Here’s the transcript to this week’s Live Q&A chat. Join me next Wednesday at 2pm EST at https://tradingwithcody.com/chat or send me an email with your question at support@tradingwithcody.com.
Q. Any reason why you say in your alerts that you are not turning bearish “YET”? Is it just me or does it seem like you have one foot out the door when you have VERY VERY lofty targets / aspirations for the likes of FB, AAPL, QCOM, SNDK, FF, NVDA, AMZN etc.
A. I say “not turning bearish YET” because I will eventually turn bearish when my homework and analysis and art tell me that the economic/market cycle has turned. I say “not turning bearish YET” because I still think we’re not done with the Bubble-Blowing that I have been set up for and has been playing out in real-time with the insane 0% rates, QE, Corporate Tax Subsidies, etc that the Republican/Democrat Regime is forcing upon its citizenry. But as the markets hit all-time highs and as the horrible imbalances in the economy continue to build up, there will be a time of reckoning and the markets will probably have started discounting that collapse before it happens, and we’ll want to make sure we’re ahead of that curve again. And so “not turning bearish YET” is my way of reminding us that we can’t just blindly buy a few stocks that we believe in for the long-term and forget about our portfolio.
Q. So as for your NOT YET comment you truly feel before the bubble bursts that your targets on AAPL, FB, SNDK and others can be genuinely achieved within the next few short years? As this bubble can not be inflated for the next 3-5 years +?
A. I don’t have a crystal ball but I spend my life trying to answer the very questions you’re asking there. It’s possible that the bubble lasts longer and grows bigger than anybody on the planet expects. It’s possible it pops tomorrow. We have to be ready and engaged either way.
Q. What in your opinion will be the reason for tech performing well as so far 2013 it has been very selective and very rough for our longs?
A. I think when we look back next year at the first seven weeks of this year, that we’ll have a hard time remembering any of this. We sold a lot of stock and almost all of our call options back when many of our stocks were near new highs. And meanwhile, we’ve got several new picks like ZAGG and MRVL that are rocking for us already, and we’ve got by far our biggest short, Apollo, which we shorted the heck out of and bought puts on back when it was at $55 a share, still collapsing in front our eyes. We’ve got gold popping after starting to buy it again last week. And most of all, I’ve got all that cash that I raised with my selling and trimming near the highs that when I see the time and place to get aggressive again, I’ll be ready to pounce.
Q. Hi, Cody: For today’s chat — appreciate your buy-the-real-thing-and-short-the-funds logic and recommendation made the other day. My question is, with what I’ve occasionally heard about SILVER having the potential to move up as much as, or more than, gold (because it has more industrial uses — including phones,BTW! — etc.) would you equally recommend the same strategy there…or more or less so, and why? Thanks.
A. I definitely think there’s a great hedged/paired investment of buying physical silver and some day shorting the silver ETFs and other “paper versions” of silver that likely will never be able to get hold of as much physical silver to match the amount of paper silver has been sold.
Q. Hi Cody, do you have any comments on Apple’s stock holder conference this morning?
A. Not really, because there was no real news or announcements or anything of substance in the conference. Real headlines from today’s Apple event: “Apple board in ‘active’ talks on cash-pile options” AND “Apple CEO promises investors ‘great stuff’ to come” AND “Tim Cook On Competition With Samsung And Android: ‘We Don’t Have Our Heads Stuck In The Sand‘”. SQUIRREL!
Q. Cody, when do you think Apple stock will turn a corner? It continues to go down in up market, and since the company keeps secrets no one seems to think much of the near future. What do you predict for the rest of the year?
A. I predict Apple bottoms somewhere in the low $400s or near these current levels, and that it will see $6-700 a share this year at some point.
Let’s hope you are right.
Q. Cody what is your price target for this year in AAPL?
A. See above for full answer.
Q. What do you feel apple has left up its sleeve in terms of blockbuster products? Phones being copied left and right even new blackberry looks like it. Ipads similar story. Where is the growth to come from? Eco system I know I love it and wont leave but product wise? Watches? can be that big? TV’s glut in market as it is? Samsung makes amazingly thin gorgeous versions.
A. Motion-gesturing, holographic and/or projectory imagery, wearable computing, common-language interaction, and content licensing are all growth areas for Apple to drive innovation and continue to build their ecosystem and lock-in the world’s consumers and enterprises.
Q: If you were going to buy Apple calls today what would you buy? I have a long common position and want to add to this position through Apple calls. Thinking of either June or August calls, not sure of strike price. What would you recommend, on both month and strike price? Thank you.
A: I can’t hardly believe my eyes — somebody actually asking me about BUYING Apple and buying Apple CALLS at that?! Well, if you’re willing to lose all of your capital in the trade if it doesn’t work out by your time horizon, then you just have to decide just how risky you want to be in those calls. The higher the strike price, the more bang you get for your buck, but the riskier it is that you’ll lose the full amount if the stock can’t get up to your strike. I’d look anywhere at $400 to $480 or so depending on your risk-tolerance.
Q. Lots of chatter on the ZAGG boards that the trade volume is low and that the shorts are going to gain the upper hand again and drive the price down. You have any concern with ZAGG and the 33% of shares shorted and their power to manipulate due to low buying volume?
A. If the shorts drive the stock price down while ZAGG’s fundamentals are this strong and the stock is already this cheap, I’ll use that technical dislocation as a buying opportunity to really get aggressive. In general, I LOVE being long a popularly-hated and shorted stock like ZAGG. Flip it.
Q. Damn I wish I’d sold out of my ZAGG @ 8. She’s dying on the vine.
A. I’m not sure you do with you’d sold already. Now I’m by no means saying that ZAGG is another AAPL for us, but I actually bought AAPL when it was trading below $8 a share and within a few days, it was at $9 and then it went back to $8. If ZAGG is going to double or triple for us, which is why we bought it, then today’s action is another opportunity to scale in for a potential big homerun. We didn’t buy it to try to catch a 10% move over the last two-weeks after all.
Q. ZAGG actually went negative on the day, how does that happen with the results?
A. For all we know, some small fund manager owned 1mm shares of ZAGG for the last year and he’s down huge on it and he’s got all his investors clamoring for their money and he’s selling every share he’s got in a panic to meet redemptions.
Q. Hi Cody. Question on QCOM. Right after the great earnings report, when everyone including you thought QCOM was going to run to $80, an analyst downgraded QCOM and cited a global slowdown in smartphone adoption. QCOM has since flatlined as has NVDA. I don’t believe that you hold this view. Can you comment?
A. Long-time readers and viewers know that I was calling for the App/Smartphone/Tablet Revolution five years ago and I’ve long cited that Revolution’s suppliers like QCOM as key holdings for this cycle. “This cycle” being the operative words there, because I do think there’s some merit to the idea that those suppliers are likely to see some leveling off of growth this year and especially next year. Over the last few months, I’ve been slowly but surely getting rid of many of those App/Smartphone/Tablet Revolution stocks and I think we can stay ahead of the markets by focusing on some other, new Revolutions that I’m working on and will be moving into next.
Q. What are your thoughts on what is driving FB weakness? Many have stated as a given that the powers that be will be driving FB back to and over the $38 IPO price…but clearly a lot of pressure on the stock lately. Any comments to share on the never ending FB ebb and flow cycle? I’ve been joking on the board that $27 is the new $19…I hope so.
A. Back in this article, I wrote “Facebook’s continuing to ramp into this mysterious press event tomorrow and at this point, I don’t think there’s much chance that whatever they announce is going to live up to the hype. I’m going to sell a tranche of Facebook calls, leaving me with common and mostly longer-dated call options with strikes about $30 or so that I bought when the stock was in the teens. Yes, in the teens. Here at $32 heading into tomorrow’s call, I want to continue to lock in some of those big gains because it’s always possible that FB sees the teens again of course. Not likely, IMHO, but certainly possible. More likely, I’d expect to see it trade in the high $20s and on up towards $40 before the year is over.” I’d say it’s playing out pretty much according to playbook so far.
Q. Do you have a number in mind to get out of GOOG before it gets dumped by the funds?
A. I sure don’t think that GOOG is nearly as over-owned by the fund-managers or the retail crowd as AAPL was at $700. Indeed, I think everybody’s so expecting GOOG to follow the recent AAPL collapse-after-the-spike action, and that alone is another reason not to expect GOOG to collapse here.
Q. Cody, do you still feel that those GS and MS call trades we made recently will pan out in the mid term?
A. I’ve still got 10-20% gains on those recent MS and GS puts that I bought last week, and I might have already locked in some of the even bigger gains we had before they rallied the last couple days, except I think they provide a great hedge to our overall net long portfolio. And with the markets at all-time highs, strategically it’s a time I’d like to have some hedges on the sheets, as I’ve been noting lately.
Thanks much.
Q. I’m slowly beginning to understand the method to the madness…
A. I don’t know that anybody will ever figure out the “madness” of the markets, but we can apply a reasonable and profitable method to trading them over the long-term.
Q. What do you think of the DG and DLTR shorts going forward?
A. Nothing’s changed, I think they are in a secular decline and we’ve locked in some nice gains on their recent crashing, and I’ll look to add some of that short exposure to these names back to the sheets after the stock settles down here.
Thank you!
Q. ACFN/Acorn Energy/ bought a tiny amount and is down 18% or so, thinking of scaling into more. Any thoughts on ACFN?
A. I like Acorn and it’s on my list of very high risk/high potential return alternative energy stocks. At $6.60, it’s yielding 2%, which is more than Treasuries. Obviously it’s riskier than Treasuries. Well, except for that whole Treasury bubble that has to pop eventually…but I do digress.
Q. Cody, do you have a development stage company in the touch screen interface space on your radar by the name of Uni-Pixel or UNXL?
A. Not off the top of my head, but I’ll take a look at it.
Thank you.
Q. Any thoughts on MIDD?
A. I have no edge on this type of industry or company: The Middleby Corporation, through its subsidiaries, engages in the design, manufacture, marketing, distribution, and service of commercial foodservice and food processing equipment in the United States, Canada, Asia, Europe, the Middle East, and Latin America.
Q. Cody, can you drop by the message boards more often? I think we all miss your notes and comments there in between these chats. 🙂
A. Yes, most definitely, and I get a lot out of your guys’ daily Subscriber Chat room, myself. I was a little bit overwhelmed by the wedding/honeymoon/sickness/finding-new-stocks, but I’m back full-speed now.
