Here’s the transcript to this week’s Live Q&A Chat.
Q. Hi Cody, what are the main differences between treasury vs. municipal bonds? And if you had to, which one would you prefer?
A. The main difference between Municipals and Treasuries is whom you’re lending your money to. When you buy a Municipal Bond, you’re risking your hard-earned capital by lending it to a city that might risk it on building pro sports stadiums, subsidizing big businesses and real estate developers while running a big deficit and which could eventually go bankrupt. When you buy a Treasury, you’re lending your hard-earned capital to the US government to do the same kind of thing but with the power to tax the whole nation’s workers and businesses and/or print more money to pay you back. I don’t like much of any bonds in this time of historically low interest rates.
Q. Cody, yes the low interest rates makes me not like much of any bonds either. So where would you suggest a retiree put his/her money if they looking for very low risk?
A. I’ve written extensively about how hard it is for the retired savers of the world to just safely stay up with inflation and get any decent yield on their money. No easy answers. There’s been enough movement in enough asset classes in the last few months that it’s probably time I take a fresh look at all 5%+ yielding assets out there and do some Economic Revolution Investing analysis on them to see if there are some relatively safe opportunities.
Q. Cody, do you have an update on the oil stocks you were researching? I know it’s impossible to gauge a bottom, but do the valuations look compelling at this point?
A. Yes, my update on oil and most all energy stocks (outside of our long-held Revolution Investment in $FSLR) is that I don’t want to touch any of them until there’s at least one major bankruptcy in the energy/oil industry. I think this energy downturn/crash could take a few years or even a decade or two to recover and that would mean that most energy stocks are at best dead money and/or dividend plays for the next few years or so. Patience and avoiding undue risk is key to investing and now is a time for both in regards to the entire energy sector.
Q. Google has been exasperating…anything new to comment on? What turns that ship around and when? There has been talk that Google “has to” make a big acquisition this year…you buy that?
A. Remember when the markets were at all-time highs like every day in 2013 while $AAPL muddled along at the bottom and was making what seemed like endless new 52-week lows? I think $GOOG in 2015 might be similarly short-term depressed like $AAPL was in 2013, but that at some point it’ll make new all-time highs and head onto $1000/share by 2020 as I’ve long predicted.
Q. As the market and tech stocks have pulled back more than others and we / u have lofty expectations for many stocks in regards to their targets should your portfolio not be getting LONGER vs the least bullish / long position U have been since this uptrend began?
A. I’m comfortable with my net long positioning and potential upside in my existing stock portfolio. I’d welcome the opportunity to tranche into more of my favorite long-term Revolution stocks in a panicky sell-off, but am in no rush.
Q. Talk about exasperating, FSLR and solar stocks have been absolutely crushed…when does solar get de-coupled from the price of oil if ever? If never, should we be avoiding solar stocks in the same vein as your thoughts regarding waiting on buying energy stocks?
A. If you’re finding your stock positions exasperating, I suggest that you’ve got too much exposed in those positions. Yes, I’d avoid solar stocks in general for now, but I’d suspect that solar might be the first subsector in the broader energy sector to bottom at some point this year or in the next couple years.
Q. Cody, considering the internet of things, all of these “things” will need to be connected either through wifi or a data plan through the cellular companies. With that being said, do you have any thoughts on VZ (Verizon) and T (AT&T). I am looking for lower beta stocks that pay out seemingly “safe” dividends. I feel that these fit the bill with a good potential for capital appreciation as more things get connected.
A. Most Internet-of-Things will be connected to the Internet over Wi-Fi networks, not over wireless carrier networks like VZ and T have. I like Verizon more than AT&T and have been considering adding some of it to my own portfolio.
Q. Can you give us your 2015 prediction for Apple’s stock price, and what call options if any might you consider? A blowout Q4 earnings and lots of excitement for the Apple Watch has potential to move the stock quite a bit, no?
A. I’m worried that there’s too much hype/expectations for the the Apple Watch to live up to for its first quarter or two. Earnings at Apple historically are pretty much impossible to game consistently from quarter to quarter, but yes, feet to fire, I’d expect a blowout but a big guide down into next quarter’s expectations as Apple is wont to do, especially when expectations get high like they are right now. Better to under promise how the Apple Watch will perform and then to blow it out in future quarters than to over promise what it will mean to your topline before you’ve even seen if it gets adopted as well as I and Apple expect it ultimately will.
Q. Any thoughts on QCOM? I read that they are trying to gain additonal revenue streams by being a chip supplie for the Internet of Things. They seem to be the best company in the space, do you like it at these levels?
A. China’s leaning on Qualcomm’s pricing and that’s got a cloud over the stock. Not something I can really try to game.
Q. Interested in any active hedges right about now Cody? (other than cash)
A. No, not bearish, just cautious so cash is my main hedge for now.
Q. $AMBA is currently up $7.00 over its Monday low. Any thoughts on what’s driving the pop in price? ($GPRO is down $2.00 today.)
A. Maybe Sony and Ambarella are both up on Sony Wearable future. Lots of hype around Ambarella-based HD-video chipset technology at the CES, as High-Def video recording goes mainstream-er.
Q. Cody: am i reading two possibly contradictory things in your stand on energy/oil stocks? On the one hand you say a major bankriptcy might be a catlayst for market action we can take advanatge of. On the other, you talk about the category/stocks at best being dead money and/or dividend plays. What will you be looking for after that bankruptcy?
A. No contradiction in what I’m saying — it will take at least a year or two before there’s a major bankruptcy in the energy sector and even then, only, if oil prices stay down below $70 throughout that time. Even at $70 a barrel, up 40% from today’s prices, there would still be a lot of pain and lack of growth at the energy companies and their stocks will be dead money at best for a while, I think.
Q. What do you need to see before you buy GDX Cody? This run get you any more interested?
A. How about a major bankruptcy of two in the gold mining industry to put a final bottom into the GDX?
Finally, I’m about to launch the new TradingWithCody site and chat room. If you’d like to be one of the first to try out the new http://twc.scutify.com site, make sure you’re registered on Scutify, let me know your username on Scutify and after the chat is over I’ll manually set you up on there. . Just a one time thing to register on Scutify and let us know your user name. And I’m not ever going to terminate this existing TradingWithCody.com site, but I’ll point people to the new one and phase out the chat and stuff on here. All the old articles and archives will remain here on this old TradingWithCody.com site. Email (firstname.lastname@example.org) and my contact info and support from our resident all-star Rene Mooshy will all remain the same.