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Why I’m Betting on Tesla Motors Stock in 2014

Going into 2014, my second-largest, real-money holding is Tesla (NASDAQ: TSLA ) . Though it’s tough to guess where the stock will go in the next 12 months, over the long haul I’m placing my bets on a bullish future. I think Tesla’s current price levels provide investors a reasonable entry point into a stock with enduring characteristics. In fact, I’d go as far as to say that Tesla is one of 2014’s best opportunities.

Model S. Source: Tesla’s official Twitter feed.

I haven’t always been bullish on Tesla stock. I debated that Tesla was overvalued when it reached levels around $190 per share. In fact I sold shares at about $165. Recently, however, I decided that selling was a mistake. I bought shares in the $130 range when three fires in five weeks drove the price down.

Notably, trading in and out of a stock like this isn’t a reflection of my typical buy-and-hold investment style. Instead it simply reflects that fact that I changed my mind regarding my outlook for Tesla stock. The fact that the trades worked out favorably was simply luck.

Though when I sold shares the first time I believed the stock was fairly valued if it could actually sell hundreds of thousands of its alleged more affordable Model E per year by 2016, I also believed this to be the best-case scenario for Tesla. And in any projection, it’s important to give weight to the probability of all the potential outcomes — even the worst-case scenarios. That led me to believe that a bet on Tesla Motors’ stock at levels that clearly priced in mass-market adoption of its Model E was purely speculative.


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