Hi and I want Go-Big-Or-Go-Home Investment Ideas for My Roth IRA

[Car-Guy]

Quote:

Originally Posted by Gumby I know of an investment strategy in which you have a 47.37% probability of doubling your money almost instantly. And since you asked nicely, I'll tell you - go to the roulette wheel at the casino and put it all on red. The downside is that you have a 52.63% probability of losing everything, but you said that would be OK.

It happens... Go big or go home, in less than a minute.

https://www.youtube.com/watch?v=zGCdBsOIKYA

[Gazingus]

It's not about discovering the next big growth stock (as any "fool" will tell you), it's about holding it long term and riding through the inevitable volatility and the will to let a stock, or stocks, be a high percentage of the account.

[ERD50]

Quote:

Originally Posted by Car-Guy It happens... Go big or go home, in less than a minute. https://www.youtube.com/watch?v=zGCdBsOIKYA

I wonder what the taxes were on that? He is apparently from England, and the bet was in Las Vegas - I don't know how taxation would work. But it would all be lumped in one year, and regular income I assume, which would probably increase the tax hit in any case.

He shoulda just gone for "7"!


-ERD50

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[ERD50]

Quote:

Originally Posted by Gazingus It's not about discovering the next big growth stock (as any "fool" will tell you), it's about holding it long term and riding through the inevitable volatility and the will to let a stock, or stocks, be a high percentage of the account.

But it can also be about knowing when to get out. My Sister-in Law once asked me how to get a stock that isn't trading off her books, and/or how can she declare the loss (there is a procedure for this, it isn't complicated).

Turns out, she bought a penny stock that went through the roof. I don't recall the exact numbers, but I think we are talking something really wild, like a 50x gain, on a non-trivial amount invested! But she held, all of it, all the way to ZERO.

I'm not sure how to find the stock price history on de-listed/merged/bought-out stocks?

https://www.safety-kleen.com/about-us/our-history

Quote:

The 1980’s: In 1982, Safety-Kleen became listed on the New York Stock Exchange and by the end of the year held more than 9.1 million shares, grew to a company worth a billion dollars and employed nearly 5,000. In 1987, Safety-Kleen began its oil recovery business, which reclaimed used oil and re-refined it through their first re-refinery in Breslau, Ontario Canada. The 1990’s: In 1998, Safety-Kleen merged with Laidlaw Environmental. Unfortunately the success of the merger was short-lived and Safety-Kleen filed for bankruptcy in 2000.

-ERD50

[Car-Guy]

Quote:

Originally Posted by ERD50 I wonder what the taxes were on that? He is apparently from England, and the bet was in Las Vegas - I don't know how taxation would work. But it would all be lumped in one year, and regular income I assume, which would probably increase the tax hit in any case. He shoulda just gone for "7"! -ERD50 .

I wonder too.. And yes, it's to bad he didn't "go for it" and put it on #7... Hindsight is sometimes a wonderful thing, but not in this case.

I know very well how gambling taxation works for folks who live and gamble in the US... I'm not sure how they handle taxes for someone that is from out of the country but I suspect the US Gov expects their "cut"...In any event, no W2G's are issued for winning on roulette (even if you win that big) but you are still obligated to report your winnings when you file your annual tax return. The income tax burden can be offset by your losses of course but it all still needs to be reported.

As it is in the video above, he only won 136k (even money bet), and that's not enough to retire on IMO. But if he had put the entire 136k on #7 for that spin, he would have won $4,760,000 usd on that hit... Now that's serious money for an everyday Joe.

[eyenitnoy]

I've noticed a few posts recommending cryptocurrency. I am not expert-maybe its here to stay and maybe it isn't. But I would say this. In its current form, it is being used by criminals and money-launderers. That is not going to last. Governments will end up doing something to curtail this. In the short to medium term I see this as a major downside risk.

So, does that mean I suggest NOT to invest in these "newfangled" currencies? No. What I suggest-IF you think it is the way of the future and the next big thing-is to mitigate your downside risk IF I am right and there is some sort of a government crackdown in the short to medium term. (As we are already seeing.)

How is this done? Lots of ways. Perhaps invest in a company that moves in part with the movement of cryptocurrency. Take a company like Square. (SQ) It has a large holding of bitcoins. Buying this company gives you exposure to Bitcoin but mitigates the risk of holding it outright. There are other companies that hold bitcoin or trade bitcoin. Think about all the various ways you could invest in the cryptocurrency without holding it outright. There are lots of ways!

My point is there are many ways to invest in crypto, if that's your thing, while also mitigating risk.

Another VERY important point for holding and trading any cryptocurrency outright. There are tax issues relating to holding bitcoin and trading bitcoin that are very different from stock investments. Be sure to understand the tax implications (if you are a U.S. citizen at least) BEFORE investing.

I am not suggesting not to invest because of the tax implications. Not at all! But you absolutely must understand these issues before buying your first coin.

Just my two cents...err, two bitcoins.


(edited for typo)

[OldShooter]

Quote:

Originally Posted by FIREarly Index funds and TSLA!! ...

Well, the OP isn't interested in index funds. Tesla, though, makes a good illustration of what happens when the herd of greater fools gets ahold of a stock: numbers go out the window.

Just back of the envelope: Worldwide vehicle production is about 100 million/year. (https://www.statista.com/statistics/...on-since-2000/) The Tesla zealots will say this badly undershoots, but let's hypothesize that Tesla will achieve a 20% market share, or 20M units. Tesla's goal for this year is to produce a million cars and says their planned growth rate in capacity is 50% per year. (https://www.marklines.com/en/report/rep2151_202104) Run the numbers and it will take Tesla almost 8 years to develop enough manufacturing capacity to serve 20% of the market. Never mind the near impossibility of sustaining such a growth rate over a long period. Never mind that huge amounts of capital investment that would be needed. Never mind that new stock issues to obtain part of that capital will dilute existing investors.

Another one I did a few months ago and am too lazy to repeat: Take Tesla's current market cap and assume a mature company P/E (20?) to get the amount of profit a mature Tesla must earn. Now hypothesize a reasonable profit margin per vehicle and divide to get the number of vehicles that must be sold to achieve that profit amount. When I did it, with my numbers, the number of vehicles was roughly equal to the projected total worldwide market -- 100% share. This is ridiculous on its face, not even considering that the world's biggest economy will be largely off-limits to non-Chinese manufacturers.

The point here is not to pick on Tesla. Virtually all greater-fool bubbles feature these kind of numbers. There is nothing new here and this time it's not different. For cradle-to-grave stories look at Worldcom, JDS Uniphase, or some of the other tech darlings from last time around.

Moral: The train has left the station on virtually all the stocks identified in these posts. To win big, the OP has to find a stock or two that has not yet been discovered by the greater fools.

Cathy whatshername is an interesting situation too. She really doesn't care if her funds eventually crash. She is in the game for the fees she can collect by pumping the product and attracting investors. If she has increased her market cap (and her fees) by 10x and can hold that for just a few years before the crash, she is set for life, even if leaving a smoking wreck where ARKK used to be.

[NW-Bound]

^^^^

Tesla shareholders already price the stock as if the company will be the only car maker in the world, and all other existing car makers will go bankrupt and disappear.

And if this happens, remember the promised Level 5 autopilot. If it also become true, it means cheap robotaxis, and the sole car maker in the world now gets to sell fewer cars.

[MRG]

Quote:

Originally Posted by OldShooter Well, the OP isn't interested in index funds. Tesla, though, makes a good illustration of what happens when the herd of greater fools gets ahold of a stock: numbers go out the window. Just back of the envelope: Worldwide vehicle production is about 100 million/year. (https://www.statista.com/statistics/...on-since-2000/) The Tesla zealots will say this badly undershoots, but let's hypothesize that Tesla will achieve a 20% market share, or 20M units. Tesla's goal for this year is to produce a million cars and says their planned growth rate in capacity is 50% per year. (https://www.marklines.com/en/report/rep2151_202104) Run the numbers and it will take Tesla almost 8 years to develop enough manufacturing capacity to serve 20% of the market. Never mind the near impossibility of sustaining such a growth rate over a long period. Never mind that huge amounts of capital investment that would be needed. Never mind that new stock issues to obtain part of that capital will dilute existing investors. Another one I did a few months ago and am too lazy to repeat: Take Tesla's current market cap and assume a mature company P/E (20?) to get the amount of profit a mature Tesla must earn. Now hypothesize a reasonable profit margin per vehicle and divide to get the number of vehicles that must be sold to achieve that profit amount. When I did it, with my numbers, the number of vehicles was roughly equal to the projected total worldwide market -- 100% share. This is ridiculous on its face, not even considering that the world's biggest economy will be largely off-limits to non-Chinese manufacturers. The point here is not to pick on Tesla. Virtually all greater-fool bubbles feature these kind of numbers. There is nothing new here and this time it's not different. For cradle-to-grave stories look at Worldcom, JDS Uniphase, or some of the other tech darlings from last time around. Moral: The train has left the station on virtually all the stocks identified in these posts. To win big, the OP has to find a stock or two that has not yet been discovered by the greater fools. Cathy whatshername is an interesting situation too. She really doesn't care if her funds eventually crash. She is in the game for the fees she can collect by pumping the product and attracting investors. If she has increased her market cap (and her fees) by 10x and can hold that for just a few years before the crash, she is set for life, even if leaving a smoking wreck where ARKK used to be.

Good thing Tesla isn't a car company.

[NW-Bound]

Quote:

Originally Posted by MRG Good thing Tesla isn't a car company.

Besides car making, Tesla also has some revenue from the energy operation, namely solar installation, battery storage for residential and commercial installations. This energy division is small compared to Tesla's car business.

Growth in the energy sector is not without competition. Several companies are building large battery storage units at utility scale. The residential solar operation bought from SolarCity lost money, and I don't know if it makes money yet.

Tesla is looking to make its own battery. Don't know how it is working out, but Tesla said it would be buying cells from other makers for quite a long time to come. The growth of EVs and energy storage will be limited by availability of battery. Perhaps investing in battery makers is a safer bet.

Some analysts projected big valuation on the future robotaxi operation. Given how the Tesla FSD is working right now, this is another case of counting your chicken before the eggs hatch. Well, more like before the eggs are laid.

Maybe it will work out. I don't like the risk, and think I can make money elsewhere with a better chance.

[PhrugalPhan]

Quote:

Originally Posted by OldShooter Well, the OP isn't interested in index funds. Tesla, though, makes a good illustration of what happens when the herd of greater fools gets ahold of a stock: numbers go out the window. Just back of the envelope: Worldwide vehicle production is about 100 million/year. (https://www.statista.com/statistics/...on-since-2000/) The Tesla zealots will say this badly undershoots, but let's hypothesize that Tesla will achieve a 20% market share, or 20M units. Tesla's goal for this year is to produce a million cars and says their planned growth rate in capacity is 50% per year. (https://www.marklines.com/en/report/rep2151_202104) Run the numbers and it will take Tesla almost 8 years to develop enough manufacturing capacity to serve 20% of the market. Never mind the near impossibility of sustaining such a growth rate over a long period. Never mind that huge amounts of capital investment that would be needed. Never mind that new stock issues to obtain part of that capital will dilute existing investors. Another one I did a few months ago and am too lazy to repeat: Take Tesla's current market cap and assume a mature company P/E (20?) to get the amount of profit a mature Tesla must earn. Now hypothesize a reasonable profit margin per vehicle and divide to get the number of vehicles that must be sold to achieve that profit amount. When I did it, with my numbers, the number of vehicles was roughly equal to the projected total worldwide market -- 100% share. This is ridiculous on its face, not even considering that the world's biggest economy will be largely off-limits to non-Chinese manufacturers. The point here is not to pick on Tesla. Virtually all greater-fool bubbles feature these kind of numbers. There is nothing new here and this time it's not different. For cradle-to-grave stories look at Worldcom, JDS Uniphase, or some of the other tech darlings from last time around. Moral: The train has left the station on virtually all the stocks identified in these posts. To win big, the OP has to find a stock or two that has not yet been discovered by the greater fools. Cathy whatshername is an interesting situation too. She really doesn't care if her funds eventually crash. She is in the game for the fees she can collect by pumping the product and attracting investors. If she has increased her market cap (and her fees) by 10x and can hold that for just a few years before the crash, she is set for life, even if leaving a smoking wreck where ARKK used to be.

TSLA is my "Go Big" stock in my Roth IRA (50%) and overall investments (15%). I was curious about your logic and figured I should check it out. Since last quarter TSLA produced 200,000 cars I figure if I multiply by 100 to get 20M units sold, I can do the same to their financials from the last quarter and see what happens. Earnings was $1.45/share, so earnings would be $145/share for 20M units. Given the current price of TSLA of $715(-ish) that gives a P/E of 5. Hardly scientific, but since we're throwing around generalities why not. So according to your methodology if I want a P/E of 20 I should price the stock at $2,900 in 2030(?).

And the above assumes they will continue extra heavy R&D (which they wouldn't) and large stock payments to Musk (this stops in less than a year). If I backed out those costs from last quarter, the earnings go well over $2 / share. And you can figure out how much stock price would be at 20 P/E. Not to mention this assumes no robo-taxis (90+% chance this will happen by 2030), and no profits on other business ventures (these will grow not shrink). And if the "Green New Deal" becomes law, TSLA's profit per car will likely increase 50% from what it is now.

Another way to look at it would be gross margins on vehicles. For Ford it was 8%, GM was 13%. And those are for internal combustion engine cars that they actually understand. For EVs, their gross margins are currently near zero if not negative (their current EVs are loss leaders). For the last four quarters, TSLA's worst gross margin was 20% (latest was over 25%), and its been growing. So I don't think TSLA would need to make near the amount of cars you think they do.

And as pointed out by others TSLA is much more than a car company, and may just leave that market once other endeavors make even higher margins. If you want to stick with legacy automakers, feel free. But I'll go big with TSLA for now. And I also have some money in ARK funds (though only 1% for now)

[OldShooter]

Quote:

Originally Posted by PhrugalPhan ... I was curious about your logic and figured I should check it out. ...

Thank you for making my point for me. You apparently bought Tesla without having made any kind of analysis, as did most other Tesla owners IMO. That is bubble stuff.

Be careful about gross margin numbers. In mature and efficient markets, margins collapse to the point where the most efficient producers are just making an acceptable ROI. That's why the UAW nearly killed American car manufacturing; they didn't understand this. A mature EV market will be no different.

[Out-to-Lunch]

Quote:

Originally Posted by PhrugalPhan Since last quarter TSLA produced 200,000 cars I figure if I multiply by 100 to get 20M units sold, I can do the same to their financials from the last quarter and see what happens.

I think the max number of cars sold in the US was like 18M. What makes you think that ONE manufacturer could sell more than that?

[Gumby]

Quote:

Originally Posted by Out-to-Lunch I think the max number of cars sold in the US was like 18M. What makes you think that ONE manufacturer could sell more than that?

The overall trend is up (https://www.statista.com/statistics/...es-since-1951/), so we may have a 20 million sales year 20 years in the future, but your point is well taken, since that is all vehicles by all manufacturers.

[ERD50]

Quote:

Originally Posted by Out-to-Lunch I think the max number of cars sold in the US was like 18M. What makes you think that ONE manufacturer could sell more than that?

Tesla sells outside the US. That 18M figure isn't the limit.

For example, Toyota's worldwide sales are about 5x its US sales.

Just pointing out a fact, I'm making no comment on what I think Tesla sales volume may or may not be at any point. I have no crystal ball.

-ERD50

[Out-to-Lunch]

Quote:

Originally Posted by ERD50 Tesla sells outside the US. That 18M figure isn't the limit. For example, Toyota's worldwide sales are about 5x its US sales. Just pointing out a fact, I'm making no comment on what I think Tesla sales volume may or may not be at any point. I have no crystal ball. -ERD50

Yeah, you are right. Thanks. In the middle of the night last night, my sleeping brain told me that I made this this elementary mistake!

[FIREarly]

You can contribute to my retirement Go Fund Me page, jk!

[NoiseBoy]

Last year I had a very similar idea; identify the next Amazon/Apple/Google and invest ~5% of my portfolio in the company(s). I got things started by buying Apple & Tesla just before their respective splits. I double-downed on the EV band wagon and bought NIO, a Chinese EV maker and followed that up with an investment in QuantumScape, a company that is trying to build a solid state battery for the car market. I diversified with a pot stock, Tilray, and also dumped an amount equal to all of these equity plays into a VG energy sector fund mainly for its dividend. My final play was putting $20k into BTC this spring just before the price dropped like a rock. I should note that all of the money for my speculations came from cash-like investments that were earning next to nothing last year (and still would be.)

Overall, I picked more winners than losers, but my two big losses (QS & BTC) have taken a pretty big bite out of my total return. When I last ran the numbers, my speculation portfolio was trailing a 100% S&P investment by about 2 points. Not horrible, but it's cooled my enthusiasm for stock picking. Out of my choices, I think QuantumScape is the one that could deliver out-sized returns, but only if they can make the technology work and there's a lot of negative press on that. NIO has definitely been discovered already, but it might have more room to run than TSLA going forward? Another EV stock to keep an eye out for is Rivian. They're scheduled to start making deliveries of their truck & SUV next month, and have an order for 100,000 EV delivery vans from Amazon in their pocket. They haven't announced the date of their IPO yet.

What have I learned? Well, I need to figure out a "when should I sell and pay the taxes" number because several of my stocks had pretty big run ups before the bloom wore off the EV rose in March. I was holding at least two stocks that had more than doubled, but I didn't sell. Some of that was hoping that they will out-perform the market long term (TSLA), and some of it was simply not knowing what else I'd buy.

[dheb]

Quote:

Originally Posted by raria Thanks but doesn't have to be actual stocks, can be areas/sectors/ideas. For example, I've been looking at artificial meat as many millennial (25+%) are vegetarians.

A while back I read that for most people, their highest medical costs come in the last 3 years or so of their life. That's when they tend to be getting really intensive care for serious conditions that they ultimately don't survive. And then I thought about how, for the past several decades, you couldn't go wrong investing in whatever the Boomers were spending $ on, and it dawned on me that a lot of money is going to be going into health care as Boomers hit the phase of life where medical spending typically increases. I invested in a health sciences fund that has done very well. Not at an 'I bought Amazon at $23' level, but still pretty good.

[OldShooter]

This may be behind a paywall for some, but here is an interesting article on angel investing, which IMO probably has a higher potential payoff than playing the greater fool game: https://www.nytimes.com/2021/08/09/t...-startups.html The article implies that its necessary to invest through an intermediary -- not true and a bad idea IMO. Local deals found through local contacts like lawyers and accountants are most likely to pay off.

I have done three or four local deals with small money, up to $50K, and on balance have done quite well. The benefit is that you can really study the merchandise and, often. you may already be acquainted with the principals and/or with other investors. We did flush $50K down the toilet with one restaurant deal, though. Like most investing, the key is to diversify by doing more than one deal. My strategy was one deal at a time.