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Sell Tesla (TSLA) to Buy it Later

As I search through financial markets looking for opportunities to write about, I am frequently reminded that trading and investing are two very different things that demand two very different approaches. Trading is short term and involves spotting when something has momentum, or has gone too far in one direction. What that thing is and whether it has any value over time is basically irrelevant. Investing, on the other hand, involves a judgment about the long term viability and prospects of what you are buying.

They are, as I said, different disciplines, but once you understand that difference it is quite possible to combine the two. Sometimes both a trading and fundamental investing approach suggests the same thing, making for what I consider to be the ideal trade. Sometimes, however, they are in conflict and the obvious trade is in direct contradiction to your long term view. For those with an investing background who have learned some trading techniques along the way, that is a recipe for inaction; they cannot imagine buying something that they don’t see as a good investment, nor would they sell stock in a company that they liked. Those of us who started out trading, however, have no such compunctions.

Take Tesla (TSLA) for example. From a fundamental, long term basis it is hard not to love the stock. Their cars are amazing and the level of technical innovation behind them is staggering. As many boutique luxury car brands have found in the past, however,…

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