Why I Bought Tesla Stock Today
The markets are in total collapse. We are nearing the bear with it closing in on a 20% decline from the all time highs.
So why on Earth would I buy? After all, isn't rule #1, never try to catch falling knives?
To start, I must state that I am a long term believer in Tesla. In spite of all the news that came out this week about the markets, Tesla actually had a good week. Elon Musk announced they are looking for a place to build a factory for the Cybertruck in the middle of the United States, most likely either Texas or Nashville.
There was also photos showing expansion of the China factory, the one that just opened in December (and was closed in January). Reports are this will double production out of there.
Finally, it was announced that Tesla delivered more cars in China for the month of February as compared to January. Granted we are not looking at numbers that will wow Wall Street but it was still an increase in spite of the shutdown of China.
Another major point in this is that I am scaling back in. Make no mistake, I expect further downside for the entire market along with Tesla. That said, it is impossible to time a bottom. Thus, I bought what amounted to a 1/10th position of all that I expect to end up putting in there. It is safe to say that my purchase did not rattle the markets.
Yesterday, I did a video about the DJIA hitting 40,000 and possibly beyond. This is not going to happen overnight and we might endure a lot more pain before the trend reverses back up. However, when it does, it will be powerful over the next couple decades.
This correction was sorely needed. The virus was an excuse for markets to sell off in a big way. Market watchers have been saying for a while that this was necessary. Prices just got too far out of line.
The final point with Tesla is the fact that I sold half my holdings at around $960. After the massive run up, before the virus took over the headlines, I felt Tesla was way too much, way too soon. I booked some profits hoping for a pullback.
I certainly got that.
Before all is said and done, I figure we will see a 5 handle and possibly one in the fours. Since timing the market is tough, I will keep adding to my long term position as new lower levels are hit.
With long term positions, I like to buy the dip. There are times when things get crushed but, for me, it is in a retirement account so I have the time.
The flip side, when there is a massive run up, it is best to take some profits off the table.
As Buffett likes to say, buy when there is blood on the Street. I guess you can add, even if it is your own.
As always, this is not financial advice.
If you found this article informative, please give an upvote and resteem.
Posted via Steemleo
