Let’s rock n roll. Ask me anything.
Q. Cody- with the fed in USA and soon to be Europe pumping more QE money into the system, are we not possibly looking at 2-3 more years of upside? Just ask as at times its confusing to hear 1999-2000 like feel when PE’s are so low if looking at that aspect, people searching for yield badly and no way yield will fly from .35-1% at banks to 4-6% in a meet 12-18 month period unless we see stocks FLY like we saw 2nd half 1998 until 2000. What’s your take? I agree with your possible 3 years left you have mentioned a few times vs. more recent posts like today saying its a 1999-2000 feel.
A. I feel like the longer we sit here net long and bullish and riding this ongoing stock market bubble blowing, it’s like sitting at the poker table with lots of big stacks of chips from a marathon game. Feet to fire, I think we’ve got at least two years left in this bubble and that eventually we see even higher prices than the recently revisited all-time highs. On the other hand, even if it is 1999-like in the stock market price action over the next few months, recall that the Nasdaq itself doubled in the last half of 1999!
Q. With the strength in the market and your belief we are near a top a part of me feels like we are already there. This has an AAPL at 700 feel when everyone was calling for 1000 and from there it just collapsed… Who is left to propel this market higher when the commentary is the same that yours was when people were panic selling now they are panic buying… My question is: is it smart to enter in a long term position at these levels whether it be CIEN or AAPL a correction will take everything down will it not?
A. I like to try to have my fish and cook it too. In other words, you see me actively but slowly scaling into some of my long-term favorites even when I’m short-term bearish as I am now. I use wider scales on the buying tranches when I’m bearish about the near-term.
Q. Hi Cody, Question: I have been looking to buy an apartment or condo since Oct 2012. I would have got one in Oct 2013 for $55K or $60K here in Scottsdale, AZ. I did not buy it then and now the same is selling for $80. I am not sure if I should buy after increasing this much 35%. Let me know your take on housing market in future. Do you expect any other dip in the house prices soon? Should I buy now or wait for another dip to buy? If prices are going to go up more in future, I would rather buy now. Also, I don’t own any house right now and this will be my first apartment I am considering. Another related question: is it a good to buy a condo or independent house if its the right time to buy?
A. Good questions, with no easy answers. I started pounding the table and buying my first real estate a couple years ago in the midst of the panicky bottom in places like AZ and here in NM. Click here and click here for example. From a “trader’s” perspective, I don’t think I’d want to chase that condo up here 35%. However, if you (like me with my land and real estate in NM) plan to live in that condo forever (or for more than say, 20 years) then there’s no reason to care about that extra $20k (over 20 years for example, that extra $20k would break down to less than $90 a month). I personally couldn’t care less whether my land values and the value of my home here in NM go down tomorrow or next year or in five years. I plan to live here forever and by any sain standards, I get SOOOO much more bang for my buck out here in NM than I ever would have even in the worst panicky real estate market ever in NYC or anywhere on the East Coast for that matter. Anyway, it depends on your goals with the condo. As an investment or a “flip” I wouldn’t chase it. For somewhere to live for a long time, then it still sounds like a crazy great deal by most city’s standards. On the flipside, there is nothing wrong with renting and not taking on the risk, opportunity cost, and lock-in of home ownership if you are more like I was for the first 20 years of having left home. I never bought, and I rented apartments in NYC ranging from $450 a month for a rat/cockroach hole in Boroughpark Brooklyn in 1998 to a $5500 a month Soho loft apartment ten years later, along with all kinds of ups and downs and experiences in various neighborhoods and cultures that came with living in more than a dozen places in NYC over fifteen years. I spent my money and energy building my career and not buying property. It was a conscious choice on my part to spent my capital on my career rather than real estate. That’s what I mean by the “opportunity cost” of locking your capital into real estate instead of other places. And finally, I personally can’t stand neighbors anymore and I hated living in apartments for the last twenty years of my life, so I bought land and lots of it and converted a barn into a NYC loft-style house in the middle of it where I can’t see or hear any neighbors most of the time.
Q. Hi Cody, I understand your analysis of the big banks, the corrupt nature of the business. They do perform some essential functions in a capitalism society. What do you think the alternative to TBTF? Bank of Internet?
A. I think the government should simple enforce the main laws of the land like anti-trust rules which would immediately force the break-up of these monstrous TBTF banks. And then simply enforce the laws of the land and bankrupt every one of these firms that have trillions of derivative losses on their books that will never ever be paid back anyway. Then send all the crooks who are laundering drug money, defrauding investors, lying about their asset values, hiding off-balance sheet losses, colluding with regulators TO JAIL FOR A VERY LONG TIME. And never ever take my dad’s and mom’s and nieces’ and nephews’ money to bail out these idiots. Rule of law. It works. Here’s the end-game to this TBTF system in a column EVERY INVESTOR MUST READ.
Q. Cody, for those of us who own Apple common and calls, what are you thinking going into earnings? People think they will miss their own guidance and have bad guidance for the next quarter. Should we hedge with puts? Or sell, with thought it will drop? What are your thoughts on Apple?
A. I think Apple’s gone from wildly overowned to slightly underowned by the professional and retail investor in the last year. I’d rather be long than short AAPL from $450 for the next year. And with less conviction I would say that I’d rather be long than short AAPL from $450 for the next month or two too.
Q. ZAGG has lagged and CIEN has declined since their positive earnings announcement. Any thoughts on either?
A. I still like both just fine here. The more volatile stocks like these two can often lead the short-term movements in the broader markets which is yet another reason to be cautious about the near-term for now.
Q. Any more reassuring literature via emails from your ZAGG contact?
A. Nothing new from my Zagg-ers.
Q. Hi Cody, I have never purchased gold . At this point I am considering coins .Do you have any recommendations as to a reliable company to purchase from?
A. I’m also learning to buy physical gold for the first time in my life, Marvin. I’ve been visiting lots of coin dealers and pawn shops and what not and you want to find one that will charge you 5% or less over the “spot price” of gold (and if you trust that it’s the quality of gold they say it is). If the dealer gives you the willies or double-talks you or confuses you at all, then just politely tell him you’ll think about it and walk out. There are lots of places and dealers who want to develop a long-term relationship with you buying from them and those are the places you’ll want to use.
Okay, folks, that’s a wrap. Thanks for another great chat session!
Thank you Cody!