Now That Tesla Has Joined The S&P 500 Index, Is It Now A Good Stock To Buy?
Tesla stocks are beginning to rise. In fact, it has popped over twelve percent after trade closed for 16th Nov 2020. For investors and potential investors in Tesla stocks, you can agree with me that the company is almost always in the news. Sometimes, their stock prices are sky-high, and other times they drop like Tesla is a startup company. Now, they are in the news this time for the right reason, they are joining the S&P 500 index, and this is a major boost for the company and its investors.
Good day readers, and welcome to another exciting blog edition from my website. In this blog, I will be answering some questions I believe most investors are asking right now. So, I urge you to read this blog till the end to see what you can learn from this new change in the stock market. Have you subscribed to my website yet? If not, hit the Subscribe button and give us a big Thumbs up because we appreciate it a lot. A benefit of subscribing to my website is you will be entitled to more expert opinions and analysis from me as changes occur in the market. Check out my other blogs such as, “Ron Paul’s Financial Bubble Theory“.
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Back to the topic of today’s blog – Tesla
Tesla Has Joined the S&P 500, Here’s What That Means
Now, this inclusion of Tesla into the S&P 5oo index started as a speculation, and it has been a long time coming. Now that it is here, you may want to know my analysis on the subject. Some investors may see this as the best time to sell, others may see it as the best time to buy, and some may even decline from investing because they think the market is still very volatile.
The first question I think should be on the minds of most investors is, why is this inclusion of Tesla into the S&P 500 so important?
First, I want to say that Tesla’s inclusion into the S&P 500 will take effect prior to trading on Monday, 21st Dec 2020. Now, for Tesla to be included, a company has to be removed, and that is something we have not found out yet because S&P has not announced it just yet. Investors and expert analysts are in suspense and are doing more research ahead of time. My opinion is that there are some companies in the S&P 500 that need to be removed, and we need new-age companies like Tesla in there. The stocks in my portfolio are doing well, so I do not think they will be bullied out of the S&P 500 but then again, who knows?
One reason this inclusion is so important to Tesla is that by the time they are official members of the S&P 500, all the other indexes must include Tesla in their list. This basically means that most of the other indexes oF SP 500 will have to include Tesla stock and this can happen when they buy their shares. Do you see that there will be some potential buying of Tesla stocks in December? In fact, the buying will start now, and as we got closer to that date, index funds will keep building up.
Tesla is joining S&P 5oo as the largest-ever new member, and this equally means that purchases of their stocks from other members of the index funds will also be large.
Well, this inclusion does not make Tesla better or worse in terms of business, at least theoretically. But, this inclusion is a massive achievement for any company, Tesla included, because it comes with more credibility, confidence, and security. This inclusion means more funds and hedge funds for Tesla because potential investors can turn into real investors. So, even though the business has not changed theoretically, its inclusion will apply more buying pressure because of the added benefits of being in the S&P 500. Now, the stock market is a place to buy and sell stocks, so the rate of selling may get offset by the number of buyers that will soon be scrambling to get into Tesla stocks.
So my guess is this inclusion does not necessarily make Tesla a better buy, but to most investors, the benefits that come with this inclusion will definitely make it a more suitable buy for now and the near future. So, for these investors who have been waiting on some good news from Tesla, this is the best, at least till the next quarterly earnings report. So, it is fair for investors to start buying strong positions of this stock at these prices.
So, for those who may be asking what my position is on all these, I will tell you. This inclusion is just like a wake-up call to Tesla, a company that has not really lived up to its huge potential these couple of months. Some may say it was due to the pandemic and current economic situation and volatility of the stock market. I predict higher prices in the coming months.
Well, surprisingly, I want to invest and buy more Tesla stocks. I already have some in my portfolio, but I am really looking to strengthen my position in Tesla. It is not entirely because of their inclusion in the S&P 500, although it certainly helped influence my decision. My main reason is my belief in the company. I believe this company has the potential to increase its market cap because of its innovations, company policies, and management teams, and I want to be with them when this happens.
Remember, when I said that investment in the stock market is a long-term investment, I meant it. So, I am going to strengthen my position in Tesla, become a bull, and wait for the long-term.
I believe you now understand my position on Tesla stocks. Remember, you are free to do your own research and findings regarding these stocks before venturing into them. So, if you liked this blog, please do not forget to like and share it. Also, drop your comments in the box below and subscribe to my channel. You will be glad you did.
Recommended for further reading:
- The Warren Buffett Way
- How to Make Money in Stocks: A Winning System In Good Times And Bad
- Shares Made Simple: A beginner’s guide to the stock market
- Smarter Investing: Simpler Decisions for Better Results
- Warren Buffett and the Interpretation of Financial Statements