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.
Yo ho ho, folkie dolkie. Let’s rock the house. Ask me anything.
Q. As a member who is not well-endowed in order to retire well-off I need a 10 to 200 bagger. Your main stock picks are outstanding but , IMHO, similar to TQQQ (triple-leveraged Nasdaq ETF) in upside potential. Do you know of any tech stocks which will likely be 10 to 200 baggers years from now? I am thinking of cutting-edge tech stocks that would specialize in things like military laser weapons, 3D food printing, and genomics for cancer gene testing.
A. Great question! I’ll do a new Investing eBook picking my five favorite potential 10 baggers for you guys over the next week.
Q. When you look to add a stock after trimming do you look for technical support levels or do you just use your gut? FB you trimmed at 29 and $27 didn’t entice you neither did $25 and now $23.3 today. When do you decide to get back what you bought? What do you look for or wait to see?
A. That’s the part of the trading/investing that’s more art than science. While I don’t necessarily ever look at charts per se to help me decide what and when to trade, I don’t like to overload on a stock in a downdraft when we’re already at all-time highs in the broader markets and have had a huge run since coming back to the markets in 2010.
Q. Cody, since your call on FB to trim after good earnings and pop on good volume to 29.25 the stock has been down almost everyday for 20% already? Are we missing something? Should we have not just trimmed with you at 29 vs. selling most of it?
A. I think FB was run up not just after earnings, but also in front of their FB home phone or whatever that thing they rolled out with HTC was called. It bombed and that’s been the main reason for the downdraft since, which has, as always been exacerbated by the weakhands puking on the way down. I am still confident that FB will be much higher in a few years’ time than the current quote, and I’ve been quite patient in waiting go buy any back. I’m likely to do so, buying some FB long-dated call options very soon while the stock is below $24 or so.
Q. FB is down another 8% from last week when you said you’d be waiting for a further drop. Seemingly lots of negative sentiment. Are you still going to hold off? You called $40 by end of year multiple times. Is that still your call? I’m concerned with another APPL-esque downward chase.
A. I’m always concerned about losing money on any trade, including FB during this downdraft. That said, I have to remain disciplined and rely on my homework and analysis and keep nimble and etc. So I’m likely to buy some more FB soon here.
Q. What’s your take on LNKD and it being the de-facto site for social networking in the business world growing faster than FB? Is it a name you are interested in buying as its undergoing its won correction as many other names are exhibiting GOOG, FB, CIEN until late, LNN?
A. I think LNKD has got a lot of institutional support and good shareholder base. More importantly, I think LinkedIn is a good company and will be a big winner over the next decade or so. In the near-term, the stock is likely to be a high-beta version of the broader markets, meaning more volatile than most stocks. I am interested in nibbling on some LNKD and letting it ride for the next decade as part of an FB/LNKD(and ZNGA?) social networking basket.
Q. Yeah, a big “?” about ZNGA. Can you expand on that?
A. ZNGA has $1.5 billion net cash on the balance sheet and is valued at $2.7 billion. At $3/share it’s a decent never-expiring call option that they figure out how to build some kind of value with that $1.5 billion over the next five years.
Q. Cody, any thoughts on the mini options? Do you think it’s a good vehicle for trading Apple?
A. As with any option, if you can buy them with little or no premium and your catalyst for the trade is going to come before the expiration date, and as long as you understand the risks of losing 100% of your long option trades and MUCH more than that in short option trades, then the mini-options should be fine.
Q. JNPR and CIEN have been doing well. Telecom spending – will it finally happen?
A. Yes, I do think the telecom spending boom cycle is here and that JNPR and CIEN are selling some of the best equipment to meet the needs of the carriers. Juniper does routers and they are what route the Internet videos and TradingWithCody.com chats and so on, and only they and Cisco are selling those wares. There is a chance that software layers above the router takeover some of the routing steps, but I think the sheer demand for ever more wireless and wireline broadband by consumers and other end users is going to swamp the networks for the next couple years at least. Driving demand for JNPR routers.
Q. Cody good afternoon! FNMA Fannie Mae: this stock seems to be increasing everyday without question. What are your thought this stock. Is it worth to jump in or did the boat pass by? It seems to me that the government has a huge influence on this stock. Can you give me a little guidance on FNMA? Another concern with this stock is the volume its taking on. For example, the volume trade for today so far is 226,000,000. High volume like this can’t be too good or can it?
A. FNMA is worthless to shareholders. They owe the government more than a $130 billion before they can recapitalize or reward shareholders. I pointed out a few weeks ago when somebody asked about FNMA that the ONLY reason the government “only” owns 70% of the shares is because that’s the only way they can keep FNMA’s worthless debt off the Republican/Democrat Regime’s balance sheet. I would be tempted to SHORT SELL some FNMA but I’d never be tempted to buy it. The only way FNMA stock can go up in price is for a greater fool to buy it from me, whereas the value of the equity is truly $0 and likely always will be until/if/when they fold their doors completely or fully recapitalize.
Q. To follow up on FNMA, why do people invest in such a stock? Is it more of a quick buck or two?
A. It’s truly a shame that the government and the SEC and the FED allow FNMA to continue to trade. They can not ever claim to take their job of protecting the little guy seriously as long as they let a worthless equity trade long after it should have been declared dead. Again, if they stop the trading in the equity, they’d have to put FNMA’s debts on the Federal Debt ledger and that would crush the regime in one swoop of honest accounting. And so it goes.
Q. Hi, Cody: Kind of a strange question, and maybe it’s not logical or fair to ask, but . . .thinking about the various mid- and long-term interest-rate and what-happens-when-the-bubble-bursts predictions and recommendations you have made, if I wanted to make a choice between going long in SLV (I’m already in there, and down lately, as you can imagine) or short (via puts) in IEF (banking on rates rising) — which would you go for? By next January, what would you say is more likely to happen — SLV up or rates up? (See? Maybe an unfair question. And I know the lose-your-money risks of the put.) Thanks.
A. I appreciate your recognizing how tough/unfair a question that is you are asking there. That said, let me do feet-to-fire analysis for you on those two trades – The metals markets and treasury markets are both likely at some important crossroads here. The fact that it costs nearly 30% to buy an ounce of silver at your local dealer than the cost of the SLV and other paper silver assets is strange. As is the fact your local dealer is probably out of stock selling silver at that price already. But it’s been like this for a couple months now and it could stay like this for a few months more. On the other hand, the Treasuries sure look like they’ve cracked and if that trend plays out, they’ll be much lower by year end. So feet to fire, I guess I’d prefer the IEF short to a SLV long for the next 180 days.
Thanks for the answer on the SLV-IEF smackdown, Cody.
Q. I read that you left the hedge fund industry because it was more profitable to become a TV anchor prior to the stock market crash of 2008, which you had foreseen. How difficult is it to make money on a stock market crash if it can be successfully predicted? Wouldn’t loading up on puts before the financial crisis have been goldmine?
A. It sure might have been a huge gold mine to be short instead of just trading in my hedge fund hat for a TV anchor hat on FOX. But then again, I wouldn’t have hosted a nationally televised two hour block party on Wall Street itself and I wouldn’t have gotten to interview Ron Paul, Dwayne Wade, Sheila Bair, LL Cool J or heard Republican/Democrat Senators laughing about their dishonesty in the green room after they just went on TV to lie or have gone on the Tonight Show and written into the first draft of Oliver Stone’s Wall Street 2. It was a great trade to have had all those experiences and see the inside of the beast’s belly that is the corporate media/wall street/government/urban machine.
Wow – what an experience you had! Any small piece of dirt on a Senator laughing at his/her own dishonesty? (No need to include it on your “public” Q&A recap…) Or is it “what happens in the green room stays in the green room”?
A. It’s SUPPPOSED to be “what happens in the green room stays in the green room”, but I don’t care! I tell the truth. Tom DeLay and whoever was the most recent Democrat equivalent of his got off the air and Tom started laughing saying, “I used to say that same bullshit when I was twisting arms” or something along that line. I have it written down in some notes I made when I got home. NEVER VOTE REPUBLICAN/DEMOCRAT REGIME AGAIN. The whole of both parties is corrupted and unfixable. I truly believe we can save our country by going independent and being free thinkers and getting back to some rule of law.
Well, thank god we don’t have Tom DeLay to worry about anymore. But I hear you when you condemn both sides of the “Regime.”
I love the TWC community. Thanks for being a part of it and helping us all become better investors and traders (and world citizens) together!
