled by the next week. It was like having a money tree in the back yard.

A normal market is all about AVERAGES --- so when the market goes crazy for awhile --- then it must go flat or down for awhile to "average out". There just isn't a straight line UP. Given the fact that the market was up like 15% in the first 6 months of this year -- it was only a matter of time before we went sideways or down 5% or so. That's where we're at right now.

The good news about learning about dividends --- THOSE JUST KEEP COMING.... I got one again today - so my account has $4500 more CASH today than it had yesterday (HYG). And that my friends --- is how I go racin' and buy parts - and pay the mortgage.

End of story.

[mdprovee]

I appreciate this thread, my retirement account is going up monthly without me adding to it, and now we are concentrating on paying things off. Then we can start saving more for life later. I am learning.

[bdahlg68]

Originally Posted by GregWeld

I wish I had something to add in a constructive way --- but I will tell you all -- THIS is a more NORMAL market.

When this tread started -- and during most of it... it reminded me of the late 90's when every day there was a new IPO that tripled it's first day of trading - and or there was a split 2 for 1 and then that doubled by the next week. It was like having a money tree in the back yard.

A normal market is all about AVERAGES --- so when the market goes crazy for awhile --- then it must go flat or down for awhile to "average out". There just isn't a straight line UP. Given the fact that the market was up like 15% in the first 6 months of this year -- it was only a matter of time before we went sideways or down 5% or so. That's where we're at right now.

The good news about learning about dividends --- THOSE JUST KEEP COMING.... I got one again today - so my account has $4500 more CASH today than it had yesterday (HYG). And that my friends --- is how I go racin' and buy parts - and pay the mortgage.

End of story.

HYG is commission free for Fidelity so it makes a nice parking lot for my biweekly contribution. In fact, Fidelity offers like 65 iShares ETF's commission free. When I get some more time I may look at some of them a bit closer.

[GregWeld]

Originally Posted by mdprovee

I appreciate this thread, my retirement account is going up monthly without me adding to it, and now we are concentrating on paying things off. Then we can start saving more for life later. I am learning.

Good because when you get much older I want Laura to be able to have enough money to be able to hire someone to change your diapers.