Tesla vs Amazon?

Hello everyone i am new to the investing world, i invest for the last 2-3 years, i will appreciate your feedback, can someone advice please , is it a good buy to buy tesla at 220$ , or its better to buy amazon at 127$ for long term investment amount which i plan to invest is around 30.000$ ?

Welcome!

Both are good stocks, and will likely do well long term…HOWEVER, if you are new to investing, I would strongly recommend that you DO NOT PUT ALL INTO ONE STOCK. No matter what we think, there is no way we can predict what stocks will do…Just look at how volatile tesla has been. It was in 400s…and was cut to 100 and then rebounded to 200 in just a month. Same with AMZN, it was as high as 150s, and then fell close to 80 last year!!! And now moved back up well!

As you start, if you put in just one single stock, and if they fall , it will really test your nerves…and at some stage you will feel really afraid and sell at wrong time.

I can tell you from personal experience that risk management is KEY!

So, what is a better option - may be choose 10 or 20 stocks…that way, hopefully if one does bad, another will more than make up for it…But, if you decide to do that, remember to choose some from different sectors.

Once you feel more comfortable dealing with volatility and know better about stocks, then you could consider concentrating into smaller number of stocks, if at all.

Here is another thought - if you are new to investing, and this is your first lump investment, why not consider investing at least 70 to 80% in a index fund like VOO or SPY (S&P 500 fund)…It will not give you crazy returns like some individual stocks, but you can avoid crazy drops as well ( I have stocks at -95% loss since I bought it…and there are also at least 3 stocks that have gone to zero in this last 1 year!!!)

Good luck!

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@Inspired2learn has given you a condensed version of the accepted wisdom of hundreds of books written about investing. What he has failed to mention is that not a single one of them comes with a money back guarantee that if you lose money on their advice they will make up your loss. In other words, whether you win or lose you have only yourself to thank or blame.

After 30 years in the market I have come to the conclusion that it is too hard to beat the market, only about one in four do it and many of them blow up sooner or later anyway. A big part of the problem is that our fight or flight instinct learned to survive on the African Savannah is not suited to the Stock Market Savannah. After 30 years I still can’t control them.

I can’t tell you what to do, I can only tell you what I’m doing and it comes with no money back warranty or a warranty of any kind. After long study I have decided that selling covered calls is a safer way to play the market because that is mathematically very similar to gambling casinos where the odds are rigged in favor of the house. Each game has a vigorish, a percentage in favor of the house. For example, roulette pays 72 to 73 or 72 to 74 depending on whether it was just a zero or a double zero. In percentages that’s 1.37% or 2.70% in favor of the house. In the long run that’s what the house makes. There are some additional safeguards specially a limit on the size of the bets. Blackjack is one of the very few games, maybe the only one, where the player can alter the odds by counting the cards that have been dealt which is the reason casinos don’t allow know ‘counters’ to play.

There are traditional methods of creating income with covered calls and I’m not using them. The difficulty is picking the best covered calls to sell. In traditional methods you sell calls on stocks you have in your portfolio which are probably not the best choices. There are thousands of stocks and each option chain had hundreds of call options. One needs to distill this universe into just a dozen or so stocks to sell call options on. This is not something one can do without help. I started using spreadsheets but they are cumbersome and error prone. Next I created a Covered Call Selector, a web-app, that picks the best calls to sell based on several filters including premium, total % yield, and dollars per day. This last takes into account the time to expiry which makes short term calls more valuable than long term ones. Once I started using the Covered Call Selector the results improved dramatically. It was just a question of grinding through a large data set, the larger the better. Currently I’m in the process of increasing the size of the data set. I was working with 30 to 70 stocks which I plan to increase to around 300. That’s between 30K and 300K options to choose from! A dozen pins in a haystack. About 0.007%. About 1 in 14,000. Only a machine can do that!

Tesla and Amazon were created by two of the wealthiest people on the planet. Which is the better investment? All I can tell you is that TSLA is a large chunk of my portfolio with a buy and forget strategy. The rest of the portfolio is dedicated to selling covered calls.

Remember, free advice is worth what you paid for it.

The Captain

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hello thank you both for your reply, i am new to the investing but i already own a lot of etfs and a lot of other stocks i currently need to invest these 30k$ and i am really considering either tesla or amazon because i think both are currently under valued… i dont do calls… my account is cash only. I know the risks… from undervalued point of view which one do you think its currently more undervalued is it amazon or tesla i need high grow potencial thats why i dont like sp 500

I don’t have a clue! I don’t do ‘valuation’ which, in my view, is a fool’s errand. The traditional method, perfect in concept, is DCF, the present value of all future cash flows. It was most useful for bonds where all the inputs are known. The only difficulty is figuring out if the cash flow will be adequate to cover the coupons and to repay the capital but this is relatively easy to figure out. With stocks most of the inputs are just guesses, GIGO, Garbage In, Garbage Out. And this is even more so for growth stocks like TSLA. Can you tell me the expected cash flow from the Optimus Robot?

Valuation is one reason so many people fail at investing. They are using useless tools meant for other securities.

The Captain

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If you are in my place what you will choose to invest 30k $ ? are there any better opportunities? Remember i am cash only account and i buy stocks only.

I own both AMZN and TSLA. For my portfolio I think of Amazon as a solid, blue-chip investment that will do well, but not so well that it will be a stellar performer. I need some companies I don’t have to worry about, and Amazon is one.

Tesla, on the other hand, is riskier. However I think it has the potential to climb to the sky over the long term (years). I also expect there to be big swings in the price along the way, swings that could have me alternately screaming in pain or with joy. I (think) I’m ready for that. Time will tell.

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My plan is to buy the company they to increase the price like +50% and i sale them thats it.
Tesla even increased their price for today almost 230$ per share.

Perfect!

That way you limit your upside and don’t run the risk of a multi-bagger return.

Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.

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I’ve been investing for 20 years and I agree with Captain that the market “is too hard to beat”. Playing the market is really a money game. Between TSLA and AMZN, these are my personal takes:

TSLA:

  1. Ability to shuffle resources between all his blue-ocean companies (spaceX, starlink, EVs, boring, Dojo). didn’t want to include TWTR cos it is just “another social media” company for him and meant to further interests in his other companies and his personal influence.

AMZN

  1. Just one for me - Infrastructure play - AWS

For this reason alone, I own TSLA instead of AMZN. AMZN is still a great stock to hold but 10 years down the road, Musk’s group of companies would be in a better shape.

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