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.
Howdy folks. Let’s saddle up and ride.
Q. Your article on the Fiscal Crisis seems spot on. But does that mean the GOP/DEM regime has taken us too far down a road from which we can’t recover? Are they really going to kill the golden goose?
A. I don’t think the US is necessarily doomed, per se, but I do think if people continue to elect these Republican/Democrat Regime politicians that we will end up doomed and probably sooner than I’d like to admit. That is, if we don’t start electing some people who have some ideas about enforcing the laws on the books and stopping the looting of our economy and future generations which the R/D Regime always claim are done in the name of “economic growth”, we’re doomed within the next decade. Repeating from my article to which you refer:
Finally, to really drive this point home — do you know how much the loopholes, subsidies, and targeted tax tricks for the 5,000 largest businesses in this country costs us in the deficit each year? More than $1.5 trilion. And end to lending money to banks at 0% and borrowing it from them at 2% along with a simple scaling tax rate on all income and/or purchases and/or assets in this country would instantly eliminate the entire deficit, would enable an immediate surplus and paying back of the existing debt, and full funding of a non-insurance-based universal health-care system.
PS. Would it surprise you guys if I told you that my publishers at the Dow Jones Network just rejected that very truthful and hard-hitting condemnation of the Republican/Democrat Regime today? They reject about 1 out of 50 articles and it’s always the same topics. Just like it was at Fox where at least I was on live TV and generating ratings that they couldn’t shut me up. Ha.
Q. If we do go over the fiscal cliff will this hurt the economy? Surely when the average tax payer pays $2,200 more in taxes it will hurt right? Less iphones being bought etc.
A. The Republican/Democrat Regime will simply find other ways to “stimulate” the economy by borrowing trillions more and hoping it will “trickle down”. I don’t think there’s nearly as much implication from what will turn out to be a few minor decimal points on the average income and purchasing power in even the so-called worst-case fiscal cliff dive scenario.
Q. Cody, in your opinion do you think the whole fiscal cliff thing is already priced into the market?
A. Feet to fire, yes, it’s already priced in. But that doesn’t mean it can’t get panicky anyway at some point in the next week or two. Such a panicky sell off would probably make me an aggressive long again, by the way.
Thanks Cody!
Q. Do you feel the market is toppy around S&P 1440 where we have had resistance a few times? Going into the new year this fiscal cliff Christmas deadline could keep the market upside capped? What do you think?
A. I think the market is wound tight and ready to either break out or break down. The fiscal cliff paranoia will destroy ya, but it very well might drive a 5% panicky decline at some point before year end. Feet to fire, I think the path of least resistance is higher, but I’m not liking those odds enough to get wildly aggressive on the long side or anything like that.
Q. Now that Obama has been re-elected, are there any healthcare companies that you have looked at, that you think will supremely be able to take advantage of the situation over the next couple of years? Or do you really only focus on tech?
A. I do trade/invest in healthcare sometimes. Here’s how I’d do it though — I typically like to short giant taxpayer-dependent business models like health insurance is, but it’s all about timing. I rarely want to try to catch the ride up on these welfare companies like just about every healthcare company is in 21st century America. Romney-care on a national basis, which is what Obamacare is, is just another Republican/Democrat scheme cooked up and fully written by their biggest lobbyists and benefactors and is, like all Republican AND Democrat policies have been for my whole lifetime, WHOLLY set up to benefit big business. Did you see the headline that there’s going to be a bonus fee collected by the legally anti-trust-exempt healthcare insurance companies as part of the implementation of Robomneycare? That is, in addition to these health insurance companies legally rolling up their competitors, in clear violation of establish US law but legislated by the Republican/Democrat Regime not too long ago, they are profiteering on taxpayer largesse which now wholly funds their business models, and here while they are and will be reporting record profits for the foreseeable future, they also get a $25 billion nest egg to share with their R/D crony representatives. I just have a hard enough time investing in great companies like Apple and Google which already do everything they can to avoid paying the same tax rates that you and I do, that I don’t want to go overboard and chase extractive business models with my investment capital. I’d love to get short these companies in 2015 or 2016 or 2020 or whenever their taxpayer-funded gravy trains collapse upon themselves as all socialist systems do over time.
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Click here for an article on the healthcare insurance taxpayer-funded trust fund. From the article:
“Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.”
Cody, thanks for some insightful answers. In the interests of full disclosure, I am a Canadian and generally very happy with our socialist government run health system. Not the best, but infinately better than a private system for those that can’t afford health insurance. However that does not mean it is the answer for USA. Personally, I don’t think our system would work in USA. The big issue for me both in USA and Canada is doctor’s fees and drug costs They are too high and kept that way by licensing boards who keep the number of doctors too restricted and drug approvals that take too long and keep teh patents too long. Let more doctors be licensed and we will see doctor’s fees go down with benefits to the population all around.
Q. Should I still keep my Feb $700 strike on AAPL?
A. Ooh, that’s a tough timing question. Feb is awfully close, and you need a $150 (nearly 25%) move higher by then. I do think Apple will find it way to $1000 or very close to it sometime in the next 24 months, but I have no idea if it’ll get moving towards or even above $700 in time to make those Feb calls pay off for the risk that’s in them. You might consider selling them down on strength and then buying some longer-dated calls with the proceeds when the stock is weak next time. Good luck.
Q. Cody, what are your thoughts on Eric Schmidt of Apple stating that the current competition of Andriod vs. IOS6 is the same as Microsoft vs. Apple 20 years ago and he sees Google clearly staying ahead.
A. I think Schmidt is making a great point and one that Tim Cook and Apple need to think about the things Apple could have done differently to avoid their eventual PC market demise to the Windows complex. That doesn’t mean getting out of the hardware business or licensing OS out, as there are a million ways to make the future of smartphones different from the past of PCs.
Q. Cody, when can we expect to see some positive reporting like apple revisions by analysts? End of Dec, beginning of Jan, end of Jan….? When do they usually start reporting news like that?
A. In the last two days, I’ve seen three analysts raise iPhone unit sales estimates for AT&T, Verizon and/or Apple. Yes, I think/hope/expect that trend to continue.
Q. Hi Cody, do you think that we are starting to see seller exhaustion for AAPL? It seems like every move up has been sold into. Also, do you think retail is doing most of the selling or institution for AAPL? Thank you.
A. No idea on when we’ll finally see some Apple seller exhaustion. I would guess that it’s both retail and hedge fund and mutual fund and sovereign wealth fund and family office funds and mom and dad and Spot and Penny’s cute cat (see discussion above) are all selling the damn stock. Do I sound frustrated about Apple? I might be. Sigh.
Q. Cody you changed your trice target time frame on apple from 12 to 24 months, what’s up with that?
A. Well, 12-24 months has been pretty much the time frame I’ve been looking at for the Apple $1000 for a long time now, I do believe. And the fact the stock now has to nearly double to get to $1000 instead of just rallying 35% to get to $1000 as was the case at $700…well, it’s all a matter of timing and odds for the traders. For an Apple investor, all that really matters is if it gets there at some point in the next couple years or not.
Q. Cody, the smart phone revolution is well underway and it seems to me that the one clear way to play all sides of it is with Qualcomm. Particularly because they are used by most phone manufacturers. I would like your thoughts as to Qualcomm. Why aren’t we in it? Have you considered it? Am I thinking about this correctly? – thank you.
A. You are thinking about QCOM correctly and the company continues to be one of the most innovative companies out there. Just recently they’ve started talking about increasing wireless network capacity a full 1000x over today’s systems. I’ve been hesitant to get in on QCOM mainly because I’ve foolishly waited for a major pullback (say like Apple’s done of late) and it’s never come. I am likely to start scaling into some QCOM long soon.
Thank you for the response on QCOM. I have been waiting for that decline as well. With it down today, I think I am going to jump in as I sold some of my upside calls in SNDK that I had sizeable gains in.
Q. Cody, any thoughts about adding more BIDU?
A. From last week’s chat, no change:
“BIDU was a foreign-based company’s stock long for me, and I’m already obviously regretting it, as it’s not been a profitable trade, even though it remains one of my smallest positions and conceivably giving us a great opportunity to scale into more while it’s down as we’ve been patiently waiting for this kind of a down move before getting serious about buying it. I don’t know though, I’m leery about adding to it just yet and while that might be a contrarian indicator, I’m not looking to force any trades. If I sound a bit flip-floppy on this answer, it’s because I am.”
Q. Hi Cody, how do you see FB for the next months? As your last recommendation was APR 13 target price 22. Still keep it? Thanks a lots and hope best to you from Italy.
A. Just to clarify, that $22 you reference is the “strike” price for the FB calls I bought — not the “target” price, which I rarely ever give on a stock. I think FB’s next few months will depend wholly upon how the continued monetization trends in mobile look. If they are growing sales even just slightly faster than the Street expects, I think the stock can run into the $30s or so. Long-term, I maintain a $100-ish price “target”.
Q. Do you like RIMM?
A. Nothing’s changed for my RIMM stance since last week’s chat: I think RIMM is tomorrow’s Palm. Remember, Palm when it had serious smartphone marketshare back in like 2006? Bono even invested in it. Then the stock collapsed and eventually was bought by the same dummies at HPQ who brought shareholders the Autonomy debacle. I’d bet that RIMM fades again and eventually gets bought by either Microsoft or HPQ or even Yahoo at some point. The RIMM platform is dead and they’ll never be able to make a new eco-system now.
Q. Cody, I did not buy the SNDK 40$ April calls you bought. Would you recommend any other call for SNDK today?
A. I always starting with a small tranche for your first buy in any trade if you think the stock is headed higher. In this case, I do think SNDK’s recent momentum could carry for a while and I’d look to buy a first tranche with maybe 1/5 as much capital as you want to eventually have exposed in call options and then scale into more on weakness in coming days. Two important notes here – as you know, I sold a few of my SNDK calls at these levels as I made a huge gain on that trade to which you reference already and wanted to lock some of it in. And second, DO NOT RISK MONEY ON OPTIONS THAT YOU CAN’T AFFORD TO LOSE. And options should only be used to complement your overall stock portfolio. Options should NOT be a driver of your portfolio.
Q. Cody, am interested in hearing more about the game plan on MSFT. I have no confidence they Softy knows what they are doing with Windows 8, Tablets. etc. and am interested in building up a short position. As always, thanks for your outstanding analysis!
A. I’m working on the MSFT trade idea. Probably about to start scaling into some more MSFT puts in the next day or so.
Q. What do you think about MLNX now after its pullback?
A. Whoa, look at this ONE year chart for MLNX (talk about high beta! This chart has more beta than a carrot soup. Ba da bing. I’ll be hear all week, folks. Don’t forget to tip the waiters.) As usual, it’s a very high bar to get me to invest in a non-US-based company and I’m just not ready to join the Mellanox Mania Momentum Mighty Movers.
Q. Hi Cody, I am wondering if you will recommend any oil stock at this moment. Is NOV a good buy now with recent pullback?
A. Oil and the whole energy complex is a sector that’s another subsidy/welfare driven industry. That said, we are working on a book called “100 Clean Tech Revolution Stocks” and there will be some stocks I like in there, so stay tuned. Still working on the whole sector right now so give me some time.
Q. Cody, any thoughts on shorting the TLT (or buying the TBT) which is showing a double top? Thanks.
A. TLT and all bonds/treasury vehicles are headed lower over the next decade or two. No idea if it starts today though. I’ve shorted the TLT a few times (and a few years ago when I was running my hedge fund, I bought TLT calls a few times) and made some money over the years. But I think it remains a crowded trade for now and the Fed/Repub/Democ Regime seems hell bent on keeping rates as low as possible until we truly blow up, as noted above.
Q. Hi Cody, looking backwards at your advisories on your Option Buys, I noticed that sometimes you give the expiry dates and sometimes not. Any particular reason that you don’t always give us the expiry dates? If they are not there, can I email to you for them?
A. I try to include the expiry dates and strikes whenever I do any option trade and if I don’t it’s an oversight. I usually do get a ton of email if I forget to.
Okay folks, that’s a wrap on the live part. I got a LOT of other questions from you guys via email too and I’m going to have to write those answers up tomorrow because this was an insane amount of typing, thinking and analyzing I just did in the last hour and half here on the Live Q&A. Thanks for dialing in.
