Usman Salis
● In a thought-provoking thread, Julian Fry dug into what actually happens when you hold Tesla stock versus periodically rebalancing it in your portfolio. Looking at real numbers from 2020 onward, his breakdown shows that buy-and-hold investors came out way ahead in terms of raw returns — but they had to endure significantly more stress and risk.
● Here's how it played out: back in April 2020, Tesla was trading at around $50 a share. Someone who bought in and never touched their position would be sitting on roughly $97,500 today, according to Fry's calculations. Compare that to an investor who rebalanced every year to keep Tesla at 10% of their portfolio — they'd have a position worth about $17,852, plus around $57,793 in realized gains from selling along the way, for a combined benefit of $75,645 before taxes.
● Taxes make the gap even wider. In a regular taxable account, that rebalancing strategy would rack up something like $16,000 in tax bills, seriously eating into the advantage. Fry's math shows buy-and-hold investors came out 66% ahead in taxable accounts and 29% ahead in retirement accounts where you don't pay taxes until later.
● But Fry was quick to point out that pure returns don't tell the whole story. "Peace of mind matters," he wrote, noting that rebalancing keeps your risk in check and smooths out the ride. He also made a fair point: most people would've really struggled with buying more Tesla during its brutal 65% nosedive in late 2022 — especially knowing it would then double the next year (though of course, nobody knew that at the time).
● Fry drew a parallel between Tesla in his portfolio and Warren Buffett's decades-long bet on Coca-Cola — both are companies with strong competitive advantages, but neither has been a smooth ride. At the end of the day, his analysis highlights one of investing's oldest trade-offs: you can chase higher returns by sticking with your convictions through thick and thin, or you can sleep better at night by rebalancing regularly and keeping things more stable.
Usman Salis
