What's new
By:

Target $0

L-Dude said:
Well you either believe in gambling or believe in hard nosed investment analysis. That sounds mutually exclusive to me.
Click to expand...

90% into an index fund.

10% into 0DTE SPY options.
 
illopp00 said:
When I was with GE, some short sellers said it was going to zero thanks to massive accounting fraud, it does take a long time to issue a statement. Although CEO Larry Culp got in CNBC that morning and said he bought a whole bunch of shares....We should be able to expect the new Lucid CEO to say something publicly...
Click to expand...
Well he can't buy or sell because he's in a blackout period. Theoretically he could have said something publicly but there's little upside. I can understand that shareholders, and perhaps customers, want the company to "do more" in response to this. But not all stakeholders are created equal. There are roughly 460 institutions holding shares in Lucid and one of them holds over 45%. And beyond the PIF there are big companies making big bets on Lucid. Companies like Uber, Vanguard, and UBS. And I doubt that any of them sold today. I suspect they're in a wait and see position regarding the current leadership's reorganization plans and will make their long term decisions based on what they hear on 8/4 and the companies ability to execute against that plan. That's what any rational investor should do.

While the internet might have "been abuzz" today based on speculation from a dubious source, I suspect it was business as usual with the investors that really matter.
 
Last edited:
L-Dude said:
That's rational investing, IMO. DCA on a single, extremely volatile stock is not. But I will just leave it at that.
Click to expand...

People buy lottery tickets hoping to hit the jackpot. Some just cost way more than a Powerball ticket.
 
L-Dude said:
That's rational investing, IMO. DCA on a single, extremely volatile stock is not. But I will just leave it at that.
Click to expand...
You seem to be assuming the DCA into a single volatile stock is the only investment people are doing.

Yeah if they're throwing their entire life savings into it, it's an incredibly stupid gamble. If they're putting a little into it because they still believe in the potential of the company and it's a small part of a wider investment portfolio, I don't see a problem with it.
 
L-Dude said:
I don't understand this whole rationale of "dollar cost averaging" an extremely volatile stock like LCID, so I asked Gemini why some people insist on dollar-cost-averaging their investments in risky stocks rather than zero-basing their investment decisions.

Gemini said: It is the ultimate battle between behavioral psychology and pure financial rationality.
In a perfectly rational world, every investor would "zero-base" their portfolio daily. They would look at their holdings, ask, "If I were starting from scratch with 100% cash today, would I buy this risky stock at its current price?" and sell immediately if the answer was "no."
Yet, millions of investors do the exact opposite. They dollar-cost average (DCA) further into plunging, high-risk stocks. Here is a look at the psychological traps and practical friction that drive this behavior.

1. The Psychological Trap of "DCA-ing Down"​

When applied to broad market index funds, DCA is a brilliant strategy. When applied to individual high-risk stocks, it often becomes a vehicle for cognitive biases.
  • The Sunk Cost Fallacy & Ego: Selling a losing stock forces an investor to turn a "paper loss" into a "realized loss." Psychologically, selling is an admission of being wrong. Buying more (DCA-ing) allows them to tell themselves, "I'm not losing; I'm just buying the dip!"
  • The Illusion of the "Lower Cost Basis": Investors love watching their average purchase price drop. If they bought a speculative tech stock at $100 and it crashes to $20, buying more at $20 lowers their average cost to, say, $40. They convince themselves it only has to recover a little bit for them to break even, ignoring the fact that they are throwing good money after bad.
  • Anchoring Bias: The human brain naturally anchors to the highest price an asset once had. If a risky stock was once $150 and is now $15, the investor perceives it as a "90% off sale," rather than recognizing that the company’s fundamentals may have permanently deteriorated.

2. Why Zero-Basing is Brutally Hard​

Zero-basing is mathematically superior for active investing, but it requires a level of emotional discipline that goes against basic human nature.
  • High Cognitive Friction: Zero-basing requires active, continuous decision-making. You have to constantly research, re-evaluate, and execute trades. DCA, on the other hand, can be completely automated. Inertia is a powerful force.
  • Tax Loss & Gain Complexities: In taxable accounts, zero-basing triggers real-world tax consequences. Selling a winner to reallocate triggers capital gains taxes, while selling a loser might trigger wash-sale rules if you want to get back in later.
  • Fear of Missing Out (FOMO) on the Rebound: If you zero-base, sell a risky stock, and it suddenly rockets 200% the next week, the regret is paralyzing. Psychologically, people prefer the passive pain of holding a loser to the active pain of selling a stock right before it recovers.

Summary: DCA vs. Zero-Basing​

FeatureDollar-Cost Averaging (Risky Assets)Zero-Base Investing
Primary DriverEmotion, automation, and hope.Logic, opportunity cost, and utility.
Core Question"How can I get back to even on this?""Where is the absolute best place for my next dollar today?"
Mental EffortLow (passive/autopilot).High (requires constant objective analysis).
Risk ProfileHigh risk of "catching a falling knife."Optimizes capital allocation, but can trigger emotional regret if a sold stock rebounds.
Click to expand...
I can see someone wanting to DCA a risky stock they are buying with play money.
 
Would be interesting to see what the short activity was today.
 
Northpointe said:
Well he can't buy or sell because he's in a blackout period. Theoretically he could have said something publicly but there's little upside. I can understand that shareholders, and perhaps customers, want the company to "do more" in response to this. But not all stakeholders are created equal. There are roughly 460 institutions holding shares in Lucid and one of them holds over 45%. And beyond the PIF there are big companies making big bets on Lucid. Companies like Uber, Vanguard, and UBS. And I doubt that any of them sold today. I suspect they're in a wait and see position regarding the current leadership's reorganization plans and will make their long term decisions based on what they hear on 8/4 and the companies ability to execute against that plan. That's what any rational investor should do.

While the internet might have "been abuzz" today based on speculation from a dubious source, I suspect it was business as usual with the investors that really matter.
Click to expand...

I'm not sure if the PIF owning 45% of LCID is a good thing. One might even argue that the PIF is not a traditional financial institution and their percentage should be more considered as insider ownership, which would make LCID's actual institutional ownership at 17%. Whether that's good or bad is for someone else to decide.

I also wouldn't read too much into the Vanguard and other financial institutions holding it either. LCID is part of quite a few sector specific funds which means those companies own it as part of those funds. And if they're owned as part of actively managed funds, well there's a commonly cited performance metric about those funds.

Would I throw some fun money at LCID? Probably not. There are more "fun" stocks to buy.
 
erigion said:
I'm not sure if the PIF owning 45% of LCID is a good thing
Click to expand...
45%? More like 57%. PIF says “jump” Lucid has to say “how high” 😂
 
erigion said:
I'm not sure if the PIF owning 45% of LCID is a good thing. One might even argue that the PIF is not a traditional financial institution and their percentage should be more considered as insider ownership, which would make LCID's actual institutional ownership at 17%. Whether that's good or bad is for someone else to decide.

I also wouldn't read too much into the Vanguard and other financial institutions holding it either. LCID is part of quite a few sector specific funds which means those companies own it as part of those funds. And if they're owned as part of actively managed funds, well there's a commonly cited performance metric about those funds.

Would I throw some fun money at LCID? Probably not. There are more "fun" stocks to buy.
Click to expand...
Until they show progress towards profit , you won’t see major investments by big firms.

Mind you, Uber invested 500 million at $13.24 per share. BAC at $8.

This makes this a perfect play money investment for me. At 1.8 billion, it’s very very cheap. Scared money doesn’t make much money!

I bought 1000 shares today!
 
L-Dude said:
I don't understand this whole rationale of "dollar cost averaging" an extremely volatile stock like LCID, […]

In a perfectly rational world, every investor would "zero-base" their portfolio daily. They would look at their holdings, ask, "If I were starting from scratch with 100% cash today, would I buy this risky stock at its current price?" and sell immediately if the answer was "no."[…]
Click to expand...
There is a second scenario - what if the answer is “yes”? You decide to invest more because you believe in the long term prospects, leading to DCA.

DCA is not an investment strategy (or should not be, anyway). The investment strategy is deciding which stocks to buy in the first place. DCA is the result of incrementally buying the same stock over a period of time.

For example, DCA also applies when the stock is going up. You continue to invest in the same stock because you believe there is further upside and it remains a good place for your new $$.

Lucid stock is definitely in the high-risk/high-reward category. We’ll probably know in a year if those who purchased at today’s prices were fools or geniuses. It all depends on the new CEO and executive management team being able to turn things around, as well as how well Cosmos sells.
 
L-Dude said:
Well you either believe in gambling or believe in hard nosed investment analysis. That sounds mutually exclusive to me.
Click to expand...
DCA is by no means gambling, you're just attributing that to Lucid stock. If your investment analysis doesn't change with price fluctuations, then it is a perfectly fine investment strategy to increase your holdings when prices decline.
 
Saksak said:
Lucid stock is definitely in the high-risk/high-reward category. We’ll probably know in a year if those who purchased at today’s prices were fools or geniuses.
Click to expand...
Perhaps, but there are a lot of stocks that are producing outstanding returns right now while some people are continuing to invest in LCID in the hopes of a big return (or oddly, in hopes of recouping their investment). There is a real lost-opportunity cost in waiting that year for LCID to come to life.
 
gaskiller said:
Until they show progress towards profit , you won’t see major investments by big firms.

Mind you, Uber invested 500 million at $13.24 per share. BAC at $8.
Click to expand...
Those seem to be conflicting sentences... 🤔
 
HC_79 said:
45%? More like 57%. PIF says “jump” Lucid has to say “how high” 😂
Click to expand...
Ah, I was just going off of Yahoo finance's info. I guess the PIF shares are more complicated than just institutional/insider.
 
L-Dude said:
Perhaps, but there are a lot of stocks that are producing outstanding returns right now while some people are continuing to invest in LCID in the hopes of a big return (or oddly, in hopes of recouping their investment). There is a real lost-opportunity cost in waiting that year for LCID to come to life.
Click to expand...
But the gains will be tremendous if they execute. Right now, rest of the market is grossly overpriced. I’m pulling my investments out of AI and investing in Lucid. They are valued less than 2 billion. A reflection of the faith Wall Street has in past leadership. If Napoli can cut spending, and show some growth, the narrative changes in a blink of an eye. Is it high risk? I don’t think so, at this valuation. Software seems to have improved tremendously, and the Gravity is the best damn vehicle ever made!
 
I sit on the board of a startup. One of the largest investors is Saudi, not PIF but related. Their board member told me the following last week: no investments that are not already allocated/ earmarked last quarter are going out. Preserving country level cash and the war is the issue- many facilities have been attached, disrupting operations, while no one knows when or if the straight will re-open. Thus the country faces a potential existential crises and cash is being preserved as reserves…

Now I come here and read the statement below. Having written similar statements let me explain how I likely read it:

“The rumors are completely false”… “we have not formed a special board committee”. Sounds good, but they could be planning for bankruptcy with the entire board tomorrow and not be liable.

“The company is sufficiently liquid to carry operations well into next year” worries me. Much better to say sending half of next year, so it’s less than that, could easily be Jan/ Feb. But more important what’s in that plan? The optimist says it’s the Cosmos, full operations, etc. The pessimist says you’ve 100% delayed Cosmos and anything you can while you’re in thus window until you’ve secured more runway. And even then, the plan assumes ongoing operations going forwards. If you realize you might not get the money you don’t run straight off the cliff, you course correct earlier. Ideally a few months earlier, so that’s ~November to begin winding operations down, another could months back from that for the investment decision to be made and wires to hit the accounts and you might have a drop dead date of ~Sept to secure more money and ongoing operations. Though my experience is with smaller companies so it could easily be more. So I read this as that might give them 6 weeks to secure funding, maybe less.

“we undertake no duty to update”- what I say is true as of this moment, ie AlixPartners has not as of now recommended bankruptcy. If they do tomorrow we won’t let you know.

I have no stock or short position and want Lucid to succeed but what my board member said last week concerned me. Then I check Lucid stock and come here. I’ve said before I felt the blind faith in Saudi’s bottomless pockets is misplaced, I hope that’s not proven.
 
You must log in or register to reply here.
Back
Top