BAS has imploded 15% in a week. I always pare back that position opportunistically when I can, precisely because I cannot trust it. Sadly, I added on to quick, down 10%, and now have some losses to show for it. The stock is owned by cowards of the lowest caliber.

HCLP is also disappointing me, down off a resurgence from the backs of the frack sand article that made rounds last week.

I was getting excited about TSLA’s selloff, but that has shored up, and is pushing higher. My expectation is the first round of put options expire worthless. I have high hopes for the longer expiration dates.

CCJ though is looking promising. Silver is also pressing higher – I would love a precious metals price recovery for Christmas.

My portfolio is flat on the day. December is young, but time is short, and it appears that I will merely perform with the market this year. A grand opportunity to broadly defeat the indices, rallied from my huge RGR trade in the beginning of the year, was wasted, sadly.

But, maybe Santa Clause will deliver a holiday special for Cain. He has plenty of times before.

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(Business Insider) The German Federal Motor Transport Authority, Kraftfahrt-Bundesamt (KBA) has concluded an investigation into three recent Tesla Model S fires and found “no manufacturer-related defects,” Tesla said today.

In a press release, Tesla said it provided the KBA with relevant data on the accidents, and received a letter saying “no further measures under the German Product Safety Act [Produktsicherheitsgesetz (ProdSG)] are deemed necessary.”

In November, the National Highway Transportation Safety Administration (NHTSA) opened an investigation into the three fires. Tesla said it has “requested” the process, but NHTSA Administrator told a House panel that was untrue, according to The Detroit News.

That investigation is ongoing, but at least the Germans have been placated.

If you woke up this morning and read this, as I did, upon seeing TSLA up 6% before the open and my puts reversing lower on this “news”, you could be forgiven if your first impression was, “when the hell did Germany open an investigation?”

You see, I remember being told about the investigation being conducted by the NHTSA, the US based auto safety agency. I remember they opened an investigation following three fires, two of which occurred in the US, and the remaining one in Mexico. Barely a few weeks ago…

But it’s funny, as I don’t recall there ever being an announcement of a German investigation. It must have got lost under the Blankenship resignation announcement.

In fact, swinging over to Tesla’s Investor Press Releases – it’s astounding – but it seems completely devoid of any bad news at all. Not even a mention of the US based investigation, much less a German one, or a peep about the VP of sales leaving the company.

Meanwhile, in the real world, real men and women are throwing their money into this company, shaking off oversold conditions on a hard bounce. And class action lawsuits are raining from the sky. I’ve mostly been thinking those lawsuits were warrantless before now, but if this is how Tesla handles communications, I’m not so sure.

This isn’t a game, people.

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AEC is the latest stock I own to go bananas on nothing. It’s up over 10%, shrugging off the indices.

BAS is the only notable correction I’m experiencing. NRP and silver are both down a bit, but nothing really leading a charge lower.

TSLA meanwhile is rolling over hard, as a multitude of technicians knife one another in an attempt to call the next bounce point. If I had to put my money on one of them, it would be our own ChessNWine.

If TSLA can dip below $100, there is a strong likelihood that I will sell my $100 puts (reserving final judgment for such time) and use the gains to zero out the cost of my other puts (expiring between 2014 and 2015 with strikes around $35-45). That would give me essentially free options to make huge gains out of nothing.

Like a modern day Rumpelstiltskin, I adore spinning gold out of straw more than almost anything else – unless it’s the blood of your firstborn.

For the moment, the TSLA position is still a money loser. But at just 3-4% of my account, how can you pretend that I care?

In summary, the Tesla fanatics are getting quiet, and many a junior in college is starting to sweat.

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I had purchased additional shares of BAS in late July through early August, between $11.55 and $12.40. Those shares were up 30-40%, so I sold off half of them. The remainder is added to my permanent position.

I love the name, but having followed it for quite some time, it’s normal deviations are in the 20-30% range. I’m happy to see it breaking out to new highs, as that jives well with my own expectations. While buying the initial stake in BAS, I called for a price target of $18 at the time, and feel this company is well positioned to experience above average growth for the next 5-10 years.

However, back to the wild price swings, I don’t trust this stock at all. So taking a bit of money off the table makes sense. If I can’t buy back in lower, I still make a fat spread on a major position. But in all likelihood, the stock craters back to $14, and I load up all over again.

My current positions are CCJ, BAS, HCLP, AEC, MAA, NRP, RMCF, TSLA puts, and physical silver.

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Tesla just had their third car fire in a 6 week period. The data isn’t really volumous enough to tell yet, and so it could just be rather bad luck. However I did want to play Texas Sharpshooter and point something out.

According to the NFPA, in 2010 there were 33 vehicle fires per hour. Assuming about 250 million vehicles on the road, that equates to a .0133% chance of being involved in a car fire over a 6 week period.

Comparatively, over the last 6 weeks, with approximately 16,000 Model S on the road, there have been 3 vehicle fires. This equates, to a .0188% chance of being involved in a vehicle fire. Over the last 6 weeks, it was statistically more likely to get in a fire while driving the world’s safest car.

Is this just a statistical anomaly of no consequence?

To test, I doubled the time period to see how sensitive the outcome is. In a 12 week period, the likelihood of being involved in a car fire in a standard ICE vehicle is .027%.

Over the last 12 weeks, there have still been only 3 Model S fires. However, there also were 5,500 less Model S’ on the road 12 weeks ago. When you hold the 3 fires but reduce the number of vehicles, I’m getting a .029% chance of being involved in a vehicle fire with a Model S, still higher than the ICE vehicle…

So double the time period to 24 weeks; you get .053% odds of being in an ICE vehicle fire, to .055% odds of being in a Model S fire. The lower number of Model S on the road keeps that number above the ICE. Again, Tesla loses, at least for now.

The trouble here again is the small data, and Musk could just be experiencing the worst luck in the world. However, at this point in time it’s worth noting we already have 8,000 vehicle years of data to look at. Depending on what you think the life expectancy is of one of these vehicles, that’s between 200-500 vehicle lifetimes.

I’m assuming the risk of a critical fire (being a pretty extreme event, not like regular wear and tear) stays about uniform throughout the life of the vehicle, not getting better or worse with age.

Now that’s not as good as say, 1,000 lifetimes of data. But because we’re so early in the Model S production schedule, keep in mind that every four months the number in percent of these vehicles on the road grows by leaps and bounds. After the next 3 months, we should already have between 500-1,000 lifetimes of data.

So maybe Musk is just really unlucky and the number settles back down with time. The difference between the rate soaring or dropping like a stone is as little as one major accident. Consider if we had stayed at 2 accidents, the Model S would easily be much safer.

However, from a vehicle usage standpoint, we are increasingly seeing plenty of data to make a judgement about accidents of the Model S in the day to day hands of consumers.

So the discrete nature of the accidents is still making this murky. But because we have so many Model S on the road, the impact on the standard deviation of the marginal accident diminishes pretty quickly. We could have fairly concrete data on the probability of a fire in a Model S as early as the fifth or maybe tenth fire.

The number of Model S’ on the road is going up, not down, so increasingly these vehicles are more likely to be seen in accidents. In another year or two, Musk’s claims of vehicle safety could get reconfirmed by a relatively safe lull. Maybe his car is just being bought by a rather more reckless segment of the population – unsafe first adopters – or bad chance? But at least as of this point in time, 9 months in, it really doesn’t appear that the Model S is all that much safer, from a fire standpoint, than a car full of flamable liquid. In fact, if things don’t turn around, it could be judged as worse.

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I got smacked pretty hard today, with NRP, HCLP and BAS all taking blows. The earnings out of NRP and HCLP apparently spooked some investors, and BAS just sort of followed along.

I am not concerned about any one of these positions. The rest of the holdings were a pretty mixed bag.

I dare not address the Tesla selloff just yet, for fear I somehow jinx it. I refuse to report any of the numbers on my put position, as it is so small and just unpredictable. Suffice to say, the first batch of options expire with early 2014. The next two thirds of them expire with early 2015. I’ll mark them down as they expire worthless, or record the profits when I actually have something more concrete.

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