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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.
2/
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/
Inverse ETFs are not a good investment choice unless you really, really believe than a company’s stock price is going to go down. And investment guides tell you that you shouldn’t normally hold them for more than a very short period.
AFAICT, that’s because •running• an inverse ETF is costly, and the people who run them past those costs on to inverstors. So they tend to lose money long term unless the stock •keeps• going down and down and down and down.
But if you actually think a stock is going to do that, well….
5/
If you think Musk is bad news, if you want to bet against Tesla, and if you have a little money to do that, here’s the tactic:
- Buy TSLQ, TSLZ, and/or TSLS.
- Do •not• put in more money than you’re willing to lose. Expect that you’re kissing your money good-bye when you buy those ETFs. If your bet pays off, lucky you! But don’t spend your life savings on this, for heaven’s sake.
- Hold, hold, hold until Musk is completely kicked out of either Tesla or the government.
6/
If like me you need to open a brokerage account, Fidelity or Charles Schwab seem like credible choices. (Steer clear of Robinhood and most other investment apps.)
If you already have a retirement account, you might be able to open an brokerage account there too and save yourself minor hassle — but make sure they actually like you buy inverse ETFs (TIAA does not, for example).
If you have a SEP-IRA, it may let you trade inverse ETFs without needing a separate brokerage account (but see warning above about not betting money you can’t afford to lose).
7/
If you open a brokerage account, expect minor hassle spread over 3+ days. You have to fill out forms online, verify your bank account, transfer money in, yada yada. They walk you through the process. Just expect lots of waiting.
I personally do not trust the thing where you log into your bank account through the brokerage’s web site. Yikes. I used direct deposts to verify my account, which took 3 days but feels like a lot less of a security YIKES to me.
8/
Once you have your brokerage account:
- Transfer that small “I’m willing to lose this much” amount into your brokerage account
- Buy TSLZ, TSLQ, and TSLS.
- Hold on to it. Don’t even pay attention to it going up and down unless you’re a glutton for punishment.
- (And maybe just do •not• do any of this if you know you have a gambling addiction. You will be tempted to put in more than you should.)
9/
I put in just a few hundred dollars, an amount I’m wiling to sacrifice. I think Tesla’s in deep shit and this might actually make money, but it’s a moonshot.
Regardless of whether I personally make money, this signals to the market that I think Tesla is overvalued and likely in serious trouble. That hurts Musk, whose power and wealth is directly tied up in the huge amount of Tesla stock he owns — and in people believing he’s some kind of magical golden child who will turn Tesla into a money unicorn with his galaxy brain.
10/
And yes, Tesla investors are gradually starting to understand that maybe Musk is trouble. Like the poor schmuck in this article:
❝Ives said Musk needed to announce formally that he was going to balance running Doge with being Tesla’s chief executive. Doing so would “dissipate” the heat around Tesla and avoid permanent brand damage, although there would still be a “scar”, he said. “Investors need to see Musk take a step back and balance his Doge and Tesla CEO roles,” Ives said.❞
“Formally announce…balance…dissipate….” Oh, poor spring child, you are just beginning to dimly compherend the hot water you are in.
11/
In my ignorance, it seems like a large number of people buying a small amounts of these inverse ETFs really could make a difference.
The inverse ETFs •do• actually drive down the stock price, AIUI: more shares of the inverse ETFs → more Tesla stock shorted → price of Tesla driven down. That directly takes money from Musk’s pockets. And it makes Tesla stock riskier and risker for the big funds who’ve been buying it as a supposedly safe bet.
12/
So, if you want to help, if you have time and a little money and are interested but daunted…well, ask questions! I’m no expert, but I’m happy to talk about my own experience, and hopefully others here can help too.
/end
Several replies also mention options trading, such as this from @JessTheUnstill, as a way to manage your bet against Tesla more closely:
https://infosec.exchange/@JessTheUnstill/114196064404618244
AFAICT, this is a great thing if you have time and mental energy to devote for this and are a glutton for learning and micromanagement. Like…if you’re the sort of person who regularly tries out new Linux distros just for the hell of it, this might be for you!
If (like me) you want to go through the setup process once and then let the money do the work for you, the inverse ETFs seem like the way to go.
After this thread, I just feel like I should say:
- Please don’t go overboard. This is direct action, and symbolic, and a moonshot — not a Sensible Investment.
- Please do not become a day trader because of me. It’s a fool’s game. If you’re fortunate enough to have some retirement money, put it in mutual funds. If you have money to invest, get an investment advisor. Please don’t let a brokerage account you created to punch Musk become a gateway drug for you to lose your money gambling on stocks! I’d feel very bad.
- It’s nice to be able to do something with money if you have money. This is, as one locked reply put it, “an accessible method for people who exist in circles of excess wealth to apply that privilege as a form of social/political/economic activism.”
BUT
…please don’t let it stop there. We all need to get in the habit of •taking action•, •showing up• for resistance efforts early and often, while we still can. Finding a #TeslaTakedown event near you is a great place to start: https://www.teslatakedown.com It’s fun!
@inthehands that's an AW HELL NO from me, Jim
@inthehands Another strong contender for brokerage in the USA: vanguard.com -- known for low fees and investor (customer) ownership structure https://corporate.vanguard.com/content/corporatesite/us/en/corp/who-we-are/sets-us-apart/our-history.html
@dmarti @inthehands but Vanguard doesn’t let me buy these, heads up. I love Vanguard, though! Low fees & relatively easy to figure out as a newbie.
@inthehands @mattia @dmarti Vanguard brokerage also doesn't allow it. "On January 22, 2019, Vanguard stopped accepting purchases in leveraged or inverse mutual funds, ETFs (exchange-traded funds), or ETNs (exchange-traded notes). " https://investor.vanguard.com/investor-resources-education/etfs/leveraged-inverse-etf-etn
@nathanw @inthehands @mattia @dmarti This is something I quite like about Vanguard. They're not about these kinds of tricky derivatives.
Even so, I'm in for $5k TSLZ through Fidelity.
I lost $300 today.
In practice, I don't think it's incredibly effective. It indirectly funds short sellers, and once short sellers push a stock below its fundamentals, there's strong pressure for buyers to push the price back up.
But I think TSLA is way above its fundamentals. And I'm willing to make a point.
@cocoaphony @nathanw @inthehands @mattia I don't know how much conventional fundamentals matter when the other players in the game are major dictators or nation-scale oligarchs who might have their own reasons to move the stock and have the CEO owe them one
@cocoaphony @nathanw @inthehands @mattia But I do see something that bugs me in finance news coverage of $TSLA—since they use company showrooms and service centers instead of dealers, you can't compare directly to a normal car company, you have to compare to company plus dealer network which I haven't seen anyone doing
@dmarti @nathanw @inthehands @mattia They don't make their money on cars. They make it on carbon credits that they sell (and bitcoin sales). They're somewhat closer to a tech stock than a manufacturer, though really they make their money on government subsidies that are currently under attack despite his position. Being highly leveraged on the goodwill of an incredibly fickle and mercurial dictator is a fragile place to be.
@cocoaphony @nathanw @mattia @dmarti
I mean, I’m basically on Vanguard’s side here: these knife-juggling financial instruments just aren’t a tool any normal individual should be using to do investing.
But since it’s available to us…what Rob said: I’m willing to burn a little of my money to make the point.
@cocoaphony @inthehands @mattia @dmarti Yeah, as an investment philosophy things like TSLS/TSLZ are totally out of Vanguard's philosophy, I get that and appreciate it for most of my funds. It's a touch contrary to the notion of a brokerage account, though.
@inthehands what is the difference between the three?
@aburka TSLS = 1x inverse, moves exactly opposite Tesla (minus costs of the people running the fund)
TSLQ and TSLZ = 2x inverse: if Tesla loses 50% in a day, they gain 100%. And if Tesla •gains• 50% in a day, well, you lose everything AFAICT. These have higher overhead costs, because the people who run them have to juggle more knives. So:
- These double the impact your money has on Tesla’s share price.
- If Tesla goes down a •lot•, then you make out like a bandit.
- But under normal conditions, you lose money on them.
@inthehands Thanks for sharing all this. Bought some TSLS & TSLZ through Fidelity.
@inthehands @aburka in the first point, do you mean "minus costs" ?
@PaulDavisTheFirst
Yes, thank you!
@inthehands please note that, aiui, these daily short etfs (esp the leveraged ones) will, under some plausible circumstances, /lose money over time even if the underlying goes down/(!)
and this is true /even if fees are zero/. it's bc of rebalancing and how things compound. not intuitive!
tsla up 10%, then down 11% the next day? awesome, you were right, it did go down! how much? 1*1.1*(1-0.11)=0.979. It's down about 2%. Nice, you win, right? So what's your return, with zero fees? uhhhh
1 * (1-0.2) * (1+0.22) = 0.976
you lost ~2% too! even though the stock went down
@inthehands "- But under normal conditions, you lose money on them."
This part's very important. Most docs I have seen on inverse ETP/ETF/ETN say that this is something that you buy *for a day* as a short term bet, otherwise you get into something about "compounding risk"
So, holding long term might work to push the stock down, but you will tend to lose money if you're not in and out relatively quick.
Definitely something to buy the morning TSLA announces earnings, I think.
@inthehands No, you're pretty clear, but I thought that point should be underscored.
@inthehands I work IT in a trading firm, and leveraged (short) funds just look like some sort of elaborate wizardry to me.
@inthehands @aburka
This is brilliant.
It reminds me of the GameStop r/wallstreetbets movement, a crowd sourced destabilization on market manipulators.
@inthehands @aburka For people in Euroland, 3x inverse:
https://live.euronext.com/en/product/etfs/XS2706232803-XAMS
#TeslaTakedown
“TSLS = 1x inverse, moves exactly opposite Tesla (minus costs of the people running the fund)”
This is not true – it doesn't move exactly opposite. It can't – there is a cost from running a strategy where you protect your downside (unlike shorting). As a result, it loses money in many cases even if TSLA is down. For example, over the last 6 months TSLA is down 4%, and so an exact inverse would be up 4% less fees. But it is 18%.
@inthehands I am doing this as soon as I am in front of my computer! Thank you!
@inthehands I didn’t wait and just used my phone to buy a bunch of TSLZ!
@gregwardo
Yay! Hopefully not more than you’re willing to lose. :)
@inthehands nope, had settled cash in my account that was waiting for this exact opportunity! Eff the oligarchy.
@inthehands Certainly - and I'm not really into any of this sort of speculation stuff. I just toss money into index funds and let it do its thing. My personal opinion is that I'd rather toss spare money at mutual aid to directly help actual people in need than bet against billionaires, but resistance takes all sorts of shapes, and I'm not going to say mine is the only correct way.
@JessTheUnstill
Well, either/and! I also put a lot more of my money into people and community orgs doing work on the ground than I did into this inverse ETF experiment, but it just felt good to be able to land this one punch directly. And right now I think it’s super important to be landing punches •immediately• and also be building new levels of resilience for the long term. So…yes and!
@inthehands Yeah, mostly just mentioned it as I don't have any experience in protest investing.
@JessTheUnstill
And also just because it’s important and worth mentioning!
@inthehands interesting, I've never heard of such an instrument.
Sounds like it's managed to give you an X% gain for every X% the stock drops. I guess they manage this with options hedging?
@inthehands a great thread on inverse ETFs.
@inthehands Responsibly, I decided to add just $100.00 more of TSLZ and TSLQ to my portfolio, just to keep the scent of impending brand-death fresh...
@jab01701mid
OK…as long as it is responsible! I think there will be a temptation to just keep trickling more and more money into this, past the point of acceptable loss. As long as we are all clear about where our personal limit is….
@inthehands Did not realize Rupert Murdoch is on the Tesla board, just exercised and sold $13M worth of options a few days ago.
Edited to note this is "James Rupert Jacob Murdoch, born 13 December 1972 (age 52)", not senior.
h/t @MaryAustinBooks
@jab01701mid @inthehands
James Murdoch, Rupert's relatively left leaning and hence estranged son
@jab01701mid @inthehands @MaryAustinBooks It looks like he sold the 55k shares in order to cover the cost of exercising the 532k shares.
@ramsey @inthehands @MaryAustinBooks Wow, so he has (at current price) a $130M option package. Pretty nice deal for a board member, I think, at any normal company.
@inthehands Posted this thread to my IRC channel and multiple purchases occurred.
Thank you for your service!
@inthehands This seems like it’ll be just as effective as donating to the DNC, but it’ll feel better and you won’t get spam texts forever. I like it.
@bubbajet
Accurate, probably
@inthehands I went to make a tiny purchase and apparently Fidelity has some hoops you have to jump through depending on how your account is set up if you have an existing account. Just FYI.
@inthehands
Let me confirm from personal experience that it's easy to lose money shorting stocks, especially ones that are essentially memestocks. The price of #TSLA is not merely irrational, it is also highly volatile.
"The markets can remain irrational longer than you can remain solvent", as Lord Keynes said.
@inthehands Thanks for the info! It just so happens that I recently rolled over my 401K from a former job & now need to figure out how to allocate the funds.
@inthehands I don’t know how to calculate it, but I bet it’s possible to figure out “a $1 drop in the price of TSLA costs Musk $X million in lost net worth.” It would help motivate people to jump into this. (I’m gonna see what I can do today)
(Anybody seeing this on my feed should start by reading from the top)
@paco @inthehands remember that his Tesla stock was used to collateralize loans he took to purchase Twitter. So collapsing Tesla could potentially unsecure those loans. He has over played his hand. The both of them are very vulnerable. #TeslaTakedown #Debillionaritization #PopGoesTheWeasel
@paco @inthehands I believe he has over 410 million shares. So a dollar down is $410 million dollars for him. I think!
@inthehands
Except Musk seems to be trying to get money out of Tesla in the form of CEO compensation, not shares?
Edit: as pointed out down-thread, that CEO compensation package is also in Tesla shares (options)