Investing 101: Booking Profits
With all the writing I did about Tesla the last few days, it only makes sense for anyone to conclude that I have followed it closely. In fact, I followed the company a lot longer than I did the stock.
As for my portfolio, I have a small holding of TSLA. This is a long term position, one that I didn't consider selling.
For me, I believe in the disruption this company is doing. I researched all I could and concluded that Tesla is a number of years ahead of everyone else. This includes the traditional automakers, Waymo, and Nvidia. The challenge is that, in this era, as Nokia found out, once you fall behind by even a year, it is difficult to get caught up.
Thus you could say I am a long term bull.
That said, I sold half my position today, at $963. The run up the last 90 days is insane. Yet the move over the last week is just completely off the chart. Cramer likes to say that bulls make money, bears make money, pigs gets slaughtered. Well, I decided to not be a pig today.
Booking profits is never a bad thing. I have no idea if the stock price will go up from here or not. It well could. Things rarely go in a straight line in one direction yet there could be the rare exception. However, my expectation is that I will be able to buy back in at a lower price, thus giving myself more shares than before.
I am not one to predict pricing in this manner but I am thinking that the shorts will push this thing down into the $500s again.
Many are looking for reasons why the stock took off. In the end, it doesn't matter. Markets have a mind of their own. Play the conditions as they are.
Tesla had a huge run for whatever reason. This is likely a case where the market got far ahead of itself. Tesla might be a legitimate $900 stock at some point. However, from what I can see, it is not there yet.
Since I have no idea which way it will go, I hedged myself. Selling a half position let me bank some profits while exposing myself to upside gains. Since I am long term, I do not mind if the stock gets hammered as a result of the huge run.
At the same time, a pullback will allow me a better entry point. Notice I am doing this while being optimistic about the company and the stock. In the markets, time frame is crucial. One can be bullish long term while bearish in the near term. This means investors can employ this strategy as well as traders. Buy and hold does not mean failing to trim positions at times when a massive run was realized.
That is the situation I find myself in.
By the way, this is not financial advice, just a lesson is taking profits when they present themselves.
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Posted via Steemleo
Great move as all Markets impulse and correct...and you will get another opportunity to get in on the correction.
Posted via Steemleo
I think that was a smart move. I’m not sure how this kind of outrageous run (that spanned several days, by the way) could hold.
I bought puts over the past 3 trading days and have managed to sell them for a monster profit based on the implied volatility alone. I just bought a few more puts today when the price was over $900 and I think it will play to my favor tomorrow if we get a solid pullback.
Posted via Steemleo
Patient is the key
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Congrats on taking profit.
Most of my stocks are just long term holds for retirement and leave the trading to crypto as more of a hobby. I'm still unimpressed by Tesla and think they're considerably overvalued for the market share that they hold. Do I think they have the possibility of continuing to grow and become a major market player, of course, but I think Ford, Chevy, Honda, Toyota, BMW, etc are going to quickly close the gap in the technology of Tesla and the rest.