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Cody Kiss & Tell: Building Baskets and Weighting Portfolio Positions

July 8, 2013 by Cody Willard

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.

Let’s rock. Ask me anything.

Q. Hi Cody, last week you wrote “I do believe all of this makes Calgon Carbon a great pure-play on our Mankind Necessities growth industry. I want to build this position up to about 3% or so of the overall portfolio to get started and I’ll be doing about half of that trade in a few tranches over the next couple days to start.” Did you mean you wanted to make CCC 3% of your overall portfolio or the entire mankind necessities basket 3% of your portfolio?

A. Important question, as weighting your portfolio positions is very important for both upside leverage and downside protection. I meant that I’d like to have about 3% of my portfolio in CCC itself, which along with LNN, FSLR and FF would give me about 8-10% of my portfolio in the “Mankind Necessities” basket.

Q. What percent of your overall portfolio are you targeting for the 3D printing and social baskets?

A. I’m looking to build up the 3D printing basket to about as follows: XONE 2-3%, SSYS 1-2%, DDD 1%. The social basket weighting in my mind should ideally be about: FB 3-4%, ZNGA 3%, LNKD 1-2%.

Q. You lowered your rating on LinkedIn to 6. Have you soured on it, or was it always s side bet compared to Google. Of course, you only rank Google at 7…

A. I’ve never linked LNKD’s valuation as it’s always been very rich. That alone keeps me from building LNKD’s rating up higher.

Q. Hi Cody, I’m willing to add some FB, LNKD to my portfolio (no positions on them yet). How do you see momentum for both?

A. Looks to me like LNKD has more momentum behind it for the near-term than FB does. As noted earlier tho, I like FB more than LNKD and the lack of FB momentum doesn’t bother me as I plan to own at least the FB and probably the LNKD for a few years to come.

Q. Do you still feel that GDX is a risky trade? Do you plan on adding more to your position at these levels or just waiting for the rise? If we haven’t built our position yet do you believe that now is still a good time to do so?

A. GDX is definitely a risky trade. For an idea of why, here’s a note from a Citi zombie analyst this morning, “Citigroup says a combination of rising unit costs (15% yoy), sustained high capital budgets and a falling gold price have resulted in a fast contraction in margins – so much that no gold company under our coverage will generate Free Cash Flow at spot gold”. I think that risk is already more than priced in right here right now. But we could certainly be wrong on the GDX for this year even if we’re right about physical gold over the next few years.

Q. Hi Cody. Can you comment on the INTC downgrade and bearish comments that are driving the stock price down? Might the PC slowdown drag INTC down before their mobile efforts can counterbalance? Are we too early on this on possibly? Thanks.

A. I think there’s some big upside to INTC in the mobile space as it finally takes some share from the ARMH/QCOM syndicate. Likewise, I think the whole “PC is dead” trade was already more than priced into the INTC/HPQ/STX PC stocks back as it was happening from 2007-2011. In 2013, the PC is dead concept is dead. INTC could double or triple in the next five years if their mobile chips catch any traction at all.

Q. Can you give us an update as to what you are seeing with XIDEQ? Totally different from our other BK plays in that this thing hasn’t made a big move….just drifted up and down. I bought both times that you did so that equates to down about 29% on this trade so far.

A. Yes, the dang XIDEQ trade has had no volatility, no legs, no lift and no action other than a slow and steady fade lower so far. I’ll be out of this trade win or lose by the end of this week.

Q. Good time to start scaling back into TVIX? Or do you think this bull will march on?

A. I don’t think I’ve ever looked at the TVIX before and boy is it a great example of why these “paper ETFs” are so vile for anything other than a quick short term flip. The TVIX is purportedly a “VelocityShares Daily 2x VIX Short Term ETN” which means it’s supposed to move about twice the direction of the VIX on daily basis. The VIX is itself simply a measure of volatility and not an actual investment instrument. So a derivative of a derivative of a measurement of volatility of stock markets in the US isn’t working as it should. Not a shocker. Stay away from the TVIX unless you’re in and out of it in a single day for a quick flip.

Q. Is the tea party real, or has it been co-opted? BTW, it is possible to have change, if ever so briefly. It only depends on someone with reasonable morals in a position of power. Think of Eisenhower and his teacher, Marshall. Have a happy 4th.

A. The teaparty has been fully co-opted and turned into another tool in the toolbox for the Republicans which are a tool in the toolbox for the RepublicanDemocratRegime which are a tool of the giant corporations and oligarchs to control wealth through government policy and tax codes.

Q. Cody, for the new format of your positions posts, I know you’ve broken down your long positions into categories. But could you somehow still order all your positions in notional order, even though they’re in different categories?

A. Sure, great idea. Let me figure out a way to do so.

Okay folks. Good stuff and thank you as always for helping make TradingWithCody.com a truly valuable service.

Related posts:

I'm likely to short a little more of that one in coming days...
US Economy Update: Rise of the Planet of the Apes...
Portfolio Positions Review
The major indices are now up nearly 10% from their lows on June 17...
Updates on the new baby, AMBA, LNN, SYNA, Pandora and more
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Filed Under: Trading

Disclosure: At the time of publication, the firm in which Willard is a partner and/or Mr. Willard had positions in some of the stocks mentioned above although positions can change at any time and without notice.

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This does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or cryptocurrency or token any other product or service by Cody Willard or any other third party. Furthermore, nothing in this is intended to provide tax, legal, or investment advice and nothing in this should be construed as a recommendation to buy, sell, or hold any investment or security or cryptocurrency or token or to engage in any investment strategy or transaction. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your business advisor, attorney, or tax and accounting advisor regarding your specific business, legal or tax situation.

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