I’m here, let’s roll.
Q. What are your thoughts on the market in general right now. S&P is about 2% below it’s 1813 high. More drop to go soon or will we continue the bull run?
A. Feet to fire, I could see a 2-5% drop in the first part of December and maybe on into year-end another 2-5% drop from there, but that early next year the market will explode higher again. To be clear, I’m not trying to game any of that and/or make money off gaming the next 3-10% move in the markets. The big money is long-term in great stocks and swinging big when the odds are really in our favor.
Q. Cody, looking at your list, and wanting to buy some of your “8’s”, would you just start scaling in now ? Little by little, or do you wait for a pullback?
A. I always suggest getting started with a first tranche (maybe 10-30% of how much you eventually want to own of any position) because there’s never a good way to guess where the stock will move next near term. Then use patience and diligence and discipline as you scale into more tranches over the next few weeks and/or months.
Q. Your book says you like to stick to 12 or so stocks. Seems like we’re a bit more diverse than that. Thoughts?
A. Another good question. Consider the baskets like 3-D printing and social stocks to be one stock though, and we’re closer to 12-15 stocks, no?
Yep. I get it.
Q. Good afternoon, Cody. I’ve read all you’ve had to say about the craziness of Bitcoin, and have that pit-in-the-stomach regret that I didn’t jump in sometime ago (but it’s only money not made — not money risked and lost, so that’s cool) . . . but bottom line today, if it’s not money I really would care to lose, though it wouldn’t kill me — is there any rationale for jumping in right now? Is this craziness going to continue? (I’ll accept “who the hell knows?” as an answer.) Also, IS it possible to “put in a bid for [some amount below market]” on Coinbase? I couldn’t figure out how.
A. Bill is there a way to put in a bid below the market on any of our existing exchange portfolios of bitcoins? Please let us know. I can’t believe how fast and how high Bitcoin has run, but if you’d been buying even as recently as two weeks ago with me, you’d have some nice gains. Anyway, I am likely to trim some of my bitcoins here. If I didn’t own any bitcoins at all yet, I would probably just bite the bullet and do a 1/10th tranche of a position.
There is no way to put a bid order in for Bitcoins through Coinbase. It just allows you to buy at the current price. I’ll check and see if there’s another site that allows you to bid at below the market price.
Check our other platforms please. Probably not anywhere possible yet.
It looks like Bitstamp allows you to place limit orders in for Bitcoins.
Q. Cody: thanks for answer regarding Bitcoin. Ripple?
A. Will have to read more on Ripple, haven’t seen it much yet.
Q. Cody, as a help to your research re Ripple, the other “cryptocurrency” to Bitcoin, here’s the article that started me off and intrigued me: The True Value of Bitcoin and Ripple. I’ll also (you’ll be happy to hear) do (or contribute to) a dive on the subject in Scutify!
A. Cool, will read and thanks for diving on http://Scutify.com with us!
Q. Where is SLV on your radar? We made some money on SLV calls in the past. Looking out until April horizon what do you see for SLV? You’ve talked quite a bit about gold. Your gold comments cross over to silver in equal proportion?
A. I haven’t been liking silver as much as gold mainly because in the grand scheme of the currency wars and what I see going on at the COMEX with physical gold inventories collapsing and claims per ounce of gold at all time highs. Silver’s not experiencing nearly as dramatic a drawdown in the inventories as gold has this year and I think there’s much more scarcity of gold in the US than there is for silver right now. Gold is flowing to China and Russia and India and leaving US, Europe and the “developed” world. Gold is likely to be a much bigger part of whatever is the next “Reserve Currency” of the planet than silver is. I don’t like SLV or GLD at all right now but maybe for a short-term, 3-month or so trade, some SLV and/or GLD calls might be a trade. Not for me. I’d like to buy more gold coins at $1200 an ounce if they ever sell there.
Q. Cody, I see that you no longer have ETF GLD in your positions, do you think the ETF is still a good short term investment or would you suggest being all in physical gold?
A. Wouldn’t want to own GLD or any other paper promise of gold or silver for the long-term. For a trade, maybe. But the physical gold and silver ETFs are going to blow up someday I do believe.
Q. There’s always CEF or some of the Sprott funds instead of GLD/SLV- I like CEF, audited physical gold/silver in a bank in Canada.
A. I do not trust the audits of anybody but my own eyes. These same auditors are the people who can be bribed to give subprime mortgage securities a AAA rating.
Right on Cody! I feel the same way, just laying out an alternative. Nothing beats physical in your possession.
Q. I shorted Wage a couple months ago but must have missed when you covered. Do you think I should continue to hold or cover?
A. I had WAGE puts, I do believe, and had only done a tiny tranche buy in them, and they ended up expiring worthless. In this bubble-blowing bull market, WAGE has clearly been a beneficiary and it’s also profiteering on Obamacare for its business model and Obamacare is full of free money for profiteering companies like WAGE.
I checked your email and you stated you were buying options and common. Just sayin’
Sorry for any confusion.
Q. I am also short WAGE; can you briefly describe how WAGE benefits from Obamacare? Is the implementation fiasco a factor at all? Could they suffer if the implementation continues to be difficult? Could the stock benefit if the web site issues are resolved?
A. WageWorks Updates Brand to Engage People in Consumer-Directed BenefitsBusiness Wire(Thu, Nov 21) WageWorks Reminds FSA Users to Spend Their Balances, Though New Rule Change Could Affect Current AccountsBusiness Wire (Mon, Nov 1).
WAGE has got its paws in every nook and cranny of the RomneyCareObamaCare debacle and they plan to profiteer and make as big as margins as possible while they can. I do plan on getting short WAGE again at some point and will try to MORE CLEARLY communicate any moves I make in WAGE or any other position so there’s no confusion.
Q. My only confusion regarding WAGE at the time was why you chose to buy very short term puts: if I remember you bought the Sept 45s with less than one month to expiration. Although you may not have explicitly said this I figured you had a reason to expect an imminent drop in the stock and I thought that going short was a better deal as it was less costly in the short run. This turned out to be an increasingly bad idea. If they have really 3 good prospects it is probably time to cover.
A. I am again sorry for any confusion on the WAGE trade from months ago. I haven’t talked about it cuz it’s not been on my radar of late and what a boon the company appears to be having from Obamacare profiteering. No idea when it will crash, but I do think in five years from now that company won’t exist.
Q. We are in the beginning stages of a shift in network architecture. The new architecture assists carriers by driving more intelligence and flexibility at the optical layer, which creates substantial savings at the switching and routing layers. As this shift progresses, the optical sector is likely to benefit significantly, and Ciena appears to have more exposure to the trend than most. Anything you can add to this?
A. My old friends from my telecom days have been talking about “smarter networks” rather than the old theory of “dumb networks” a lot lately and I think there is growth ahead for any company and technology that facilitates better and more efficient use of existing optical layers in the fiber optic networks of today and tomorrow. Ciena is a pretty darn pureplay on this concept.
Q. What are your thought on CIEN earnings due next week?
A. Tough to call any earnings report beforehand, but I think Ciena’s going to show nice continued growth and if they can guide higher for next year, the stock will pop. If they miss and guide lower, of course, it could likewise be ugly after the report.
Q. Any plays on robotics?
A. Great question, I have been trying to find some plays on drones and robotics, but am coming up empty with new names for now. IRBT is not a name for me.
Q. I have not studied it, but MZOR?
A. Thanks will check out MZOR.
Q. Speaking of drones, etc. Do you happen to agree that the Bezos display on drone delivery was pretty much just a bid to prove they’re always thinking ahead (if not, in this case, always realistically)? SO many problems with their ever effecting that system (not to mention competition jumping in, even if AMZN were to try to patent-protect the whole thing, which would fail). There’d be more of those little buggers up there than cicadas!
A. I think Bezos got a 20 minute long commercial in the guise of a “News Program” with their drone display. That was the only reason he did it.
I don’t think they have to be airborne. Drone delivery vehicles make a ton of sense. And could recharge in the go with surface pad technology and solar, or hydrogen.
Q. Hi Cody. XLNX has come up a couple of times in chat over the last year and I remember somewhat favorable comments. Is this a name you have looked into or have any opinions on as a possible investment? Has been down/flat for a little while now. What’s your sentiment on “programmable platforms” if any?
A. I like Xilinx as a company and its done very well over the long run in preserving its margins and maintaining some lead in network chips. I’ve got enough exposure to the sector with my existing telecom plays but feet to fire, I could see trading out maybe Juniper for a Xilinx or adding Xilinx to a basket of such stocks.
Q. Hi Cody, looks like AAPL gave us a great holiday gift. What’s your thinking on AAPL for the next few months? I think bulls are getting a bit corky, but probably not too much.
A. I’d rather be trimming tranches of Apple above $550 than buying new shares. But I’ve got a big existing position in Apple and might feel different about that if I didn’t own enough or any at all.
Thanks Cody. I have a full position. I’ve been thinking about trimming.
Q. Where would you look to add more FB? Is that something you are considering at these levels?
A. I’ve made a ton of money on FB common that I still own and even more on my FB calls that I sold. FB’s a big position for me but I think the “Easy Money” from buying it after the IPO crash like we did is already made. Long-term, I think FB can go to $100 next year and who knows in a decade.
Thanks regarding FB reply
Q. There was quite a bit of questioning on the board yesterday about why you decided to short HLF right now. Can you elaborate on your logic on that one? Thanks!
A. Long story short, so to speak, is that I think Herbalife’s accounting is questionable at best and that they are selling a crappy, commoditized product using a questionable salesforce and that this will be a crash at some point in the next couple years.
Q. Thanks. One final question on TQNT. It’s been inching up nicely and I have one final tranche to buy. Buy now or wait for a dip?
A. Do a half tranche now and then do the last half tranche next week!
Thanks on the TQNT.
Q. Any opinion on WDAY and RHAT? What levels would you buy them?
A. Not really. I’ve got a full plate with what we’re trading already. Haven’t looked at either one of WDAY or RHAT in a while.
Q. LNKD what price is a good buy level?
A. As part of a basket, LNKD is a buy anywhere. That said, I would rather get a chance to buy it below $200 again if I could.
Q. Have you totally given up on BK plays as a strategy? Yesterday (no time to look it up) someone suggested a company that may be coming close…but I don’t think you were online. Maybe you can check back and comment on Friday morning. Which, BTW, is — ahem — 6 am for some of us. Sigh, (I know you were accommodating another subscriber; I’m OK with that).
A. They were asking about OCZ as a BK play and I answered it. Bill can you grab my reply from the Subscriber Chat Room from yesterday about OCZ.
I’ll take any BK plays as they come and choose whether to act or not at that point. I’m definitely keen on not getting burned on any BK plays again tho!
With ya there, babe.
Q. From yesterday’s subscriber chat regarding OCZ: Question: Cody, some time ago we did a paired trade with $OCZ. It’s dropped from $5.56 to $ .06 and there are comments about bankruptcy. Would this be a candidate for a BK play ? If so why?, if not why? Thank you in advance.
A. Cody’s response yesterday on OCZ: $OCZ did a prepackaged bankruptcy and I’ve got no idea if that changes it from being a viable BK trade or not, so I’m not doing it. Did you short $OCZ as part of the paired trade?!
Thanks Bill, and thanks Cody. Bye, all.
Okay my friends. Thank you and don’t forget we’re going to do another special Live Q&A chat here on Friday at 9am EST!