Let’s rock n roll. Ask me anything.
Q: Cody what is going to happen in the next stage of the technology revolution?
A: Big topic and trying to answer a question that big reminds me of when I’d be up ranting about the Republican/Democrat Regime on TV and somebody would say, “Well, what’s your solution to the country’s political problems, Cody?” Not something I can answer in a 30 second sound bite on TV and I can’t really answer your big question in this short Q&A format.
Here are some things to look for in the next phase of the tech revolution: 1. Ever faster broadband speeds both wireline and wireless. 2. Projector screens built into smartphones/tablets. 3. Non-touch interactivity (speech, motion recognition, eye-movement control, etc). 4. Why don’t any car companies just offer me the ability to plug my smartphone into my dashboard display so it mirrors what’s on the phone? I don’t need Cadillac CUE in my wife’s car. Even though she likes it, she agrees it’d be better just to see an interactive display on her dashboard than the CUE.
Q. I am net short right now bought spx puts this morning for June…. Isn’t this trade the most obvious right now with all the bullishness and the way the market is ignoring any negative issues
A. Are you thinking that an obvious trade is a good grade or a bad trade? You know how I often remind you guys that the hardest trade to make is often the best one, but I’m not sure how that applies to the most obvious trade to make. At any rate, I don’t know that I’d call it all that “obvious” because there’s gotten to be an ever bigger contingent of bulls as we’ve started crossing into all-time high areas in the major indices and I would probably call “buying spx calls” being the more “obvious” trade.
Q. I guess obvious for us who listen and read Cody… The bulls are stomping full force nothing can bring the market down QE is endless and great for the markets… The markets are breaking to all time highs… No panic over little cyprus and wealth stealing…. Seems obviously contrarian to short here.
A. Yes it is probably ironically obviously contrarian which is almost a oxymoron. On that note, I often see trader’s out-think these types of “obvious” vs. “contrarian” vs. “obviously contrarian” vs. etc. I call it, “Fade the fader’s fade when the fade fades.” Ha.
Q. As you expected the market went down. Please keep us updated when is the right time to cover the shorts, spy puts, GS puts. etc. Do you think the market will have bad days going into May like the previous year. As and when your analysis changes and you think the market has short term bottom, let us know.
A. I don’t know that I’ll know the “right” time to cover our shorts, hedges and sell our puts, but I’ll certainly let you guys know when I start to do so. Those GS puts from a couple weeks ago are nearly doubled now, but I’m holding onto them and my high cash position and other hedges for now.
Q. Cody, I read a note this morning containing an interesting take on the AAPL valuation. A short excerpt: “Apple has pulled three consecutive black swans out of Steve’s Jobs’ arse. That’s impressive, most technology companies manage one. Nokia and to a lesser extent Motorola in mobile phones. Palm is handheld device. The list goes on as, just like biotechnology, the tech industry is fertile ground for positive black swans. The mistake many investors are making is extrapolating those black swans to a continuous line of black swans. The odds of that happening are minuscule.” What do you think about this view?
A. I think there’s a lot of valuable insight in that analysis for tech investors in general. I don’t think that AAPL’s eco-system, growth-rate and earnings and therefore valuation can go much lower than 5x next year’s earnings…but regardless I think in two to five years, AAPL hits $1000 at some point.
Q. Hi Cody, Cirrus Logic continues to drop like a stone. With a low PE and recent earnings beats, what gives? Do you think this drop is Apple related, the law suit, or what? Can you give any insight on CRUS? Thanks.
A. Take a look at this 5 year chart of CRUS vs AAPL and you’ll see that CRUS has been a high-beta (more volatile) version of AAPL. I haven’t worked on CRUS’s prospects lately, but you’re right that it’s mostly related to Apple’s action/rumors/hype/etc.
Q. Why did you rate QCOM a 6? What do you think its prospects are?
A. Qualcomm’s valuation isn’t easy to stomach and when the momentum in the market and in semiconductor stocks like Qualcomm in particular starts to fade, QCOM can have a hard time getting juiced higher. Longer-term, QCOM’s still set up for big growth ahead.
Q: Can you comment on why all (it seems) networking companies lack performance recently?
A: It doesn’t just seem that way, it’s pretty much true. Most networking stocks have been underperforming for the last few months. I think there’s a transition in the marketplace fundamentals as the enterprise-centric networking firms start to see some softness in demand while the carrier-centric networking firms are seeing some increased demand.
Q. What do you think of a FB phone in an already crowded space seems like it would be a novelty item for teens to me…. Any thoughts on RIMM short
A. FB phone ain’t really an FB phone. Just a new app for FB for all Android phones being rolled out pre-shipped on the HTC phone that they’re announcing now. @jake fistes RIMM short is all about timing. I think RIMM is still doomed, as I have since it was above $100 a share and I started writing that Rimm is doomed. BBRY these days. Same diff though.
Q: Is Verizon (VZ) a sell at this level?
A: Verizon drives me bonkers with their endless waste of cash. The company does $30BB plus in cash flow every year, $15BB in cash flow even after their spending on equipment and cap ex. If they’d saved their cash instead of doing tens of billions of dollars in stock buy backs and annual dividends, the company’s balance sheet would be clean and they’d be in a position to completely wipe out their competitors. Instead, it’s a dead stock but one with a great dividend. I don’t think it’s a “Sell” though.
Q. Hi Cody. Can you comment on LNN and corn prices and the forces that are impacting LNN stock now and into the foreseeable future? Any concern here?
A. I don’t think we can try to time our LNN buys and sell off corn price or the forces you’re talking about with this. LNN and the other water plays are long-term investments for the coming long-term potable water shortage issues facing the planet and our nation.
Q. SLV just hit a new support level. I know you are not big on technicals or paper metals but I feel there is a trade here. I have had this order open for months until it hit today.
A. I don’t disagree. I think Silver looks like a better near-term long-side trade than Gold, but I like them both for the long-term. Careful using SLV for anything other than a trade though.
Q. I am waiting for the healthcare company you eluded too when you discussed the arm surgeries as well any timetable to open a position in that company.
A. You mean the hand transplant surgeries from my buddy Jaimie Shores at Johns Hopkins? I’m working with him on these ideas and I’m learning them still, so stay tuned. If these revolutionary medical technologies and the companies creating them work out, they’ll go 10x higher in the next couple decades. Not rushing into any of it though.
Yes that one. Thanks.
Q. Hi Cody, I’m getting into security analysis. I was looking for a few good sources for getting historical data on stocks. What I’m looking for is not just price history, but also historical data on things like: earnings, book values, shares outstanding, market cap etc… Do you have any suggestions? Thanks.
A. A Bloomberg Terminal is expensive if you’re not working at a big shop that’s paying for it for you, but that’s probably about the only place I can think of off the top of my head that would have the kind of historical data you’re looking for there.
Okie dokie, folkie. I’ve got some errands to run in town before I head to NYC for a birthday party and some work tomorrow morning. Thanks for yet another stimulating discussion today.