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 email@example.com.
Howdy, folks. Let’s brush down the horses, saddle up and ride. (I’m gonna get me some horses in a few years to ride around my “ranch” when I slow down a bit more. Horses RULE!)
Q. Cody is the $NAZDAQ heading to 4000–3900-or 3800??
A. Feet to fire, I’d guess the Nasdaq hit 3850 or so in the next few weeks or into the summer. And then it’ll jostle around there for a few weeks. And then the bubble-blowing bull market will resume into year-end.
Q. Cody, what’s the best short out there – $QQQ or $IWM?
A. The BEST short out there are those crappy penny marijuana and fuel cell stocks. If I had to choose between $QQQ and $IWM as short hedges for my own portfolio at this very minute, I’d probably choose $QQQ. But both would be high-beta sold off in a broad market down turn.
Q. Cody, can you name the top 3 weed stocks that you would short? How about long dated puts?
A. I don’t think there’s put options on most of the crappiest pot penny and OTC stocks. $PHOT looks like the most easily obvious of the ones I know that you might be able to borrow some to short sell. MCIG is another high volume obvious short candidate. I still have a few $PLUG puts and I think it’s headed back towards a $1/share over the next year.
Q. Above, you said you thought $PHOT and $MCIG might be borrowable to short. Yet my, and another, broker tell you something like “Non-equity, bulletin board, OTC, pink sheet and other specific securities are not eligible for the price type you have specified.” when you try to short. Where would one go , if anywhere, to pull that off?
A. I’d call your broker and ask. To be clear, I just figure those are a couple of the most obviously easy to borrow to short sell, but I could be wrong about that. Tough to borrow any crappy penny stock that’s being hyped up like those and that’s part of their scam.
Q. Looking at your answer to @rkumar about $IWM puts . . . I’m holding April $117, am up not a whole lot (2.3%). Wondering if I should just bank that and get out, or is it worth a 2-3 week wait? (I don’t have a substantial amount, so “scaling out” wouldn’t make sense. It’s all or…wait.) Advice?
A. Depends on how net long you are and how comfortable you are with the risk in your portfolio. I’m holding a few losing and winning index ETF puts like the SPY and the XRT, etc and am comfortable with my own net long exposure partly because of those puts.
Q. Any worry once the market bubble pops, less people will use Scutify. Business is better when you are riding the bull.
A. Absolutely I am worried that traffic and valuation of Scutify.com will take a hit if and when the bubble blowing bull market ends. That is probably the single biggest risk factor to the Scutify shareholders and its future — simply that the bubble pops ala the tech bubble in 2000 to 2002. I think we’ve still got a couple years left before the crash, but it’s getting ever closer, I suppose.
Q. How is Scutify doing? It seems to me that it is growing pretty quickly. Maybe it’ll be the next Candy Crush!
A. We’ve had 100k people download our Scutify apps, and the Scutify.com site traffic is growing almost 100% per month right now. Six months in and we’ve had millions of visitors and served tens of millions of pages and are still top 50 on the Apple App Store free finance section.
Q. Speaking of Scutify, is there still any offer for TradingWithCody subsrcibers to purchase shares outside of that recent “get 10 with a year’s subscription” deal?
A. I’m not sure we’ve got any more shares available from the Scutify offering. Let me check and I’ll email out to all our subs one last notification if there are any shares left.
Q. I saw and I know your comments on staying away from the craziness of the fuel-cell (and other) pumped-up stocks. Yet I was hugely pleased by our quick profit with puts on them a couple of weeks ago when you said they were about to break. So when what I thought was a hyped-up announcement of major new contracts to be “announced in 2-3 weeks” was put out by $PLUG and they and their cohorts shot up, I threw caution to the winds and did some just out of the money puts on $PLUG and $BLDP yesterday . . . and nicely cashed out today (as the underlying shares dropped back) with 33-50% gains. Despite your overall feelings (with which I agree), are you watching for similar opportunities with these guys in the future? I thing you’re still holding on to a little $PLUG, right?
A. I saw that ridiculous headline on Markewatch about how the $PLUG CEO said he was going to “make a major new order announcement” or whatever yesterday just as the market was about to close. I should have jumped on it immediately as I had the last time it spiked when it got above $11 a share a few weeks ago on hype like that. $PLUG was up another 5% after hours last night and I was hoping that would carry over to this morning’s open and I’d get to re-load on all those $PLUG puts I’d sold for big profits the last go round. Alas, I missed the pitch the market threw at us this time. Congrats on hitting a homerun over night with that trade a second time. PS. Don’t think you’ll nail it a third time, but don’t be afraid to take one more swing if you like the next pitch it gives ya’.
Q. Cody – I took advantage of the recent Pandora short recommendation and am pleased to be up 14% as I write this note. The Pandora short is the first short I’ve ever entered into and, although I will simply cover when you cover, I was wondering if you have a target price in mind?
A. I love the $P as a short hedge against our many similar highflying longs. It’s not got the fundamental upside that I can see that most of our longs like Google, Apple, Facebook, etc have and probably much more potential downside. I’ll personally probably cover at least 1/3 of my position if it drops below $30 or so, and then I’d play the rest as it comes. Stay “tuned”, right? AmIRight? Come on now. That was sorta funny. “Stay tuned to WKRP in Cincinnati.”
Q. Pandora’s at $29.47 right now.
A. Wow, I hadn’t looked at $P since the chat started. I’ll probably not cover any of it just yet.
Q. Re your having $P as a “hedge.” Can I ask for a clarification definition again? — I shorted it on your recommendation because you hinted that you thought the biz model was broken — not really as a hedge against anything else. Does that mean the moves YOU take with it are influenced by other factors than the ones I should take? Would I, say, still want to cover a third of it if it drops below $30?
A. Yes, to clarify, I always consider my own personal portfolio’s broader weightings, long/short positionings, etc when I put on any trade, including the P short, which I consider mostly a hedge to my many longs. I do think P’s in big trouble tho.
Q. Not to belabor the point, but this came up a while back, and you said you’d be careful to make the distinction each time. Do you/will you let us know when a recommendation is pretty much ‘strictly’ as a hedge? (I’m not accusing you of not doing so, but . . . )
A. Better to belabor than to belittle the point. Yes, I’ll try to be explicitly clear on hedges vs outright shorts, though the line is always blurred.
Q. Cody, $FB is my biggest position. Why is $FB getting hit hard recently. Is it time to buy and add to our position or is there anything to be scared?
A. $FB was up from $18 to $73 in a darn near straight line over the last year and a half. $FB‘s valuation, which I repeatedly pointed out was RIDICULOUSLY cheap at $20 or so, is now rather stretched for its near-term fundamentals. That is, the company’s got to keep growing (and I do think it will) revenues and continue to show high operating margins so the analysts can model out ever higher earnings in the out years. As you know I’ve had to trim down some $FB recently as it got to be TOO BIG for my portfolio, and I will consider buying some back soon, I do believe. Just no rush for now.
Q. Should we buy $FB today?
A. Did you see my comment above about $FB here? I’m not buying yet, but I would think a first tranche buy of maybe a 1/3 full position to get started is a good idea for long-term believers.
Q. Have you done and digging around $XONE…? Thanks!
A. Yes, I’m done digging on the $XONE and I am selling the last of it today and moving on. Mea culpa.
Q. Did you mentioned that gold can hit 1000/oz before going up? You mentioned recently the best way is to buy $GDX calls expiring in 2 years sometime back and after that $GDX was hit hard. Is it a good idea to buy into $GDX calls now? When is the best time to buy $GLD? Please shed some light on GOLD.
A. Last month when gold became a hot money favorite, I started turning near-term bearish. The banks and the Fed are likely also wanting gold prices here or lower. To trade gold, I suggest the following, in order of importance for long-term investors: 1. Buy physical gold and coins and store them somewhere safe where you can access them personally anytime you want. Safes, local bank safety deposit boxes, and even buried in the ground somewhere are not bad ideas. I plan to own my own physical gold basically for the next ten to fifty years. 2. Buy some $GDX common or some $GDX long-dated calls. $GDX is an ETF comprised of actual gold mining company stocks. 3. Avoid GLD. I don’t think there’s nearly as much actual access to physical gold for all the promises of access to physical gold that $GLD‘s banking industrial complex lets on. That is, there are probably hundreds of paper promises to real physical gold in ETFs and other paper securities for every once of actual physical gold they could redeem. A paper gold ETF/securities “Run on the bank” is probably in the cards at some point in the future, perhaps this or next or in five years.
Q. Cody would you start $LNN here?
A. Yes, I still think $LNN is a great long-term investment. Water irrigation and services is going to become ever more important in our society and across the globe over the next ten to fifteen years. $LNN is the way to play that. $LNN will also, as I’ve repeatedly noted, be a good way to play the legalized marijuana “sell ’em shovels” trend over the next five to ten years.
Q. Thoughts on $CIEN? Been pretty weak the last couple of months. Would you add, if so at what level? (I own some from $19 and change)
A. $CIEN was up 70% in the last six months when it finally started stalling out a few weeks ago. Still up big from last year’s lows, the company is executing and growing and if they can continue to deliver, I think that stock could hit $50 in the next two years as Internet service providers are forced to ramp up infrastructure bandwidth capabilities. It’s another one I’d think starting to tranche into a 1/3 position is a good idea, but it certainly could get weak in the near-term if the markets sell off as I think is becoming likely.
Q. Cody, what do you think of $MSFT, and are you completely out of your position in it?
A. I have a tiny few $MSFT April $40 call options left. They were worth practically nothing, down 90% plus from my purchase price, the last time I sent out my Latest Positions, so I took them off. With the stock now above $40, they’re worth a LITTLE bit, but not much. I’ll let you guys know if I do something with them if they do skyrocket or something in value to make it worthwhile. I’ll be more comprehensive in every Latest Positions from now on, as I was wrong to assume they were going to end up entirely worthless since they almost were a few weeks ago. Recall that I’d sold most of my MSFT calls for nice profits and that the remainder was just a tiny toehold.
Emailed Q: Hi Cody, do you have an opinion on Dunkin Brands ($DNKN)? Their franchise model seems to be growing well and good relative strength on the stock. Thanks in advance.
A: I haven’t done the work on $DNKN, but from an economists/social observer’s point of view, I think mass fast food retail outlets are likely topping as a trend here and that it’s a LONG way down as people, even poor people, move away from that unhealthy food over the next decade or two. Wake me when $DNKN specializes in fresh veggie smoothies and freshly baked bagels. I love DONUTS, don’t get me wrong, and my wife makes KILLER donut holes for breakfast on Saturdays sometimes. Heck, I love going to small, locally-owned and operated donut shops and eating the food they just prepared when I’m out early on the road. But mass fast-food crap made up of recompressed food particles and rubber tire ingredients is DOOMED long-term, just like they have done to their customer base over the long-term.
Q. Hi Cody, Have you done any research on $SYNA? If so, what do you think of the company?
A. $SYNA and $BIDU are best of breed tech plays on China consumers and Internet growth there.
Q. Les Nesman over and out!
A. Les Nessman News: Monster Lizard? No, it’s Monster Blizzard. http://youtu.be/wML2V6crNc0
Q. Do you know / follow $MM or $YUME – they are mobile ad companies.
A. I don’t like the $MM management. I don’t know $YUME‘s management, but I do think it looks cheaper on the out year earnings.
Q. Within the last 15 minutes took delivery of the APMEX silver you recommended last week.
A. Great. I didn’t receive mine yet, but I think I’ll get it today.
Okay, that’s a round up. Bring the doggies on home. Thanks all!