The current investment climate does bring back some memories of the late 1990’s for a small group of glamour stocks. Market participants seem willing to pay 100-250 times earnings for companies that are barely profitable and that lack substantive assets, which often can be a good indicator towards future earnings. Tesla is probably my favorite example, as the company’s sexy cars and charismatic CEO have made it a true Wall Street darling. Amazingly, a company that will likely produce less than 30,000 cars this year has been trading at a market capitalization of roughly $24 billion. This is absolutely absurd and while eventually the stock might grow into that market capitalization, just about everything needs to go right, including the company maintaining a big advantage over its better capitalized competition. This is the type of investment that exemplifies no margin of safety. At T&T Capital Management, we have taken a tiny short position through selling calls that are out of the money, as we believe the stock has considerable downside potential. We rarely sell short and it is less than 1% of our portfolio but time will tell how things shake out. Below is the Bloomberg article and my own investment thesis on Tesla.