Riding the EV Wave to Diversification - Tesla

Tesla (TSLA) stock price in 2023 has created a wonderful opportunity to build diversification in a portfolio without giving up any value.

As we have said many times, "Concentration creates wealth, diversification preserves wealth." This wisdom from legendary investor Warren Buffet is the bedrock of our investment philosophy at DynaLogic. Through our "Just Do Something" case studies, we've showcased how our strategy of selling on strength and reinvesting in the iShares S&P 500 (SPY) ETF can lead to impressive wealth accumulation and protection.

A day doesn’t go by that Tesla (TSLA) isn’t in the news with reports covering the anxiously awaited arrival of the Tesla Cybertruck, autonomous driving, super-charging stations, or Elon Musk himself.  With that being said, and since Tesla is a household name, we don’t think a Wikipedia writeup on Tesla is necessary.

TSLA stock first went public on June 29, 2010, at $17 per share, opened at $19 per share, and finished the day at $23.89. Since it went public, there have been two stock splits so the initial purchase price should be divided by 15.  Let’s assume you bought the stock the day it went public at the closing price of $23.89. That equates to $1.59 today. 

A $10,000 investment on June 29 at $23.89 would be worth $1,581,446 as of the closing price on August 7, 2023. That’s one hell of a ride.

Let’s assume you missed most of the run-up but decided to make an investment in TSLA at the end of 2022.  On January 3, 2023, DynaLogic issued a 100% Add/Initiate at $108.10.  Let’s compare holding the stock until today (8/7/2023) vs. selling the stock based on the DynaLogic sell signals, paying the capital gains tax, and reinvesting the proceeds in the SPY.

TSLA has made a strong move to the upside this year! Below are charts showing the stock’s price chart and then a second with DynaLogic’s sell signals shown with green lines.

There were 19 sell signals over the 7+ months. The latest Sell signal was on July 17, 2023 when TSLA was trading at $290.38. TSLA closed the next day at $293.34 the closing high so far this year.

While there was a slight underperformance when comparing the DynaLogic sell discipline to a buy-and-hold strategy, this is a perfect illustration of why our approach is about more than just chasing the highest immediate returns. With DynaLogic's 19 sell signals over the past 7+ months, our strategy intelligently diversified the investments, with 65.9% still held in TSLA stock and 34.1% held in the stable SPY stock.

This may seem like a minor detail, but it's actually foundational to our investment philosophy, one that reflects the wisdom of Warren Buffet's statement that 'Concentration creates wealth, diversification preserves wealth.' The success rate won't always be 100%, but the beauty of our approach is that it's not meant to be (no approach is!).

It's designed to consistently set you up for success over the long term, allowing for the preservation and gradual growth of wealth.

While we do offer signals designed for more short term trades as well, our core philosophy is around long term investing and wealth accumulation.

Sure, in this particular case, the return was marginally smaller, but it's essential to see the bigger picture. Through our 'Just Do Something' case studies, we've shown countless examples where a significant increase is followed by a downturn. By following our sell signals, you could have locked in substantial gains, reduced risk, and positioned yourself for sustainable success.

Are you ready to embrace an investment strategy that takes emotions out of the equation and systematically guides you toward meaningful wealth accumulation? It's not about winning every battle; it's about winning the war. Click below to upgrade your subscription for full access to our daily signals on 230+ tracked securities. Claim your 7-day free trial of our full membership today and set yourself up for a more prosperous future