Scutify.com has a new “Price Targets” feature for each stock. Apple’s is here- $AAPL. What’s your price target for $FB? Put in your opinion and help us build a useable social-resource of price targets.
Here’s some of the best Q&A from the site this week. I made the first part of the Q&A into a podcast too.
Q&A with Cody Willard (and Cody Underground, The Podcast): Stocks to buy right now, Apple update, GOOG vs GOOGL and much more
Click here to listen to the Q&A in podcast form.
Q: After this pullback, assuming you had none of the names on your portfolio list, which stocks would you recommend scaling into with a first tranche right now?
A: Great question. The easiest way for me to advice you on the stocks I’d start scaling into right here, right now, would be to advise you to take a look at My Latest Positions and simply start buy scaling into about 1/4 of each of the highest rated stocks on the list. Right now that includes, Facebook, which is currently the only 9-rated stock on the list and note that I’d bought some FB earlier this week. Then there’s the 8-rated stocks, including Intel JDSU, INVN and Apple. For aggressive traders, I’d look at starting a position in some of the Yandex call options I’d bought recently. And to help hedge your portfolio a little bit, I’d look at shortselling some EWY or buying some long-term puts on EWY, which is a Samsung-heavy South Korean ETF and is the only 9-rated short position from that most recent Latest Positions list I’m using to guide me for all of this answer.
Q: Hi Cody. All is well here in Sunny SF. Went to the Giants Home Opener yesterday which was a blast. Being near the Valley, I wanted to check in on your $550 July Apple calls. Lots of talk about an iWatch Q3 for holidays, etc. and maybe more, but the talk is just that, Q3 and Q4. You still confident of a pop by July or would you consider rolling out…July is just 3 months away and a disappointing Q1 ER could be trouble for July $550′s no? Thanks.
A: It’s a beautiful day here in Alto, NM too, and my dogs got to try to run some giant Elk out of our 40 acre backyard this morning. My Red Heeler mutt from NYC really went after the biggest elk he could find this morning and nipped on its back heels. The elk jumped and jotted a couple steps and then turned around to face my Heeler, Lobo, who quickly came back to sit like a statue “protecting” me. Beautiful out there today. If I were to buy new Apple call options, I would definitely go out a few more months past the July expiration date that I recently bought. Certainly a disappointing Q1 earnings report could hit the stock, but frankly, I do think there’s a pretty good baseline case of the stock staying above $500 and that if the momentum players ever decided to just sniff around $AAPL again, it’d rally $100 or more in a month’s time. If or when…either way, the problem with options of course is that they expire. So I’d probably just stock with Apple common stock if I were to buy some right now, now that I think about it.
Q: Hi Cody, I noticed that you trimmed both GOOG and GOOGL. How do you value the class A and C shares? Do you see them trading in roughly equal values even if there is no voting rights for C shares? Thanks.
A: It’s always difficult to try to differentiate the value of voting vs. not-voting shares, but in the end, the only difference is how much voice one gives you as a shareholder. I’m not a very vocal shareholder and neither are you if you are a retail investor and since both shares are actually earnings-participation equity in the Google company itself, I don’t think you have to be too choosey which one you use, sell, trim or buy. I’ll probably just hold both of my $GOOG and $GOOGL that I got from the split and won’t choose one over the other.
Q: Got this question on Scutify.com: “How would you suggest someone youngish with, say, a few hundred or a few thousand dollars to put into gold or silver and looking to build a longterm position in some precious metals get started?”
A: And the CEO of Apmex, Michael Haynes, himself gave a fantastic answer: “$Silver bullion coins, like the American Silver Eagle or the Canadian Silver Maple Leaf, are both low premium and very recognizable (meaning good liquidity). To really hedge the long term purchasing power of the Dollar for young people, it would be best to allocate from each paycheck a certain amount toward Silver bullion coins. With some time and experience, diversification in form (bar/coin) and size (ozs) can be realized along with metal type ($Silver/$Gold). Good Fortune!”
Q: I really like your broad outlook on revolution investing. $AMZN started as an online book store, GOOG as a search engine, etc… what are some possibilites for FB to move away from just a social media destination… ancillary business or something outside of their current scope. What can you imagine FB becoming in the next 3 to 5 years?
A: Another great question, and thanks for the kind words about the broad outlook we get from our Revolution Investing approach. And your insights about how $Amazon started as a book store and Google a search engine and how they have morphed into much more than that respectively is right on. Facebook’s next three years or so will likely be focused mostly upon accelerating their revenue and creating new revenue streams from their existing user base and platform and apps, etc. Looking out past the next three years, I think FB could be the world’s largest Internet Service Provider, as they could have drones and towers and satellites keeping all their users in constant connection. $FB will also become an increasingly important video and entertainment distribution outlet and I think you could end up watching the Superbowl or the NCAA March Madness and House of Cards and Scandal season 12 on your Facebook platform, from any of their apps, their site or whatever people are using to access Facebook in five or seven years from now. Facebook payments, Facebook phone service and maybe even a few Facebook devices of some sort (not a Facebook smartphone, but something beyond that) are all possible within the next seven to ten years too.
Q: Feet to the fire, with the Fed minutes just released – do you think we may have the start of a bottom on this latest pullback and will this bounce we are currently seeing being sustained?
A: I don’t know that there’s really any more surprise to be found in any Fed minutes or meetings or announcements until they truly get back to something more than 0% rates and completely stop subsidizing bank profits while bank profits remain at all-time highs. That is, I still think there’s a good chance that we actually see a 10% pullback in the $DJIA and/or S&P 500 and something even a bit harsher than that in the Nasdaq before we see the next big leg of the bubble blowing bull market commence. But again, as I always remind you, I wouldn’t try to game the short-term market swings with your portfolio other than maybe making a few tiny moves and buying and selling in tranches as the prices and time itself move. I remain mostly net long with lots of exposure to high-flying stocks and a few lowflying conservative stocks, most of which at this point, I have rather big gains in from having bought them much lower in the last few years. But I want to try to have my cake and eat it too, so I have in the last few months trimmed down a bit of my long positions and at the same time tried to build up a bit of my short positions. I made those recent moves not necessarily in anticipation of a major short-term pullback but simply following my playbook and taking advantage of what the markets give us.
Q: Earnings season is upon us. Any good collar candidates?
A: I like how you phrase the question – are there any good “collar candidates” here as we enter earnings season. And I assume you mean that you want to buy some short-term calls and buy some short-term puts on the same stock as it reports its quarterly earnings. That way if the stock pops big or crashes big after the report, you’ll make some big money. The risk on those types of “Collar” trades is that the stock doesn’t go anywhere or that it just rallies or sells-off a little bit after the report and then you’d lose money on both the call and the puts. But the answer is yes there are some good collar candidates even tho that’s not necessarily my style of trading and I’m not looking to collar any trades into this earnings season that just got started this week with Alcoa’s report — But if collaring is your thing, a few potential ideas for this earnings season would include looking trying to capture some extreme moves in: $FB, $P, Yelp, Zillow, and most other highflying app-related stocks, as estimates and sentiment on these stocks are all over the board. I own FB and recently covered half my short for a big profit in Pandora but am still short it and will likely remain so no matter what it does on its report this quarter.
Q: Cody on your purchase of yandex I noticed that you purchased every level from 28-34 Any particular reason rather then 1 or perhaps 2 strike pts The other question is did you purchase an equal ant of each strike pt. Attempting to learn the rationale
A: The Yandex call options that I was trying to buy (and eventually did buy) are not very liquid and have big spreads on the bid/ask. I needed to buy more, and at a better price than the ask, for the Yandex trade to be worth my while than I’d have gotten buy just going in and buy the call options that were available at the prices they were available at the time I decided to make the trade. By spreading my bids for the Yandex call options out over a wide range of near-the-money call options, it allowed me to get slowly filled at good prices on those calls, especially since I got lucky and the stock dropped another 5% in the next couple days after I’d put in my call option bids below the bid/ask that was offered at the time. Sometimes, you’ll see me do the same kind of approach of spreading out my options expirations rather than the strike prices, and I could have done that with Yandex this time but there are not many expiration choices for the Yandex calls either, only the August and then a wide gap between the next expiration that the market makers of the Yandex options have created right now.
Q: Would you consider $SPEX here at $2.50 or do you feel it is dead money? Seems potential upside could be very high if courts decide in their favor regarding their lawsuit against Cisco for patent infringement. Perhaps the risk here is too high and you have seen this scenario play out numerous times…looking for your insight.
A: If you’d searched TradingWithCody.com’s archives and/or searched my blog on Marketwatch, you’d have found that I’d first wrote the following about $SPEX when it was at $25 per share: “I’ve personally been unable to locate some shares to borrow to shortsell this puppy. In my opinion, this is a classic worthless penny stock being run up over $25 a share today on nothing but hype and press releases. Note the lack of a name associated with their recent “patent win.” Blah, blah. My bet is the stock will be back at under $5 and probably under a $1 this time next year. I’ve given up trying to get any meaningful number of shares to short on it. And no puts available.” Then when it was at $6 a share, I wrote, “I’ve seen this playbook where you hype a play with press releases and ridiculous ‘analyst’ articles reinforcing the story while the insiders and hypsters of the stock unload. Stay far away from buying any stock like this. And know that when stocks like this are popping so easily off hype like this that we’re much closer to a top than a bottom in the markets.” I’ll bet I’ll be able to look back in a few years and cite this answer about $SPEX and why I wasn’t surprised to see it stop trading and go entirely to zero or something. Or put simply — NO DO NOT BUY A CRAPPY PENNY STOCK LIKE $SPEX, $PHOT and so on EVEN IF they are DOWN 90% IN A STRAIGHT LINE.
And don’t forget to check out the new Scutify.com “Price Targets” feature for each stock. Apple’s is here- $AAPL. What’s your price target for $FB? Help us build a useable social-resource of price targets.