Trader: Tesla is the model 'Lifecycle trade stock'
On a recent Yahoo Finance Premium webinar, Yahoo Finance's Jared Blikre talks with Kathy Donnelly, Veteran trader, IPO expert and author on how Tesla is the perfect model of the Lifecycle trade pattern. Not a subscriber? Start your free trial to join future webinars live!
Video Transcript
JARED BLIKRE: I want to go over Tesla. This is a slide from your book, actually, that shows the different phases, and maybe you can just kind of walk us through it here.
KATHY DONNELLY: Yeah, this is-- we really highlighted Tesla as, like, the model lifecycle trade stock. And this is the late bloomer pattern I was talking about. It had that IPO base in the beginning, an initial run-up, and created that turbulence zone that we were talking about when we we're talking about Fastly. And that was that due-diligence phase where it really didn't do much. We abbreviate it here, I-DDP. And then it created that first mature base, broke out, and had that really great run there, institutional advanced phase that I think a lot of people play.
Now, we've got some other graphics here on this chart because we coined in the book different rules that you can use to trade it. And what's really great about it, I think, is that you can pick the rule that works for your personality-- where you're a long-term holder and you can withstand some drawdowns, like myself, or maybe you just want to-- you know, don't want to withstand those drawdowns and just take the gains when you have them. And so we have rules for that, too.
JARED BLIKRE: Yeah, rules and rules and rules, which are really good. That's another point I just want to hammer home. This is what a trading system looks like. This is what you want to have is defined rules for entry, exit, money management. So when things get hairy-- and they will-- then you don't have to panic and figure out what to do next.
Just a quick audience question here on Tesla, is it going to join the S&P 500? I'll take this. You need four quarters of profit. It's done that. We'll have to see what happens in the next quarter, but they've got the market cap. I think they've got to be $5 or $6 billion, and Tesla is-- what? $300-something? Just an incredible run that Tesla's had. So yeah, I expect Tesla to join the S&P 500 sometime, not necessarily imminently. But these guys meet about once a month so could happen pretty soon.
