Why I Didn’t Buy Tesla

Palm Beach Daily

Why I Didn’t Buy Tesla

By Jason Bodner, editor, Palm Beach Trader

In 2011, electric vehicle (EV) maker Tesla (TSLA) showed up on my “unbeatable” stock-picking system as a buy at $35 per share.

Today, Tesla trades at around $770 – a 2,100% gain in about 10 years.

But here’s the thing… I didn’t buy Tesla when my system first flagged it. It’s one of the biggest mistakes of my investing career.

And today, I’ll share the lessons I learned from missing out on Tesla – and whether the company is still a buy at current prices…

The Big Money Loves Outliers

Most people don’t know this, but just 4% of stocks have accounted for nearly all the profits of the market each year for the past 100 years.

Now, I call these stocks outliers. The companies are unique in their business… grow sales and earnings at high rates… and have big profit margins.

Outliers are where the big money hides out. And to track big-money buying of outliers, I developed an “unbeatable” stock-picking system.

I used my experience from nearly two decades at prestigious Wall Street firms – regularly trading more than $1 billion worth of stock for major clients – to make sure it’s highly accurate, comprehensive, and effective.

It scans nearly 5,500 stocks every day, using algorithms to rank each one for strength. It also looks for the movements of big-money investors. And when it sees them piling into or getting out of a stock, it raises a yellow flag.

I put these yellow flags through another filter. If the flag turns red, it means the big money is selling. If it turns green, it means the big money is buying…

It’s that simple: When I see green, the big money is buying.

Recently, my system has identified companies like The Trade Desk (TTD) and Paycom Software (PAYC) for my Palm Beach Trader subscribers. And after taking their original investments off the table, they’re still up about 233% and 179%, respectively.

My system also flagged Tesla at $35 in 2011, as you can see in the chart below:

Now, you may be wondering why I didn’t buy TSLA even when my system flashed green. Let me explain…

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The Trade That Got Away

Back then, I ran the Equity Derivatives desk for Wall Street firm Cantor Fitzgerald. During that time, I had the chance to visit one of Tesla’s first showrooms in Manhattan. I went with my top trading analyst, Lucas Downey.

Coincidently, that day is the same day my system flagged Tesla. And I said to Luke, “Tesla showed up as a buy on the system today, at around $35. But I didn’t buy it.”

When he asked why, I told him it was because the company didn’t make money.

You see, for an outlier stock to make it from my system to my portfolio, it can’t just flash green. It also has to be a money-maker.

But after triggering my system, Tesla exploded past $60 in May 2013. And just four months later, the stock hit $180.

So my system was right about the big money flooding into the stock. Yet I had missed out.

And that’s when I learned a key lesson about investing in outliers…

The Exception to the Rule

My system can identify 99% of outliers. And they almost always are money-makers. But sometimes, there’s an exception to the rule…

These companies are outliers of the outliers. And they:

  • Have incredible products

  • Are spearheaded by visionary leaders

  • Develop solutions to major problems

  • Address key demands

Tesla fits all four criteria.

It has some of the best electric vehicles on the market. Founder and CEO Elon Musk is a creative futurist. Tesla’s products are helping solve the major problem of greenhouse gas emissions and sustainability. And the company is addressing a key demand: The EV market is expected to grow as much as 1,100% by 2030.

But sometimes, these kinds of outliers don’t make money right off the bat. In fact, it can take them years to make profits.

Take outliers like Amazon or Netflix, for example. They fit the four criteria as well. And both also showed up on my system. But neither company initially made any money.

Again, I want my outliers to make profits. It just adds an extra layer of safety to the stocks we own. And it’s worked, too: The system has handed my subscribers a current portfolio win rate of 85.7% and average gains of 45%.

But here’s the lesson I learned from Tesla: When you do find a game-changing outlier that doesn’t make money right away, it’s okay to make a small bet on it…

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Win Big By Betting Small

In 2013, I made a small, bullish bet on Tesla by selling puts. The stock was falling at the time. But as it recovered to $180, I quickly pocketed about $1,500.

Sure, I missed the monster money on Tesla. But I was still able to make a quick profit on an outlier that wasn’t making money.

By betting small, you can double or triple your money if it does turn into a winner. And if it crashes and burns, you’ll only lose a small stake.

Now, my system is starting to see big money moving back into Tesla again. But just like before, the fundamentals aren’t quite justifying a high-conviction trade yet.

However, as a potential game-changer, it’s still a good company to keep an eye on for making small bets.

Stay bullish!

Jason Bodner
Editor, Palm Beach Trader

P.S. As I mentioned above, I used my experience from nearly two decades at prestigious Wall Street firms to develop my “unbeatable” stock-picking system.

It took half a dozen years and hundreds of thousands of dollars to create, but it’s highly accurate and effective. You see, my system uses specific algorithms to look for big-money buying activity. And it can predict this activity up to 10 days in advance.

And if you sign up today, I’ll show you how to get a discount on your first year… Plus, you’ll get my 10x guarantee: If my system doesn’t hit its goal, I’ll reach into my own pocket and buy you another year of Palm Beach Trader.

To learn how you can gain access to my system – and get in on the best stocks before the big money lifts them higher – click here for all the details.


Like what you’re reading? Send us your thoughts by clicking here.

IN CASE YOU MISSED IT…

Jeff Brown: “There’s a New Game In Town… HINT It’s Not 5G or AI”

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But Jeff guarantees you’ll never hear about it from those “talking heads” on TV…

And you’ll never read about it in any of the dozens of high-priced financial research publications available out there…

In fact, the only place you can learn about it is right here.

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www.palmbeachgroup.com

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