Tesla's stock price just skyrocketed nearly 22% in a single day—the highest surge since May 2013, when it rose 24.4%. This monumental jump was spurred by an optimistic earnings report and Elon’s ambitious projections for the company's future growth.
But I didn’t see much of these gains.
Just before this surge, I made the decision to sell a significant portion of my Tesla shares. I previously wrote about my concerns about the company's future growth prospects and a desire to diversify my investment portfolio.
However, as I watched the stock soar, I couldn't help but experience a moment of FOMO. Was I wrong?
The Earnings Report That Sparked the Surge
Tesla's recent earnings report exceeded Wall Street's expectations in several key areas. Notably, the company projected that fourth-quarter vehicle deliveries would surpass estimates by 25,000 units.
Additionally, Elon Musk indicated that vehicle growth could reach 20% to 30% next year, outpacing the previously projected 15%. These optimistic forecasts contributed to the stock's dramatic rise.
Navigating Mixed Emotions and Market Volatility
Selling my Tesla shares before this upswing has been a learning experience in managing my own psychology as an investor. It's easy to look back with hindsight and think about what could have been.
However, it's important to remember that the stock market is inherently volatile, especially when investing in individual stocks like Tesla. Trying to time the market to catch pumps and short dumps is a dangerous game unless you do it for a living.
In the grand scheme of things, I've already seen a 13x return on my initial Tesla investment. Trying to pinpoint the perfect exit moment is nearly impossible, and striving for perfection can often lead to problems.
Moreover, the impact of not selling TSLA at the exact right moment represents less than 0.2% of my overall portfolio—which is relatively minor considering my long-term financial goals.
Sticking to My Long-Term Strategy
One of the key reasons I decided to sell was to free up capital for other investment opportunities. Diversification is a fundamental principle of sound investing, and reallocating resources can position me to capitalize on emerging trends and markets.
While Tesla has been a profitable venture for me, it's crucial to avoid becoming overly reliant on a single stock, no matter how promising it may seem.
Maintaining a Healthy Skepticism
Despite the recent pump, it remains to be seen whether Tesla can continue to meet its ambitious growth targets, and compete effectively in all the areas it aims to dominate.
Historically, when Elon Musk's projections haven't materialized as expected, the stock has also suffered equally dramatic drops. It's essential to balance optimism with a critical assessment of the challenges ahead.
Looking Ahead
FOMO from pumps like these can tempt us to second-guess ourselves. But it's important to make decisions based on long-term objectives, rather than short-term market movements (unless you literally work on a trading floor).
While I may have missed out on this particular surge, I’m pretty confident in my overall view of the stock, and am excited for other opportunities. The market is full of potential, and with a diversified portfolio and methodical approach, there's plenty of room for growth.
Thank you for being part of this journey with me!