Let’s rock n roll.
Q. Hi Cody, I have a question regarding the NUGT (Direxion Daily Gold Miners Bull 3x Shares). I have recently brought this at 12.40 or so. Can you please let us know what do you think about this and if this has any/lot of risk in it. It has a market cap of $200 M. Please let me know about it if I can keep it for gold to go up.
A. That NUGT is exactly the kind of ETF that I’m warning all everybody against “investing” in. If you’re looking to make a trade that’s measured in a few days’ or a couple weeks’ time frame, then the NUGT is fine for aggressively making that kind of a trade. But when the crows come home to roost, I don’t think that those ETFs and other places that “promise” to be able to deliver physical gold will deliver. It’s not easy to scale into gold coins and physical gold bullion and that’s why you keep seeing me talk about trying to find yourself a reputable local coin dealer that allows you to no more than 5% premium over spot prices. The gold and silver coins and bullion that I’m talking about investing in is forever or until a Revolution happens.
Q. Thanks for your answer on NUGT. So its ok for the short term right? My question was even the GLD went up a little today NUGT was down 10%. I agree that I invested without thinking (dumb). After your post on gold buying and short term ETF buying I picked it as someone else told me to and don’t have any idea why it went down when gold hardly moved. Depending on your answer I will come out of it with losses.
A. I’m sorry to say I don’t know what else to tell you. I would have expected you to get a nice pop on something that’s supposed 3x leverage the daily movements of gold spot prices. That’s yet another reason to just stick with buying some coins and bullion instead of trying to trade or invest in this paper stuff.
Q. If the thought is GOLD will rise as a result of central banks around the world printing money would gold not be a logical buy here for many? Do you have a target for gold itself? Are we missing something? Not looking for instant gratification buy having fallen 500 dollars from its peak it seems to have many questions around that thinking gold as an inflation hedge if it can just sit at 1350-75 an ounce?
A. Yes, Elad, that money printing from the Central Banks around the world is likely to trump any other forces at some point when its too late for the Central Banks to pull back on the reigns. I have a target for gold of $2000 in the next two to three years and I figure I’ll see $100,000 for an ounce of gold before I die in a few decades from now.
Q. I understand the buy-the-real-stuff and avoid-or-short-the-ETF philosophy on precious metals. My question is, do you see any difference between Silver and Gold in terms of future performance (either the DETF as a short-term play or the actual stuff for longer-term holding)?
A. Silver will probably be a short-term higher-beta (more volatile) version of Gold and longer-term it probably won’t go up quite as much in value.
Q. Is SLV any better or worse a play than GLD, with all you’ve said, Cody?
A. SLV, GLD and all the other precious metal ETFs and anything other than actually holding the physical gold and silver coins and bullion in your own two hands is defeating the purpose of this investment.
Q. Are you still bullish on Apple for 2nd half of year?
A. Yes, but as I noted in the Subscriber Chat earlier today, I’m not so bullish with Tim Cook’s leadership right now. He needs to do something besides show up at work and keep the plane at flight. Steve Jobs would be designing and demanding a new spacecraft by now. Tim seems happy to be enjoying the view. Sigh.
Q. Hello Cody – Perhaps this is redundant in light of your posts on the topic of Apple but, can the negative sentiment get worse?
A. Yes, the sentiment can always get worse and last longer than anybody ever expects. It’s the markets versions of testing each of us.
Q. I am sitting on a substantial AAPL loss because I rode the stock down from $700. My big bad. Do I simply let it go now, or do I wait for another quarter or two to see what happens. Another question-where is GOOG going? I sold for a profit when the media started talking about it a couple of weeks ago.
A. See my answer to the questions about how to trade CRUS if you bought it and have a loss in it now. I think AAPL will still get to $1000 someday, so I am holding my long-held AAPL common steady, despite the big drawdown from $700.
Thank you very much for your advice. I have confidence that AAPL will go back up even if Cook is not coming up with anything new. It does look like he is not Steve Jobs. No one else is either.
Q. Hey Cody, I’ve asked about Cirrus Logic before, but sorry, I have to ask for advice again. With today’s huge drop, I’m down 33% on my CRUS position. Is it time to cut some losses? I’ve never been one to buy high and sell low, so what’s your take….do I ride this one out? Thanks.
A. Headlines today, causing the 13% drop in the stock: Cirrus Logic (CRUS), whose audio chips are used in Apple’s iPhones and iPads, reported slightly lower than expected preliminary revenue for its quarter that ended in March. Moreover, the chip maker predicted that revenue for its current quarter would come in at $150M-$170M, significantly below analysts’ consensus estimate of $195.42M. Meanwhile, Taiwanese technology website DigiTimes reported that shipments of Apple’s iPad mini would drop 20%-30% this quarter, compared with the previous quarter. ANALYST REACTION: In a note to clients, Jefferies analyst Peter Misek wrote that Cirrus’ guidance “reinforces” his belief that Apple’s second quarter guidance will be weak. The analyst expects iPhone shipments to sink 25% in the second quarter compared with the first quarter, and he expects the company’s second quarter revenue to come in well below analysts’ consensus estimate. The analyst maintained a $420 price target and Hold rating on Apple. TODAY’S PRICE ACTION: In late morning trading, Apple sank $20.50, or 4.8%, to $406, while Cirrus slumped $3, or 14%, to $18.40.
As to answering your question — First, please don’t apologize. There’s nothing wrong with asking for help and advice on a losing position and we all have them sometimes. My suggestion would be to sell 1/3 or 1/2 of it here and catch your breath. You don’t want to look back at the price you paid for the stock because the only thing that matters to you now is where you think it is going from here. You can buy back what you sold after letting your brain and fingers rest for a bit and reanalyzing the stock anew. You can also just go ahead and sell all of it and take the loss and move on if you think that is the right thing to do after you catch your breath.
Q. Any thoughts on CIEN at these levels? Also, are you still as confident in AAPL (long term) as ever?
A. I like CIEN down here near $15 with a time horizon over the next year or two. See my earlier comments about Tim Cook vs Steve Jobs, but yea, I do still think AAPL will get to $1000 some day.
Q. Read your post on strengths and weaknesses yesterday… and your discussion about phones/platforms/etc. Reiterated that BBRY is definitely on the weakness side. Is it time to pull the plug on BBRY based on the fact that the new phone will NOT pull them out of trouble? Short? Puts? Wait? (Maybe even wait for AAPL ER to see what it does for the category?)
A. I don’t see anything wrong with starting a short position in BBRY here. You can always cover it if it goes against you too fast. Or just use puts to limit your loss exposure to 100% of a small piece of capital on the trade. I think RIMM will never get above $20 a share and that it will be a penny stock in two years.
Q. Thanks on BBRY, Cody. Should I go for longest-term puts if I choose that route?
A. Probably because I don’t know when or where the catalyst will come. Could take a while for the market to truly write off BBRY as I am.
Q. ZAGG getting pounded too. Any more updates or thoughts?
A. All things Apple-related are getting crushed today. It is what it is. I still think the stock can get to $20 if they execute on their plan for the next few quarters.
Q. Yesterday, Yahoo reported earnings and it is bad. Do you think we can short it ? And where do you think market is heading into may. Is your short term bearishness means into may also?
A. I wouldn’t short YHOO simply because it’s got a lot of momentum investors behind it in that chart and the bar is low enough that if the company can deliver some topline growth or even just continue to give the impression that it can do so, it will likely be tough to see that one crack. I’d wait until it’s down 10% or so from its highs some day and then look to build into the YHOO short if that’s a stock you’re looking to short. As for the markets into May, I don’t know. I won’t know until we see how April plays out.
Q. I am glad I got some BRK-B, NKE, KO at times like this. I got a cost basis on CRUS Of 35 so down almost 50% and I went slow into this,
A. Yes diversification is key to success over the long-term. We all will suffer losses like you are with the CRUS. See my earlier advice to the prior question about how to handle that trade.
Q. Cody, at what price does AMZN become a buy?
A. It already is a buy depending on your time frame. Scale into some more, maybe 1/5 position, if you feel like you need more exposure to AMZN for the long-term. For the short-term, I’m not even trying to figure that out.
Q. Connecting with Trading with Cody has been invaluable for sorting through the media news, but one casualty after another like GLW ..remember gorilla glass you would pound the table and I got Onboard and then got hammered…so Cody this is a very difficult business investing…I am appreciating having these slow and steady stocks in my mix. My question is on follow through and I am feeling like TWCody has been like Being at the rodeo and getting thrown off and hitting the ground hard following many of your calls and you remain upbeat. It has been getting hard for me and so if anything I am feeling the need to be even more cautious in real time.i guess that is it finding balance in the midst of all the revolutionary volatility .How do you do this for you? Sometimes it feels like living in new Mexico helps you stay grounded in the real world. Ok thx.
A. I’m sorry to hear that you’ve had losses on some of the TWC trades. As you guys know, I am the first to tell you that I am fallibile and will make mistakes on trading ideas and investments, just like anybody else. I’ve had a lot of success over the years and so have my long-term subscribers but we’ve also had to persevere through and learn from our losses. As for finding some balance and seeing past the panics, manias and hype that dominate the headlines.
1st- Turn off the TV news. I have worked in the sausage factory that is TV news and I can tell you that it’s call crap, propaganda from scared producers who mostly just want their weekly paycheck and from a bunch of insecure and mostly stupid reporters who look pretty on TV can handle reading a teleprompter without stuttering. 2nd – Stick with us at TradingWithCody. I’ve had a lot of success over the years and so have my long-term subscribers and you’ll learn more about trading, investing and managing your money in a community like we’ve developed here than you will in ten years of working for a sellside investment bank.
Thanks and see u next week here for the Live Chat and see you around in the Subscriber Chat soon. 🙂