All rightie folks, let’s ride. Ask me anything.
Comment: Cody, I’d like to give you and everyone around here a big high five. We all watched $AMBA and $HIMX climb, climb, climb. You sent out such a timely letter yesterday with a call to trim those 2 stocks. I think many of us did just that. Great call, and many thanks. INVN looking pretty good on such a down day as well.
Comment: Yeah, I agree. I followed those calls and I am glad for that.
Cody: Better to be lucky than good? Sometimes, often times, (Most of the time?) catching a high like that on a trim right before a big decline is more art than science. Rock on and thanks for the kind words, to both of you
Q. Hi Cody. Whatever happened with that long Whole Foods, short McDonalds thing? Just curious after you threw it out there a few weeks ago.
A. Frankly, I’m still working on it. The thesis of “Buy healthy food outlets and short crappy kills-you food outlets” seems pretty straight forward enough, but I’m trying to get comfortable on those two stocks, Whole Foods and McDonald’s specifically
Q. I agree with the high five on $HIMX. Guess “discipline’ has two meanings, huh? — discipline to trim when things are great and flying high, and then discipline the next day not to say.” Why did I trim only a fifth of what i had,”( But I’m being strong.) BTW, although I guess it’s usually a judgment call, but when you advise to trim, let’s say, one-fifth (and sometimes you say “one-fifth of my profit or one-fifth of my gain”), is it roughly one-fifth of total market value/one-fifth of shares or options you’re holding/literally one-fifth of your gain . . . or what?
A. I mean 1/5 of my total number of shares in that particular stock when I say “I’m going to trim 1/5th of my common stock position.” As for the “why did I only sell ‘part’ at the high, instead of all of it?” logic, read this. I wrote it seven years ago when I was about to quit running my hedge fund to go to TV: “For the past five years of running money I didn’t even have an alarm clock. There was no need. The knot in my gut that came with the pressure of running other people’s money swelled long before the sun rose each morning. For four and a half years I was up and attentive at every single market opening. Such steadfast dedication was exhilarating . . . and exhausting. Running money is unlike any other job because you can quantify your results at any moment. And then you and your investors can gauge just how stupid or smart you are at that moment. Of course, a good money manager never really thinks he’s smart – there’s no place on Wall Street for successful complacency. You lost money? You’re an idiot. You had a good streak but still underperformed a booming market? You’re an idiot. You blew away the market but had too many hedges, which capped the gain? Yup, you’re an idiot.” http://www.ft.com/intl/cms/s/2/b50a535a-896c-11dc-b52e-0000779fd2ac.html#axzz3EuxOm8zX
Comment: So in other words, back in the day, it was “Cody’s pain is my gain”? (PS: I see the logic.)
Cody: If you can learn from my pain, then that’s your gain, and yes, more power to ya’!
Q. Cody, I think it could be very interesting to hear your thoughts on this market situation and please let us know what are you thinking as possible action for a market rebound or if it keep falling. Thanks
A. Feet to fire, my take on the market for the near-term is that I think all this day-to-day volatility and big sell-offs are wearing out the bulls and the longs and weak-handed traders. That has probably turned the path of least resistance lower for the next few days or weeks. Again this is feet-to-fire analysis and not something I’m trying to game. I’m going to scale into the best stocks on an opportunistic basis in the context of the broader market near-term moves. My overall analysis continues to point to further bubble-blowing bull market action in years ahead. And regardless, I want to buy Revolutionary stocks that we can own, at least part of our positions in, forever.
Q. I don’t see my post after entering 2 times. Do you still think for near term market is sideways with little upside as you were saying before as the market is going down with many of the stocks seeing fresh lows?
A. See my prior answer about the markets action part. In short, the path of least resistance is probably lower for the next few days or weeks. As for the problem posting…guess what- just today, we’ve finally come up with a solution for integrating my articles and reports and ebooks into the new TradingWithCody.com platform/site/apps that we’ve been working on. If everything goes right, we could have the new TWC site with our much better new chat program up in the next week or two. And we should have a first-iteration, basic iPhone app for TradingWithCody soon thereafter. Android to follow. And then we’ll keep improving all of it. Stay tuned!
Q. On Scutify you mentioned possibly adding to positions or possibly new options later today or tomorrow…can you give us any early tip offs? What is grabbing your attention as the best opportunities?
A. That Scuttle actually came from my article this morning on TradingWithCody.com actually. If I had an early tip-off for you on what I might nibble on next, I’d have put in on TWC for subscribers only. I don’t know yet. Stay tuned again.
Q. Right now I am 42% cash as hedged but I think it could be more interesting work on shorting something. Just now I am thinking we could have bought $SPXU, or something like that, Just ideas…
A. Are you sure trying to game a near-term market action move is a sustainable and helpful kind of trade for you and your money personally? Just think about that 10,000 days concept I keep trying to hammer home before you do anything. Other than that, I do think $BKS is acting like it might break down lower again, so maybe look at starting something short-wise there if you do decide to take some risks on the short-side. I’m also constantly trying to find the hyped-up bubble stocks like $JRJC and $DGLY, both of which, by the way, are getting absolutely crushed again today and are at new lows since I cited them.
Q. I know you cut $CIEN from the portfolio, but from a Revolution Investing standpoint doesn’t this stock still fit the bill? Internet data is increasing every moment, won’t companies need Ciena’s products to help move that data? from what I read their revenue can be lumpy so could this be the cause of lowered guidance? It’s not that business disappeared but rather it was delayed. What did you learn to make you remove the name from the portfolio?
A. Just days after we sold our $Cien, I saw this report, though I’m not sure it’s going to turn out accurate. “Telecom capex to fall ~2% in ’15. “Now that the big waves in the mobile phone tsumani are over, telecom carriers are starting to tighten their purse strings. Overall capital equipment spending by service providers is expected to fall about 2% next year” – EE Times. http://goo.gl/9YoqEF ” Regardless, I sold Ciena because management is not delivering on what would drive the stock higher for us as investors and from a bottom-up perspective on Ciena individually, I don’t like the risk/reward vs other places my money could go.
Q. I know you cut $XONE from your portfolio a while back, but what are your thoughts here now with it near $18/share?
A. I haven’t looked at $XONE but at $18 down huge from where we got out of it, it’s probably worth a look. Will do so.
Comment: Even though i don’t post much at all I would like to say publicly that I really appreciate your efforts in attempting to make us better traders. mucho thanks
Cody: Your kind words are all the more special because you took the time in a rare post to give them. Thanks!
Comment: Thanks regarding XONE. It is on my radar here at these levels too.
Comment: Hey Cody, first time on your Wednesday Live Chat Session. Just wanted to say thanks for all you do! I love reading your daily emails!
Thanks. Lots of kind words for Cody today. (Thinks to himself, is that a contrarian indicator? Then sorta LOL’s.)
Comment: Well any normal person has to ask themselves Do these guys get it? I am espousing all this info and all I get is silence.
Cody: Are you implying I’m normal? Wow, great chat today, packed with love and fun and great questions too.
Q. How do you decide when to go long using stocks and when to go long using call options?
A. Short answer: More art than science. Longer answer: It depends on the time frame in which I think the stock might move and whether or not the premiums being charged on the options is outrageous or cheap, etc.
Q. Whats a good entry for $amba??
A. Probably now near $41 is a decent time to start a small tranche to scale into $AMBA. But give it time near-term. Maybe below $40 is next if the high-beta stocks continue to lead lower and $AMBA joins the sell-off?
Comment: I really do want to echo the sentiments praising your investment guidance. You have helped me immeasurably. I am in a position in which I have to leave money when I “depart this mortal coil “(Hamlet) and you have provided the means to do so.
Q. What are ur thoughts on gold. Im thinking about adding to my position.
A. Can’t wait to show you guys the new TradingWithCody.com site that looks and works great on mobile. And the apps should be really cool too but they’re just now under development, so they’re a bit farther off. Anyway, I do think gold is going to be continue to be driven by the dollar’s broader action, and as the dollar’s uptrend looks set to continue (as I outlined in a report on TWC yesterday), I think gold might be capped near-term. I still think having maybe 5-10% of your longer-term capital in physical gold (and a little silver) is very important, but I don’t know that you have to rush into it just now. Over the next few years, I do expect a solid uptrend in gold to return, regardless of the dollar’s overall strength vs other fiat currencies.
Q. Thanks New site would be great. Is it time to buy $GDX now as it got hit hard?
A. $GDX might be rangebound at best along with gold for the near-term, driven by dollar strength. So, I’m not considering going back and buying $GDX just yet.
Q. Cody — can’t pull up the exact report, but on SeekingAlpha today there seemed to be a reasoned analysis re Yahoo that made the point that, even at $70/share, $BABA represents $35 of value to $YHOO and that at today’s roughly $40 price (and $BABA, of course, isn’t @ $80 — yet?)you’re essentially getting Yahoo, Yahoo Japan and other Yahoo elements for only $5. Does any of this make sense to you? Your general thinking on $YHOO at this level?
A. $YHOO – $BABA = $ZNGA. That is, Yahoo without its stake in Alibaba reminds me of Zinga. Yahoo might be worth the $14 a share it used to trade at if not even less. There’s just no growth at Yahoo in a booming Internet/Mobile market.
Cody: Thanks Micah! Lots of kind words for Cody today. (Thinks to himself, is that a contrarian indicator? Then sorta LOL’s.)
Comment: Maybe Cody is going parabolic. Should I cut my faith in him by one-fifth?
Cody: Did my mom put you guys up to saying all this nice stuff about TradingWithCody today? Just kidding. Thanks again for the kind words, all!
Comment: BTW, neither here nor there, as long as this is TWC-is-Nirvana week: i recently wrote in with some trouble I was having with my TWC emails — and Rene worked at it doggedly for me (turned out to be my problem, maybe) until we solved it, always with good cheer. Give that woman a raise — or at least know she’s a terrific rep for TWC.
Cody: You know that Rene was Jay Leno’s right-hand woman at the Tonight Show for many years before she joined TWC and Scutify. She and I bonded the minute I met her the first time when I went to meet Leno before I appeared on his show. She’s great and thanks for the feedback letting me know you agree!
Comment: I knew that about the Leno (and other) shows with Rene. Glad we agree…and you should know she said it’s great being with TWC. (And BTW, today i got a notice that tomorrow, Time-Warner Cable is totally changing their channel lineup . . . so I’m not too happy with the name “TWC” these days.)
Cody: Haha, The TradingWithCody Live Q&A Chat Quote of The Week: “Maybe Cody is going parabolic. Should I cut my faith in him by one-fifth?” Maybe buy some puts?
Q. Trading markets versus stocks comment-can you elaborate?
A. There’s no easy way to manage broader market sell-offs sustainably, but you need to make sure you have a plan for them anyway. Here’s the simplest way to answer your question: If the broader market sells off 10% and many of our highest-beta stocks, including, say $FB and $GOOG and $AMBA and $SNDK and so on were down 15% or more from their current levels, would you be able to sleep at night? Would you have the money and the guys to nibble some more on them while they’re down? If you manage your buying and trimming and nibbling and selling your stock portfolio properly, the broader market moves can fade in importance anyway.
Comment: Great advice there, Cody
Comment: Except you probably need guts, not guys, to nibble some more.
Cody: Yes, good catch, thanks.
Q. Any interest in any of Kirk Spano’s picks? $EXAS, $WPRT, $SUNE…?
A. I’ve no interest in any biotech stock, including Exact Sciences $EXAS, especially when every bad trader/pundit I know thinks him/herself a biotech expert right now in the incredibly bubble-blowing bull market context that they’re currently trading in. $WPRT sounds interesting, but the losses there are ugly and I’ve no edge nor do I know the management or the sector very well, so probably not. Westport Innovations Inc. provides low-emission engine and fuel system technologies utilizing gaseous fuels. The companys technology and products enable light, medium, heavy-duty, and high horsepower petroleum-based fuel engines to use primarily natural gas and alternative fuels. I like First Solar $FSLR better than $SUNE, but if $SUNE gets hit hard enough I might take a look at scaling into some.
Cody: OK, that was a killer chat today! Thanks all. My fingers hurt. And so does my brain. And so do my eyes. I’m gonna eat some lunch and get some air. Thanks again.