I have, much to my dismay, learned enough about stock trading to explain how to bet against Tesla as an individual, with your own money. Doing this can put downward pressure on Tesla’s stock price and hurt the company. (And if, like me, you’re betting that Tesla is grossly overvalued and #TeslaTakedown will hit it hard, then this might actually make you money — but don’t count on that!)
I’ll share what I’ve learned in a thread here. I hope it helps others, and I hope people with actual expertise will correct me if I say anything wrong.
1/
Here’s the brief version:
- You can buy something called an “inverse ETF” to bet against a company.
- You can lose this way, but not more money than you put in.
- The inverse ETFs for Tesla are TSLS, TSLQ, and TSLZ.
- Holding on to them hurts Tesla.
- To buy them, you need a brokerage account, and it needs to let you buy inverse ETFs.
- Anyone can open a brokerage account. It’s a nuisance and it takes 3+ days, but it’s ~free.
And:
- A large number of people doing this each with a small amount of money would have a real effect on Tesla.
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Like me, you’ve probably heard of shorting stock as a way of betting against a company. Everything I’ve learned about this says: DON’T. This is like learning to snowboard by doing jumps off a rocky cliff. You will hurt yourself badly.
The details are complicated, but the short of it (pun intended) is that you can actually lose •more• money than you put in. And there’s no limit to how much shorting can put you in debt. Don’t.
Especially don’t if you’re extra smart, because you’ll just figure out how to hurt yourself worse.
3/
Fortunately, there’s this thing called an “inverse ETF” that lets you bet against a company without that risk. Again, details are ridiculously complicated, but basically it acts like a normal stock that moves in opposite proportion to some other stock.
The important thing here is that is puts downward price pressure on a stock — i.e. it hurts that company’s investors — without the possibility of you losing more money than you put in.
Inverse ETFs for Tesla are TSLZ, TSLQ, and TSLS.
4/
@inthehands I have been wishing there was a way to easily remove Tesla from my investments (mostly index funds), would this effectively do that?
Disclaimer: Not a financial person
What you're saying here is a different sort of thing than the original post. Think of the stuff being described by the OP as a way to attack Tesla, with a cost that you're willing to pay. What you want is more passive.
I don't know how your retirement is managed, but if you have a "financial person" who manages your investments, simply calling them and asking to be out of Tesla can work. That's what we did with our retirement investments.
I should also note that when we called our financial guy and told him we wanted to get out of Elmo's companies, he noted that he had been getting "a lot of those requests lately."
Small blessings.
@doctorambient @nhpaul @inthehands I called my guy after the US election and said the same thing and he said that in terms of our individual investments we never had any Tesla to begin with which I was very pleased to hear.
@nhpaul In my ignorance — not an expert!! — I think that if you could figure out exactly how much of your money your mutual funds have in TSLA and then buy exactly that much TSLS, then yes, it would kind-of-sort-of cancel out the good that the mutual fund is doing Tesla by holding their stock, at least in market signal terms. Buying $N of TSLS is approximately equivalent to selling $N of TSLA, in theory.
In practice, buying TSLS would lose you more money than if the fund simply sold their TSLA and gave it to you as cash, because ETFs are inefficient.
Also, this is probably more money than you’re willing to lose, and also it’s hard to figure out exactly how much TSLA they have and near impossible to adjust that on a day-to-day basis. Better to just pressure your fund to sell TSLA.