Here is 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.
Howdy folks. Ask me anything.
Q. Cody, I am hearing a lot about a big pullback in May with the last couple years having pullbacks in May. Do you think it will be same this year also? I see that the market is closely following last year from JAN till now.
A. The more we hear about a big pullback in May the less likely it is to happen. We really nailed the “this year’s market is set up to be just like last year’s market” back in December when I was writing about that and setting us up for that. But you know how it is — now that everybody else is on board with that concept, it’ll likely be a briefly self-fulfilling prophesy and then the markets will do exactly opposite what everybody is set up for.
Q. AAPL has had a $50 run. It is down today about $5. Is this going to be again the “sell in May” thing?
A. If the sell in May dynamic is going to play out, it’ll be a lot worse than a 1% pullback. Which I think is your question. As you know, I sure prefer to be buying on panics rather than at all-time new highs in the market. I do think this market is likely for some panicky pullback at some point, but as I’ve been pointing out since 2009, the 0% interest rate and unprecedented quantitative easing we are living through right now is fueling a stock market bubble and I don’t think it’s about to pop quite yet. So, for trader whose timeline is measured in days, I think you probably stick with the upward trend. For a trader whose timeframe is measured in weeks/months, I’d be a bit cautious. And for investors, I think you just ignore all that and stick with the best stocks you can find and be ready to take more exposure off the table in the next couple years when the bubble is likely bigger and likely getting closer to popping.
Q. Cody, is selected tech the new leadership? There is no growth anywhere else.
A. The good news is that I’m just starting to hear more and more traders ask that very question. The bad news is that when everybody ends up moving into tech, it will be time for the next rotation to the next hot sector. I do think tech is acting very strong and like there’s a lot of money ready and willing to move into tech if earnings continue to be decent in tech vs. the broader economy.
Q. Considering the endless printing of money do or have you considered putting some money in a bank in say Canada which seems to be (is) more fiscally conservative to diversify away from this ridiculous debasement of our currency?
A. Interesting thesis. But here’s my answer – if and when the major currencies of the world really do end up nearly worthless, Canada will not be a safe haven. I wouldn’t want my money sitting across the border when the next collapse comes.
Q. Would you at some point be adding to the short positions of JPM & MS. I haven’t taken a position yet but don’t trust the banksters and their complicit Gov. thugs. It seems as though the banks can do as they like b/c the ‘Law’ is on their side, your take?
A. You got that right — as long as people keep voting for the corruption that is the Republican/Democrat Regime which is wholly owned by giant corporations and big banks, specifically, the banks seem to have an endless line to subsidies, accounting gimmicks and lawlessness that will guarantee they always show earnings growth. All businesses that depend on government subsidies for earnings eventually collapse because they wouldn’t have been depending on government subsidies for earnings if they had a viable business to begin with. My timing has been terrible on these financial shorts, but I remain confident that at some point the shareholders of the big banks will be crushed.
Q. If I had to bet I would think you have read “The Law” by Frederic Bastiat. I believe everyone should be familiar with the principles outlined. Hope this doesn’t seem out of place here!
A. To be clear, I’m in no way endorsing his books or ideas, as I always strive to be an independent-mind, free-thinking individual. I read Bastiat’s The Law back in college. Long time ago. Here’s something from the book that every Republican who considers him/herself a believer in free-market and/or capitalism should read and think of next time they go to vote for a party that loves agriculture subsidies: ““Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all. We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.” In today’s day and age, the Republican/Democrat Regime DOES raise grain. With your socialist tax dollars. If you vote for Republican/Democrats, Bastiat would consider you an extreme socialist. My how far we have fallen from a free-market, capitalist, free society, eh?
“Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.” ― Frédéric Bastiat, The Law
“But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.” ― Frédéric Bastiat, The Law
“When goods do not cross borders, soldiers will.” ― Frédéric Bastiat
“Now, legal plunder can be committed in an infinite number of ways. Thus we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on, and so on.” ― Frédéric Bastiat, The Law
Q. What are we longs looking for in FB earnings tonight–and hopefully will be embraced as the 4th horsemen?
A. The longs want to see continued acceleration in mobile revenues. I once wrote an article about how FB is currently generating about 1.5 cents per day in revenue per user on the site, or $5 a year last year. Cable companies and telecom companies generate about 300 cents per day in revenue per customer. If FB can double revenue per user this year, they’ll more than double sales overall, and earnings will be huge. I don’t think that’s an outrageous goal to hold for the company and I think they could do 20 cents per user per day in a couple years. Tonight’s earnings won’t really tell us that much about the long-term, but I do expect if FB can execute on their business plan at all, the stock will be considered a 4th tech horsemen in a couple years.
Q. What are you looking for in the FB earnings today aside from EPS? Eyeing any specific data points from them?
A. See above. FB needs to show mobile revenue growth acceleration in tonight’s call. I think that metric and that metric alone will be the catalyst of tomorrow’s action.
Q. Cody, what do you think of FB into the earnings tonight? What kind of call options do u think are better to buy now before earnings if you think the report will be good tonight?
A. For FB options gambling into earnings tonight, I’d stick with slightly out of the money or slightly in the money call options expiring in June or maybe May and July to spread out the risk of the gamble at least a little bit.
Q. Cody, when DO YOU believe Apple will be releasing a new Hardware product this year? I believe the software update will be followed by hardware release of a potential new revenue stream. Is it safe to bet that Apple will be reaching 600+ levels by Q3 or 4?
A. Maybe Apple is setting up their entire eco-system of Macs, MacBooks, iPads and iPhones to run the same (or very similar) iOS operating systems. Apps on Apple TV and your Mac and your iPad and your iPhone and they all work seamlessly together and alone. iCloud really needs to be revamped and that’s on the horizon too. More hardware is coming sometime this year and anything Apple releases that surprises the market will likely help you get your $600 price target sooner rather than later.
Yes, I am a trader guy, so I was thinking about sticking with upward trend. Thanks.
Q. Dear Cody, how do you think of FWLT at this level? Also, any recommendation on the Jan 2014 600.00 APPLE Call? Thank you.
A. I don’t like investing in pure cyclicals and I don’t like investing in non-US based companies, so no real opinion for you on FWLT. The Jan 2014 $600 Apple calls would be a big gamble that the market decides to pay up for AAPL’s future earnings before the end of the year. When a big stock like AAPL loses its mojo as AAPL has, it can take a while to get it back. If you really want to make a high-risk/high-potential-reward trade on AAPL that’s not a bad option to use.
Q. I have been holding that option for a while and it currently at a loss still. At what stock price range should I consider sell it since shooting for 600.00 by Jan2014 might not be reasonable? Thank you.
A. No easy answer. If you only had one of the options, I’d probably let it ride and hope to catch a big win or just be willing to accept a total loss if AAPL can’t get back up there before your expiry.
Thank you for the advice.
Q. Thoughts on NUAN at these levels… close to 52 week low and Carl Ichan owning 10%. I know you used to own this name, are you looking to re-enter at all?
A. I don’t think NUAN is delivering on what the company should be able to deliver for shareholders in this high-growth industry of speech recognition. It’s a great industry and NUAN is the purest play on it, but I got sick of the management failing every quarter to deliver what they’d promised and seeing the stock get hit like it did post-report ala yesterday.
Q. Update on MRVL position. WDC is up over $50 a share and while the death of the PC is being advertised, the HDD makers seem to be doing just fine which in turn should benefit MRVL even more?
A. I couldn’t have written the current fundamental set up for MRVL any better. Nicely phrased and nicely analyzed on your part. I’ll just say I agree and I’m still holding most of my MRVL with big gains since we entered the position.
Q. I would like your opinion on AMZN here, I sold some FSLR and have money to invest.
A. Congrats on the FSLR trade. I think Elad’s Amazon write up the other day was dead-on. For the near-term I’m worried AMZN might lose a little luster and see a multiple contraction, but it’s certainly a stock I want to stick with for the long-term.
Q. Any thoughts on YHOO?
A. Yahoo can only increase earnings without revenue growth for so long. The new CEO is doing a great job of hyping Yahoo’s future, but now the bar is set very high for the rest of this year and next. If Yahoo can deliver some topline growth and some new mobile revenue streams, the stock can go to $30 or higher. If not, it’s headed back into the teens.
Q. Cody, Erbya or anyone have a familiarity with CIMT: It’s involved in 3D printing, has nominal or nil debt, generates good cash flow. It’s financials look strong to me.
A. CIMT is a micro-cap. $75 million valuation, $10 million net cash in the bank. Looks like a hype 3D printing play to me, but that doesn’t mean it won’t catch some big spikes and maybe double or triple from this current level when 3D printing gets hyped up again in the stock market. Not my kind of play though and you’ll mostly want to try to catch the trends of 3D printing hype to 3D printing hate over the year if you want to trade CIMT.
Cody, Thanks for the insight. 2-3 points and it’s gone!!!!
Q. Any opinion on GSVC as a long?
A. I see it’s trading at less than cash these days, but here’s a tell that the management there is less than upfront about certain things with their investors:”GSV Capital Corp. is a BDC fund specializing in investments in emerging growth companies and venture-backed private companies. It may also invest in select publicly-traded equity securities of companies that otherwise meet its investment criteria.” Why don’t they spell out what BDC is. Business Development Company. I worked at a BDC as the dotcom bubble inflated and then popped and it’s not something I would casually invest my hard-earned money in. For a trade right now while it’s trading for less than cash, I like it. For an investment though, no way.Regarding the chat…I have spent the last two weeks working with our IT people and outside vendors to find a chat program that will work consistently for us on the site. Stay tuned, we’ll be installing it this weekend.
Q. Do you see any difference in buying metals from say ampex vs. local bullion dealers?
A. I like supporting local businesses much more than big businesses located elsewhere. I like to build relationships with small business owners and the community. I trust the local coin dealer I found and these days I don’t trust nobody in the metals business if I can’t shake their hand. All that said, I think if you really want to buy some gold and silver coins from apmex for now it’s probably not a bad thing.
Thanks Cody, I get it, I didn’t think of the community angle.
Q. Know of any biopharm stocks about to spike up?
A. I opened my tech-centric hedge fund in a “hedge fund hotel” floor on the 40th floor of a high rise in midtown Manhattan in 2002. My next door neighbor, who eventually became an investor in my fund as well as a great friend, ran a biotech-centric hedge fund. He spent as much time trying to get an edge in biotech/biopharm/pharma/health-care stocks as I did in tech, financial stocks and economic trends. I realized soon on that we should each stick to our specialties most of the time or else we end up mostly gambling rather than investing/trading. So the short answer to your question is simply, no, I don’t have any biopharm picks about to pop for ya.
Okay, that’s a wrap. When the show would end, I used to grab a drink or a coffee with the fans who would show up at Fox Business Happy Hour back when I was an anchor over there. Too bad we can’t all have a $12 beer or a $5 coffee at the Bull & Bear in the Waldorf-Astoria as today’s show (chat) ends.
