Just Not Enough Going On To Care About

Quite a lot of nothing going on right now, as I wait for the market to sell off so that it can turn around and crush the shorts more.

My feelings of a market correction this year were predicated on bad data breaking into the faces of rosy optimism. But, instead we got nonchalant data; and while not rosy, that’s not necessarily the same as a disappointment.

Look, recessions can’t last forever. We’re already five years out from the 2009 lows. At some point, we will grow again. Maybe that time is now. Or maybe, we’re just far enough out and everyone has enough unrealized gains baked into the pie not to care.

Either way, I have a nice fat little cash position, but my terror level and need to keep 50% long exposure controlled in case of another 10% wash out is ebbing. The summer has past and now the fall is here.

Obamacare is coming into effect, and that will be a little shock, but it’s a shock people are increasingly aware of. And the good men and women of American industry are doing their best to ensure the fallout of this lands squarely onto the shoulders of the American jackass.

My guess is that through October, the market will get a little messy as healthcare premiums get released and sticker shock frightens the market. Then, we rally into Christmas, because any company with assets over $ fifty million self-funds anyway.

My distaste of TSLA was built on a few different arguments. The main ones were basically: (1) overpriced valuation, (2) no sales data and (3) issues with how they were managing their leases.

(1) is still quite valid and I maintain my bearish posture on TSLA because of it.

Issues (2) and (3) however are getting the data and attention needed to back them up, if indirectly.

The leases were pushed off into a separate segment of the filing in the latest quarterly settlement. Whether this was of Musk’s own free will, pressure from outside sources, or some combination of the two is rather irrelevant – this needed to happen and it has. I’m still watching it closely, as an active stake against the stock, as it lost $0.15 for every share. But this early on could be prudent early write downs to get fair books as much as anything else.

And as for the sales data; we still don’t have any of that. This is an obnoxious inconvenience, and should be pretty straightforward.

However, CNBC commissioned Edmunds.com to to analyze registrations and online search data to get a feel for who is buying Tesla’s cars. 77% of the buyers, according to this estimate, have salaries over $100,000. 17% more have salaries over $50,000. If these estimates are accurate, then there is no concern about Tesla’s sales or leases, clearly. However, sales data really needs to start getting reported better, directly from corporate. If the company is a $17 Billion market cap, it needs to hold itself to it.

So what does this change? Not a whole lot, to be honest. I’ve never encouraged short selling TSLA – it’s too risky. My position is tiny, built of options, with a chance to add 5-10% to my account value if sometime over the next 2 years, the unexpected should occur. The omitted sales numbers and leases getting integrated with earnings (even though they’re long term payouts) were simply red flags. Now that they’re getting addressed, this play morphs into a foremost bet off the valuation and probability. The growth curve the company requires, if subject to any notable delays or missed expectations, will yield fruit to me.

However, these signs are good for Musk and the hardworking men and women at Tesla, who are being vindicated for their efforts.

The veranda I’m resting on is a medley of sounds, smells and sights each so subtly spectacular that any words I craft for them falls pitifully short. Each breeze or noise carries this awesome unpredictability that just strips you of any and all illusion of knowledge.

So much chaos and yet, from it, springs this well of near order and harmony that defies explanation. It’s very presence mocks us. The most fundamental of laws, so absolute on the smallest of scales, suddenly broken with impunity by Maxwell’s demon.

Take the 21 year Glenlivet Scotch in the bottom of my rocks glass. It’s such a simple straightforward liquid. The tastes and aroma themselves a pleasantness that we’ve become so accustomed to it hardly seems worth talking about at all.

But the journey that this bottle took to get into my liquor cabinet is itself an epic so fraught with beautiful chaos that the mere existence of it is almost a miracle.

This was the handcrafted product of a master artisan; quite possibly the greatest work of this man or woman’s life. Decades of careful study, impinged with failures, setbacks, and hardship, somehow gives way to this – the culmination of their lives. Twenty one years the liquid spent in a casket, with no way for the humble worker to possibly know whether it would be an accomplishment worthy of the admiration and appreciation of anyone, on a warm August night. Or a spoiled waste.

When this drink was being fashioned by the thoughtful work of some person, who may be dead now for all I know, the modern internet of the World Wide Web probably did not exist. Neither did cell phones. If we humbly admit that the real time to create this masterpiece extended well longer than 21 years, then it is equally plausible that neither did personal computers, CD’s, or DNA fingerprinting.

And what of the life of this obscure person, who worked so hard so that we can have this experience, decades later? This person was probably born before the cure for Polio, before MRI, and before Tylenol.

Or take the cigar, burning faintly in my left hand. The worker who rolled this cigar is no less mysterious, if not quite so distant in time. While this person may be closer to I am today, the cigar itself is a good symbol of the immense energies so inconspicuously present in our day to day lives.

What would happen if these people failed to find good students to pass their crafts on to? A dereliction of this sacred duty could deprive us of these small comforts in ways so terribly beyond our control… and yet we indulge in so many of these wonders without ever stopping to appreciate what splendor it is.

The smoke curling up the length of my finger, wrapping on an angle with my knuckles, and fraying into the space before my eyes, contains no less mysteries as the men and women who touch us every day.

If I froze the space in time, I could construct a field model that near perfectly describe the smokes wispy pathways. I could do this for any instant you might desire. I could do this for approximately every instant between two arbitrary points in our view.

But it would be such a wasted effort, for it would tell me nothing. The next light breeze to come along would swipe away my hubris and any pretense of understanding as definitively as mortality will surely swipe away Cain Hammond Thaler.

If I attempted to control fate, and protect my model, I could spend my life networking across the space around my small field. I could create thousands of adaptations based on information of change pushing into my little balcony. And if I wasted all the energy which my life has to offer, this effort could give me a tiny window into the future. But this window would expire so quickly, all of that time would be wasted. If I could have firm control over every particle in this county, the pressure from the rest of the planet would quickly exert itself.

If I could control the planet, the heavens would move against me in a matter of minutes.

The greatest minds of our species have understood this. As example, Poincare showed it over one hundred and fifty years ago. Lorenz’ life was dedicated to this pursuit. Feigenbaum persists in this study to this day. Yet, here we are, listening seriously to voices telling us that our understanding of the unpredictable, the unknown, the unfathomable, is somehow better because now we know that our understanding of these things can never truly be better. And always, the simple terrifying truth of it all is never uttered.

Folly and arrogance of the highest order are found in all of these things.

Sit with me on this pleasant night. Take slow breaths after the inhale of the cigar smoke. Feel the cool air take life into your lungs.

The dynamic between our taking breath and the trees around us are chaotic. The minute functions of our respective bodies is chaotic. The impact of infinite iterations of the universe are chaotic. Yet, time and again, we begin our sentences with the dreadful words, “we know”.

The work of these people is being tainted by the second hand malpractice of their misguided pupils, striving to apply false or trivial knowledge.

The sun is setting on the horizon, the trees hiding in the shadows. And they are as invisible to me as their secret inner workings.

Prepare for bed and rest. And do so in the beautiful comfort of our complete ignorance. Tomorrow is as unfathomable as yesterday, and yesterday will soon be as hazy to your mind as tomorrow. But the moment…the moment is wonderfully clear.

Okay, I’m not here to be Mr. Sunshine on the economy, because we’re up big on the year, Chinese stocks are rallying, and I personally hate many of you on a very intimate level for your cheerful attitude and can-do outlook on life. But, maybe it’s possible the Walmart buzz is overdoing it a little bit.

I’d like to see the earnings of higher end retail alongside WMT before I panic too much. Yes the Philly number was awful, yes people have swept a lot of problems under a rug, no question that I was expecting a slowdown all summer that may finally be coming front and center, certainly the financial savings and debt loads of US citizens looks horrible, and sure, I suppose, this could be the first indication we’ve had that everything is about to slow down.

But I would implore you to consider, on face value, that Walmart, Target and Macy’s are where people go to shop when they can’t afford to go anywhere else. Walmart ramped into the recession because their sales expanded. You have to suppose that the opposite effect is to be expected – playing in reverse – when the economic conditions switch up. There isn’t much straightforward about a vibrant economy. But the purchase habits of people as they come into more money may be one such thing.

I don’t know the answer. There’s more to consider here than just the straightforward answer that WMT is the single greatest thermometer our economy has.

Take treasuries: yields are expanding a great deal. However, in absolute terms our debt is still yielding payments that are almost not worth pursuing and, relative to the rest of the world, is almost undeservingly expensive. It was always going to selloff; it almost had to.

The operating results of low level retail and US treasuries could just as easily be a signal that we’re finally switching gear out of this quagmire we found ourselves holed up in. Taken on their own, they can be misleading. We need to put these datum against a more complete backdrop to figure out where everything fits in.

I purchased HCLP for $23.99. This is pricier than I’m usually willing to pay, but it’s still a small parternship, growing very fast and right where I want to be situated. The dividend is high at >8%, but it’s sustainability is questionable.

The partnership is acquiring property rights for the sands used in fracking.

I’ll do a full write up later – I don’t have time right now.

Current positions: AEC, CLP, CCJ, BAS, EUO, DRI, RMCF, NRP, HCLP, silver, TSLA puts and cash

Why does one even take a vacation?

I took off Friday and Monday to have a nice long weekend. And when I returned, it looked like a file cabinet vomitted from a night of rough drinking, all over my desk. My inbox was overflowing so, crying like a tiny child, I began to make the effortful climb to the top.

The papers are now beginning to clear away, and I can start to see desktop again. Heaven help me if I take a real vacation this year.

The markets are docile and I am on my toes. I have a nice big cash position, but am refraining from becoming to bearish. There are things I see that frighten me, and have for months, but generally speaking I feel that I have a good strategy here. The positions I own should do well, even if the rest of the market should come on hard times. I just need to wade through any blood.

My personal positions have been in a miny sell off for about two weeks now, and my gains are down to the 19% mark, year to date.

Other than that, life is good and well worth living.