I’m back in the saddle, let’s ride.
Q. How big of a dip do you think the NASDAQ ($NDAQ) will have?
A. We already had the dip, it seems. I think path of least resistance for the markets has turned upward again.
Q. I am looking for a basic “insurance policy” for my portfolio. A hedge that will cover me in the event of a big meltdown. I don’t want to spend too much money (I except to loose the money). The portion of my portfolio I want to insure is most closely correlated with $QQQ. I am thinking buying some $QQQ puts 3-4 months out and 15-20% out of the money. I think this will cover me in case of a meltdown. You have any advice? Is this a good idea? Am I way off?
A. I think 15-20% out on the puts would only be beneficial in the event that the markets completely crash in the next 90-120 days of your time horizon. You’d have to see the markets drop at least that much and then more before the expiration of your puts for those to actually pay off at all. If you’re wanting to hedge a more common kind of pullback of, maybe, 12-15% or so over that time frame, you’d probably want to buy some puts with strike prices that are 10% or less than the current $QQQ trading price.
Thanks Cody! Appreciate your perspective. I owe you a Green Chile Cheese Burger from Blake’s Lotaburger. 🙂
I will take you up on a Green Chile Cheese Burger, but not from a CHAIN like Blake’s. Locally-owned and established joints are where I like my obligations paid off!
Q. Elad seems to be very active week to week selling dips and buying rips whereas you don’t seem to play the near term individual stock trends as actively for the TWC portfolio. Would you say your strategy with the TWC portfolio of rip & dip/Selling & buying is more based on the macro market movements vs. the micro individual stock movement?
A. You have to remember that one of our main objectives and rules is to take what the markets gives us and let it dictate how and what we buy and sell. Long-time subscribers have seen me buy dips and sell rips much more aggressively than I have of late, but that was partly because I had more confidence in the lower prices/valuations and in the part of the cycle that we were in for the markets at those times in years past. I will be aggressive in trading like that again, when I think the risk/reward is most desirable. The markets are not giving me the confidence to make those kinds of broad and aggressive buy-the-dips and sell-the-rips kind of moves. Heck, we’ve been without a serious 10% or more decline in the markets for years now, and that’s what would likely get me more serious about a buy-the-dip/sell-the-rip kind of approach.
Q. Cody ~ Any thoughts on how the Ukraine situation may impact the markets should it continue? After the Olympics close up shop on Sunday evening Putkin no longer has an incentive to “hold-back”.
A. Good question and my heart sank when I read about the horrific extent of lawlessness with total immunity for all the Ukrainian government’s forces. Prayers go out to all involved and hurt by this, yet another, tragic political development in our so-called “developed world”. Yes, it’s a worry and if Russia goes off and starts warring like the US has been all over the middle east, it could definitely impact our stocks, economy, the cycle, currencies, gold, bitcoin, and everything else. I wouldn’t freak out about it for now though, and I would more likely be a buyer of any major pullbacks from this Ukraine/Russia civil war stuff for now because it will take a long time and we’ll see more warnings if this conflict escalates to something that hits like I described above.
Thanks for your thoughts on the Ukrainian situation. Watching gold prices as international crisis typically drive prices higher.
Q. Hi, from yesterday’s meeting, where do you go to understand what Bitcoins are?
A. Heya, Cupcake, that was fun meeting you and the other subs at the MoneyShow yesterday. You missed out on some good discussion and sushi afterward, but it was great to put a face and personality to your username from TradingWithCody! At any rate, bitcoin is a bit confusion and I’ll try to explain more myself for you. In the meantime, here are some links to prior explanations of bitcoin: FB, INTC, MSFT, Bitcoin and other important tech stuff, Everything you need to know about Bitcoin, No currency is ever actually safe or stable. Certainly not the dollar., 21st century madness of crowds and popular delusions, See the future.
Q. Also re Bitcoin (though I know you’re preparing a whole update — can you address this?): is/was there any way to hedge the disparity in prices between the various ‘platforms’ or ‘exchanges’ (whatever you call them)? I’m guessing not, or they wouldn’t have been as obvious as in the past few days.
A. That same question came up in my presentation yesterday, and my answer is that I’m sure there are/were traders taking advantage of the disparity in bitcoin prices at the various exchanges but that over time, that spread and the opportunity to arbitrage it will decrease if/as bitcoin hits critical mass and popularity. @ebdavids: That same question came up in my presentation yesterday, and my answer is that I’m sure there are/were traders taking advantage of the disparity in bitcoin prices at the various exchanges but that over time, that spread and the opportunity to arbitrage it will decrease if/as bitcoin hits critical mass and popularity.
Q. But (re Bitcoin) you aren’t aware of HOW they hedged?
A. Well, if you owned 100 bitcoins at XYZ.com exchange and another 100 bitcoins at ABC.info exchange and you can sell 10 bitcoins at XYZ for $800 and buy 10 bitcoins simultaneously at ABC for $700, then you’ve just arbitraged the spread and hedged against any potential loss in the trade in real-time, no?
Q. Hi Cody. Welcome back from the land of exuberant, non-Bitcoin-owning traders. You recently mentioned you were thinking of shorting $TSLA again. If you were to buy puts today before earnings, what would you buy?
A. Well, that $TSLA has continued to struggle and today got repelled hard from the $200 level, I’d mentioned that I was watching. I’m likely to add some $TSLA puts, but I have been so busy the last five days traveling, speaking, etc at the MoneyShow that I feel like I’d be rushing into an opinion without as much confidence on tonight’s report. All that said, I would consider buying maybe 1/4 of a full position in some lottery-ticket type puts into the report tonight, if you’re willing to take a full loss if the report moves the stock against ya and back up above $200. Maybe consider the MARCH $175s or the MARCH $180 PUTS. High risk trade/gamble, obviously tho.
Q. Time to scale back into $AMZN?
A. I’ve been of the opinion that buying a 1/3 tranche of $AMZN here at $350 or so isn’t a bad idea, but I’m in no rush. The momentum there has faded and we’ll need a new catalyst for near-term rally in the stock, and I don’t know what that catalyst might be.
Q. Any thoughts on $LNKD?
A. Like with $AMZN, the $LNKD momentum has disappeared, and will likely need a new catalyst to get it back up and moving above $200. $LNKD is part of the same basket that $ZNGA is in for me and I’m just planning on holding both til the bubble gets a’poppin’.
Q. Also, $ZNGA? I scaled back a bit after yesterday’s jump on the basis of the competitive IPO. Think it’ll continue to degrade back to maybe 4-ish?
A. Now that there’s some momentum to the upside in the $ZNGA and its gotten above the $5 level, there’s a potential floor on the $5 range. Maybe you’re right, $4.50ish might be a low end of the range too, but if the bubble blowing bull market continues apace, this stock could see double digits by the end of the year. I hold $ZNGA as part of a basket of social stocks and will just continue to do so this year.
Q. $NUAN? take care CODY
A. Nuance’s management has squandered years of profitability/revenue growth and I don’t want to be punished by letting my capital be exposed to their incompetence.
Q. Can you comment on $MSFT please?
A. They needed a better new CEO and something to really change up the $MSFT culture and potential new products. Not seeing it from the CEO they found. I’d rather own other tech companies that actually do revolutionary stuff like $GOOG and $AAPL, just like I have for the last decade.
Q. Read an article from Fool.com on $T (AT&T) that said they are seeking to capitalize on the “internet of things”. I am looking to park some cash in a relatively low volatility stock that produces some yield. Any thoughts on $T? The Link is: 1 Telecom Poised for Growth in the Internet of Things
Q. What would be the catalyst to short Pandora ($P) again? January puts of any interest?
A. Pandora’s ($P) off my screen for now. I put it in the penalty box after I covered it for a loss and I don’t want to be tempted by it until the markets/cycles turn.
Q. There was a spike in trading in $LNN twice in the past two weeks in the last few minutes of trading on relatively high volume – this stock does not normally have very large daily volume. Do you take any significance from this activity?
A. Not necessarily, as for all we know, some big hedge fund manager who owned $LNN already got a big cash infusion and had to use some of it to build up his exposure in $LNN proportionately. Or maybe some other mutual fund manager finally decided to start a new position in $LNN after months of researching it and he’s trying to build up a small position for his fund. ETC.
Q. $NXPI has been really strong and is a leader in nfc tech does this co interest you at all?
A. $NXPI in a strong cycle right now. Not sure I’d want to own it over any of the others in its industry though.
Q. Hi Cody. I enjoyed your talk in NYC yesterday. I am wondering if you are adding to your Calgon Carbon $CCC position?
A. No, not adding to $CCC yet, but it’s a good one, I do believe, for the long-run. I’ve got a full position in it already though.
Q. What are your thoughts on the price of gold in the near term?
A. Gold’s got so much attention right now and the “breakout” and “bottoming” that goldbugs have long been waiting for since the crash from $1900 sure COULD finally be in. Couldn’t you just see the big banks and scammers out there who have cornered the paper gold and gold ETF do one more 5%-10% crash, at least in their GLD prices, that would shake out the newfound holders of their gold one more time? I could. I’m a buyer of gold near $1200 and holder of it any price above that for now.
Q….and, short of owning real gold, are you still more a fan of the miners — when and if — that the other ETFs?
A.The miners ETFs are a high beta bet on gold continuing higher. I’d like to buy some $GDX call options long-dated if we got a crash in gold just one more time. I won’t force it though.
Q. Does Scutify architecture allow for it to be linked smartly into a Yahoo portfolio to provide scuttles on your holdings similar to how Sig Fig links to your broker accounts? Along the same line can you see scutify as sort of a “Buzzfeed” box connected to Yahoo Finance or Market Watch etc? That seems like the kind of critical mass use case that can take it to the next level or no?
A. LOVE THE FEEDBACK and this idea for Scutify specifically. I’ll forward your comment to Kheang, our co-CEO and head developer. Thanks.
As Bob Marley and about a thousand other rock stars have written, “Everything’s gonna be all right” and until next time, that’s a wrap. Peace!