Howdy folks. Crazy ugly out there. Part of the cycle tho. If the reason the market is selling off the last 5% or so is because of #Ebola concerns then I expect a bounce back to new highs relatively quickly. If there’s an economic/financial Black Swan (including if #Ebola spreads further), then it’s going to be a long way down. I am indeed putting a little capital to work as I raised cash at much higher levels all year. Easy does it tho. Scaling in with tranches as usual
Q. Hi, $FB is one of your largest holdings. Did i read right that you are buying some more now? what price are you looking for? regards
A. Yes, I think $FB is monetizing the heck out of their users and that there’s upside to the fundamentals. Earnings report is next Tuesday…and I’m admittedly nervous about it. Speaking of which, buying FB is hard right now. See my article today about why making the hardest trade is usually the right one.
Q. What happens to $FB stock price if monetization is up but finally the specter of slow user growth/attrition raises its head?
A. That sounds like a phantom-permabear-not-actually-meaningful catalyst for $FB and if it got hit on concerns about “slower user-growth/attrition” I’d probably start to scale into some longer-term calls.
Q. What if any Apple Calls do you recommend?
A. I’m not sure $AAPL’s got a lot of near-term catalyst and/or upside, so I’d stick with common not call options for now.
Q. Would you buy $LNN at this point?
A. Yes, if I didn’t have any LNN, I’d look at starting to scale into some. It’s knocking the cover off the ball. I’m less impressed with $CCC’s delivery and fundamentals, but LNN is killing it.
Q. I pay 7.95 for each trade. Is this reasonable? Would I be overstepping by asking how much you pay?
A. Depending on how often you trade and how big each order is when you’re trading and how good your broker is, paying $7.95 for an order is about “fair” these days for online brokers. Using Scutify’s trading platform, which is provided by Tradier Brokerage Inc, costs just $3.49 per trade. If you’re really active and/or doing trades for less than $1000 per order, I’d probably consider moving to a cheaper broker unless you love the service you’re getting for $7.95. Learn more about trading on Scutify here — (and there is currently a promo of getting a $100 Amazon Gift Card for signing up and funding your brokerage account via Scutify, but I don’t want to push you there unless it makes sense for you individually): http://www.scutify.com/tradepromo.html Good luck!
Q. Cody any opinion on oil?
A. Ebola concerns, right or wrong, are definitely impacting people’s travel plans. If they can choose not to travel, they’re not. I don’t think oil can rally until #Ebola is contained globally and here in the US. That said, I do expect them to contain Ebola in coming days and weeks and months and that Ebola Oil Discount would disappear and other catalysts will be driving oil’s price at that point.
Q. Cody I bought Chevron ($CVX) common because of the dividend and calls at 130 back in august when I thought it was bottoming. They pay a nice dividend and have billions in cash on their balance sheet. But it obviously didn’t bottom and I’m getting punished. Everyday on CNBC they show how much the $XLE and oil has been hit and they now say the $XLE is in bear market territory. I need this thing to go up not down but up. What do I do? Do you think oil goes higher or lower from here? Thanks
A. First, that’s again why we use the Tranche/Scale-In approach to buying a stock. No looking back now though, let’s figure out what to do right now with your position there as best we can. Like I said earlier, if “Ebola concerns, right or wrong, are definitely impacting people’s travel plans. If they can choose not to travel, they’re not. I don’t think oil can rally until #Ebola is contained globally and here in the US. That said, I do expect them to contain Ebola in coming days and weeks and months and that Ebola Oil Discount would disappear and other catalysts will be driving oil’s price at that point.” I would think that CVX is likely to continue to be a higher-beta (more volatile) version of oil, so if oil were to come back, so too would $CVX. The 4% yield is nice, but obviously if the stock has more downside along with the price of oil near-term or otherwise, the 4% yield doesn’t cover the capital losses. If you bought it with conviction about the long-term prospects and upside and dividend of CVX, then you might actually consider scaling into some more while it’s down. Hope this helps. Good luck!
Q. Do you have any thoughts on $GOOG earnings tomorrow?
A. I think $GOOG is monetizing mobile and YouTube very well and that there’s upside to the quarter. Guidance is the question, but if they’re catching traction on mobile and YouTube and other high-margin revenue generators, the guidance will be good too. Android is so huge in 10 years, I’m buying $GOOG now because I want to own it when it becomes a trillion dollar company in a few years.
Q. Last week you chose “Top 3 Non-FB/GOOG/AAPL Buys Right Now: $AMBA, $SNDK, $SNE. Top 3 Most Massively Oversold Stocks That (Might) Come Roaring Back: $FB, $INVN, $YELP.” Any changes to that list given the dynamics/price changes of the last week?
A. Ooh, I like the question given how badly most stocks have gotten trashed in the last week. The biggest difference is between this week and last week is that I’m now actually starting to scale into some of these names. Top 3 Non-FB/GOOG/AAPL Buys Right Now: $FSLR, $LNN, $SNE. Top 3 Most Massively Oversold Stocks That (Might) Come Roaring Back: $SNDK, $INVN, $HIMX, $INTC, $FSLR, $AMBA, etc LOL
Q. Cody, how are you feeling about $INVN these days?
A. $INVN is down huge with most semi/component stocks and it’s been hit even worse off a sell-the-news thing from the Apple iPhone 6 supplier win. My gut tells me that a huge investor in $INVN had a liquidation that forced him out of his position and he magnified the downdraft. On the other hand, if the stock is somehow indicating a near-term big miss or something, there’s still more downside before the long-term upside. Use tranches. I added some $INVN call options dated a few months out a few weeks ago. A couple weeks ago or maybe it was last week. Time’s flying.
Cody: What is your take on the chip sector in general? Microchip said that they saw some market softness in the chip sector went boom. I am long $MU, $INTC and $TQNT, $SNDK and $QCOM. Comments on any of them? I think that the chipsters will rally when the panic stops.
A. Lots of traders leaning the wrong way on the semiconductor stocks if Skyworks’ big raise is indicative of anything industry-wide. That said, there’s been several semi warnings like $MCHP last week. “$SWKS (+8% premarket) Skyworks Raises Revenue and Earnings Outlook” http://t.co/w38zyKwhyu INTC’s report was organically-fueled and very strong across the board. It’s a stock picker’s market in semi’s right now.
Q. I noticed that Alibaba has started to trade options. I am aware of the fact that this company is based in Grand Cayman and might be a bit dangerous to invest in. Have you changed your opinion about them ?
A. I think $BABA’s stock will go up over the next few years as the company grows sales and revenues as long as the Chinese government lets them. I just don’t have any interest in risking my own capital on that idea though.
Q. Why $TWTR right now? What’s with $IXYS-should it be totally purged from our accounts?
A. Like FB is, TWTR is heavily monetizing its user-base and likely to show some very huge revenue and earnings growth over the next few quarters. I want to be a part of that for now. As for $IXYS purging…it’s still a toehold position for now and as I’ve been saying since we bought it, I want to see a couple quarters from management before adding or purging. Toehold it remains.
Q. How far out would you go buying $twtr calls?
A. I’d go out two or three months if I were looking at $TWTR call options, but I think the premiums are outrageously expensive on them and am sticking with common for now.
Q. I’ve heard it said many times, that the best place for your money is in a broad based type mutual fund. Is this “set it and forget it” plan anything you ever put any of your money into? Or just out of curiosity have you ever owned a mutual fund?
A. I think the last time I owned a mutual fund was when I had a 401K that I was max contributing to back in 1997 making $24,000 base salary at Oppenheimer. I realized I’d rather eat than contribute to my 401K back then — and it was the right choice! For most people having some of their portfolio in some mutual funds is probably a good idea.
Q. Hey Cody, when do you expect that “launch a hedge fund” feature to go live on Scutify? Really excited to get involved with that, I really want to make myself more comfortable in trading options.
A. I’m excited about the new Who Wants To Be A Hedge Fund Manager feature http://www.scutify.com/hfm/ at Scutify too. Kheang told me last night (morning his time in Australia) that he’s planning on getting it done and turning it on later this week or early next week at the latest. Should be fun!
Q. I’m trying to look back at the couple of weeks and gain some knowledge from what’s been happening in the broader markets. If you looked at your portfolio say three weeks ago, what percent cash were you, and where are you now?
A. I’d sold down several of our biggest winners, taking 1/5 or 1/4 or so profits throughout this year and I’d reduced the number of long positions I had throughout the year too. I’ve deployed a small fraction of that cash in the last couple days.
Q. Hi Cody, just wanted to say thanks and good job. Do you expect the markets at all time highs next year? Any comments on gold and gold stocks?
A. Thanks for the kind words — nice to hear that kind of feedback on an ugly day in a down market and not just when stocks are at all-time highs! That said, yes, I do think stocks will get back to all-time new highs in the next year and then maybe on higher from there. We’ll play it as it comes though. Gold is suddenly a safe-haven again and it’s got an Ebola-premium that’s not quite as large as oil’s Ebola-discount. I own my physical gold coins and bullion that I bought over the last couple years and plan on holding it pretty much forever.
Comment: Cody you are welcome. Good to work with a smart, upbeat and honest guy. Not easy to find in the financial industry.
Q. Comments on $INTC quarter and reaction?
A. Very strong $INTC quarter. Still need mobile to catch traction. Sigh. Market reaction is more about broader market sell-off than $INTC’s quarter.