I wish I had time to sit and talk. Sadly, I do not.

But sometime tonight, I want to see TSLA burning. Will I get my wish?

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Earlier this summer, I tried getting weather forecasts but to no avail. It’s been a tough year for the meteorologists, I am told, because of some El Nino/La Nina uncertainty that was holding off high probability estimates. Not that it’s ever easy for meteorologists.

But, it appears the Almanac finally settled on a guess, and that guess is “cold”. So we will see what happens.

Natural gas prices have well near recovered from the spill they took over the last two years. Futures almost tipped back above $4 for forward months a while ago. A good cold spell and a hard inventory drawdown could do wonders for the price. If you’re interested, I’d look for a focused supply operation contained predominantly in the coldest expected regions, as they will reap the windfall profits if heating demand soars. An old favorite is PNY, but the weather should guide the buy.

Meanwhile, today I continue experiencing my private little bull market. HCLP continues unabated towards its destiny of higher valuations.

Tesla received a bit of a jolt recently; a German magazine casted doubt upon the heretofore unquestionable ascent of Musk as a major global auto manufacturer. This is the kind of doubt that will sow the seeds of triumphant gains. My put options are cheap and have almost no tradeoffs. I just need blood in the water.

I added to NRP today for $20.26, because I’m not that worried about the EPA, especially as it pertains to an operation that gets much of its royalties from metallurgical coal.

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I added a percent to the TSLA puts at the $100.00 strike price.

If the selloff continues, expect TSLA degenerate longs to be butchered.

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The next person to offhandedly quote Keynes to me, explaining why my Tesla short is doomed for failure, gets boxed in the scrotum, then lit on fire. The 9th floor is declaring taboo any and all “mainstream” financial references. If you heard it in high school, that trash is not welcome here.

I wouldn’t care if it were even remotely applicable to what I am doing.

But it isn’t.

Do you understand what a put option is? It’s a contract, that costs a finite amount of money to establish up front. Its value is derived either absolutely through execution, or else by pawning it off prematurely to startled counter-parties who are sweating profusely at the thought of massive losses, for a fat premium of course.

Do you know what never comes up as a concern, remotely, when you have 2-3% of your account in a non-margin put position?

Solvency.

It’s crazy, but not fucking once lately have I worried, “OH MY GAWD, THE MARKET CAN STAY IRRATIONAL LONGER THAN I CAN STAY SOLVENT”.

Do you know why?

Because I’m fucking solvent.

These products have been cut in half since I bought them. I am solvent.

These products can go to absolute zero for all I care. I am solvent.

I am solvent because I’m not a complete dumb ass, and know how to take a negative view of something in a way that only has massive payoffs. I’m solvent because I understand how to set aside 1-2% of my account annum (less than I make in dividends) to buying something that has well defined losses attached.

I don’t need to know what will happen to Tesla to make it sell off. That is an adminicular point. I just need to believe that something none of us here can possibly expect will occur to shock people. It then requires only modest stipulation that, at current positioning, that something is more likely to be really bad than really good.

If my January 2014’s expire worthless (of which there is a strong possibility), then I will put another 1-2% of my account into January 2016 puts (I currently hold January 2014’s and January 2015’s).

Do you know what my upper bound is on losses?

6.1%, spread out over three and a half years.

Do you know what I will lose, in real terms, if I am wrong about Tesla?

Probably <6.1% in losses, spread out over three and a half years.

Do you know what I don't care about?

6.1% of losses, spread out over three and a half years.

I'm up ~20% this year alone. The amount of money we're talking here, 1-2% of my account annually, is just so de minimis…

Please, stop slaughtering economic quotes by using them out of context. It may shock you, but I actually am quite familiar with Keynesian-isms. That happens when you've followed the markets and finance for a long time. And frankly, if you can pick up a bit of financial advice out of a copy of the Rolling Stones, it probably isn't worth anything.

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It’s a Friday, and my heart isn’t in this right now. Rather, my imagination keeps running away outside to whatever’s left of Summer slipping away. This is most inopportune, since work is a runaway train.

So, here’s a brief list of things going through my mind right now.

1) War is overrated and oil is begging to get taken down a notch. Tell me when these geopolitical type scares have actually panned out? The last time was under what, Carter? The oil market is well supplied; a few oil traders are just gaming the system to make their year’s. Meanwhile, a US energy revolution is sweeping accross America.

2) Multifamily REITs selling off alongside broader REITs is as careless an act as I can think of. These companies are all 95% plus occupied with rising rates and numerous projects in the pipeline. Tell me who was forecasting that two years ago, other than myself and a handful of others? Yields are only a problem on a case by case basis. Sellers slamming the whole space here are irresponsible.

3) Coal prices and associated companies are unnecessarily low. Natural gas prices have come back nicely from the death throes they were convulsing in last year. The EPA can only do so much to legitimate, legal owners of coal producing assets. There’s this power grid we have that demands base load, after all. And even the most eco-friendly of Californian millionaires will not tolerate their precious Tesla batteries running dry. Even with natural gas transitioning taking place, there’s a price point where coal comes back online Everyone hates coal, making it pretty attractive right now.

4) I still fear for the wellbeing of Tesla longs, but I can only care so much. On a different note, there was a Seeking Alpha article about battery supply problems that made no sense. It was trying to argue that batteries will constrain Tesla production, but it pointed out that Tesla’s primary competitors are transitioning away from using the kinds of batteries that make up Tesla’s product. At most, I could see competition for batteries pushing up Tesla’s costs, keeping their vision of an affordable mainstream electric vehicle at bay (for longer than longs could survive, I might add). But at some point, Tesla forcing helping to force battery prices higher causes the electronics manufacturers to convert to the newer battery options, freeing up capacity. Besides 100,000 vehicles a year for Tesla isn’t exactly a plague of rats.

5) The natural gas and fracking boom will run further than any of you can possibly fathom. There is no reason not to buy into this. The go to corporations are the specialists who make the backbone of the extraction process (like BAS) and coporations or partnerships supplying the materials that make it all possible (I like HCLP). Risks that the frackers will saturate the market with so much gas and oil that it will collapse profits have blown over. Chesapeake energy was last year. Aubrey McClendon’s ass has been fired.

6) I’m not sure I can like this DRI position if prices for commodities keep pushing higher. But there was plenty of opportunity for the resturant business to line up cheap access to the raw foodstuffs they need for any number of months into the future. So I’m going to hope for the unexpected. Meanwhile, the job market is humming along. Now go eat at Red Lobster tonight.

7) The uranium market disgusts me. I knew it would blow out again. So far CCJ is taking the damage in stride. There’s a major fuel supply issue looming, but reactors just use up fuel so slowly, it takes forever for it all to wind its way through the system. It would be nice if the Japanese could get off their culturally slow-as-shit asses and maybe do something expediently for once in their lives. No, no, please, by all means continue to import oil and coal to your resource depleted island for sky high prices. Who needs an economy, especially with the egregious demographics problems of a nation like Japan?

8) I would rather lick an ant hill than let the sequal to the Catholic Church circa 12th century France come back to power – whether it’s crosses painted on the walls or crescents. To hell with both sides of the Syria civil war. If we’re going to let loose the arsenal, we should at least do it indiscriminately.

9) We are going higher.

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Wednesday, a NYU professor put out a post on his personal blog talking about everyone’s favorite, Tesla (TSLA).

My readers know my own frustrations with the stock and personal contempt for its valuation (which is not to be confused with contempt for its product) – even if they don’t understand it.

The professor created a model you can download and play with, putting in various assumptions to spit out different ends. The verdict?

He has no idea why Tesla is going for this much either.

While he did say there were a few outcomes which were as profitable for current buyers as they were farfetched, the probability of realizing those outcomes is dismissible.

This guys seems to have done more in depth work than I did. I just grabbed the growth estimates and studied the exponential curve generated from those assumptions…then recognized any variance is no friend of TSLA shareholders.

It’s worth pointing out that all of the assumptions this professor used to reach his conclusions are actually very optimistic, in the favor of Tesla. Even after that, he still can’t reach the current valuation. If you use my colder, less favorable assumptions, you get to my numbers…

At this time, I still hold my TSLA puts, with targets in the $30’s and $40’s. They have basically been cut in half (spaced out 6-18 months out from purchase), but constituted an investment of about 2-3% of my account at the time of purchase.

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