I was on the road yesterday (had a detour because of missile testing at White Sands) and in meetings while the markets were tanking. I was glad to see nobody panicking in the Trading With Cody Chat Room while I was out.
Well, remember earlier this week when I bought some puts, writing:
Most likely I expect we do get a 10% pullback in the stock markets and that some of the more volatile stocks, including some of our own will get hit for more than 10% in the next few weeks.
And then I mentioned how you might feel if the market were to pull back 10%:
As I often remind you when markets are at all-time highs and in rally mode — remember how you felt the last time the stock market was down 10% and the headlines were full of panic and explanations of why more selloffs were ahead. Realize right now, that if and when the stock market is down 10% next time, you’re going to be a bit scared. You’re going to wonder why you didn’t sell everything at the exact high a few weeks prior. You’re going to wonder if Cody missed the top.
Let’s all be cool though, we’re ready for this, right?
Don’t be greedy. Be cool. There are Revolutions happening all around us that are creating new trillion dollar markets and over time, I plan to keep putting our buckets out there to catch some of those dollars streaming into those new Revolutionary markets.
Much more next week. Meanwhile, here’s the transcript to this week’s Trading With Cody Live Q&A Chat.
Welcome to Cody Underground the podcast, I’m doing a live Q and A here with my Trading with Cody subscribers. Anybody on the conference call or on the APP, live streaming here. I’ve got an interactive live streaming feature on the I am Cody Willard App. Download it for Ios or Android. On the call. First I give you guys first bidding here. Barry or anyone else who I heard dial in.
Subscriber: Do you see you see Apple when autonomous vehicles become ubiquitous becoming like Uber because they can just put an app on their phone and there’d be no loyalty to Uber. And then you get in and everything syncs. Do you you think that’s a market they’ll enter? Because, there’s no … you have to pay drivers, you know, now the only thing preventing other people from competing with Uber or Lyft are drivers. But when self driving cars …
Cody: It’s an interesting concept. You’re getting at two different things and both somewhat speculative. I mean, one’s definitely going to happen. The driverless car revolution is happening. The idea that people, especially … Yeah, especially in when you’re hailing a ride, there will still be people who drive for joy of course, but um, you know, in 10, 20 years, I think 90 percent of our travel will be on some sort of a driverless vehicle. 90, what, probably 80 percent of our travel is routine anyway. So that routine, your routine travel, you’ll probably end up in some sort of driverless cars, so it’s going to be a huge market share. So the question sort of then, from there, becomes specific to Apple and that’s where we get speculative. It’s because you’re looking out five or 10 years and wondering if Apple will invest in creating … putting a bunch of driverless cars on the road and especially in major cities and becoming Uber. Displacing Uber.
I don’t think so, frankly. And here’s why. Uber and Lyft, shout out to Lyft, I’ve got a great call with them next week with their driver-less people, actually. Talking about their driverless dashboard entertainment. I met with them when we were at CES when I was there with Neil Patrick Harris. We did a driver-less ride in a lift car. So Uber and Lyft are funded to the tune of billions and have probably access to tens of billions of dollars in coming years and they know that that’s their future, and they’re investing in this thing tremendously and they’ve partnered all the major car vendors already.
And Apple … For the last five or six years, people have been talking about Apple doing driverless. I’ve been real skeptical about that.I never thought they would release a driverless car anytime soon. I think they are interested in being a platform inside of driverless cars. But I know the company I met with, its active. Which partnered with Lyft and they’re driverless cars. What they’re doing already is amazing and they have invested a lot of money and to catch up with these companies that are racing to driverless, Apple’s way behind. Let’s put it this way, it would take an acquisition of someone serious and you’re talking an acquisition that’s 10 times bigger than anyone that apple’s ever done. Beats being the biggest acquisition that Apple’s ever done. There’s just no … Apple would, again, okay … So Apple could spend 20 billion dollars and buy a driverless car platform company and that would just be 10 percent of their cash, of Apple’s cash.
It could happen. It would take an acquisition, I would think. I don’t know whoever is going to be guiding Apple is going to have the guts to do that, you know? I mean they’re all … Tim Cook’s been a manager and before him Steve Jobs was of course a trailblazer, but in between the time that Steve Jobs was CEO originally and after he got fired, there were several CEOs that came through Apple, too, that were scared and they’re not aggressive thinkers. And so it would shock me, frankly. I don’t think apple’s going to be big into the autonomous vehicles anytime in the next five or 10 years. What were you about to say? Last question, or point that you had?
Subscriber: Hey, Cody, I’m a new subscriber. I made my first purchase with you on CALX it’s up over five percent in a week or two. Do you still like Calix even after this rally? And why is it up so much?
Cody: Okay, now number one, I’m about to talk about a small cap stock and it’s only so far been talked about for Trading with Cody subscribers from me. Sometimes when I talk about this stuff in public, the stock can move and I don’t know that anybody listening actually heard the name of the company that you said. So I’m going to leave that be. If you’re a Trading with Cody subscriber, you know, probably what stock he’s talking about (Calix CALX). But I’m not going to just throw it out there in public because it is a brand new thing for Trading with Cody subscribers and I am going to publish this on YouTube after we’ve finished talking.So with all that as a caveat and precursor, the company you’re asking about (Calix), just signed an agreement with Verizon.
Calix is a supplier to telecom companies, a fiber optic supplier to telecom companies, a passive optical network fiber optic supplier to telecom companies. All that to say that look, so when you sign a company with America, North America’s largest telecom company, Verizon, and the potential is there for it to become … This is again, a small cap company that’s doing a few hundred million dollars in sales right now. There’s the potential for this thing to do 10 times that if Verizon actually implements and distributes this passive optical network, um, that this company is supplying into the Verizon networks. Now it helps 5G is the reason they’re doing that and so Verizon’s going to spend 10 or 20 billion dollars investing in 5G in coming years. So absolutely you want to capture, as I like to say, there’s five or ten billion dollars of cash flowing into 5G’s spending infrastructure from Verizon alone and … the company I’m talking about is putting their bucket out in front of that spending and that’s a good thing.
So the stock popped a little bit on that news. The reason why I didn’t pop more than a few percent to five, 10 percent from where we started buying it last week when this Verizon news was announced this week, the reason it didn’t pop more is simply because we don’t know how much Verizon is going to put it and build on this company’s products. We just know that they’re doing a trial and that they’re implementing it and that that’s a very good sign that Verizon is going to be using this company’s products. So that’s why the stock is up a little bit. And then to your next question … Look, almost all of my revolution investing, my Trading with Cody approach to companies like this is longer term. I’m not trying to capture five or 10 percent move. You know, I’ve got stocks that we’re up ten thousand percent on, 600 percent on in the last two years on NVIDIA. And if I had worried about the first five percent or 10 percent move after I bought it, or tried to sell it or been scared to buy more or something, you know, I mean, you miss the six hundred percent. You missed the thousand percent moves. So you gotta be patient.
We’re not in here for five or 10 percent move. I also, the other thing I would say about that is this is why I like to spread my purchases out over traunches. I don’t like to buy everything all at once and throw in. I like to spread it out over time and over price. And sometimes that means paying up a little bit on the second or third traunche. And sometimes I get to buy more lower after I’ve bought some. So yeah, I might buy some more of this company, do another small traunche in the next week or two, wherever it’s at, because if it works it could be a five or 10 bagger. And if it doesn’t work, I think it could be down 30, 40, 50 percent from right here in the next year or two.
This one, unlike most of our investments is a small cap and it is a binary outcome. So it’s either going to go up a whole bunch or it’ll drop quite a bit. And most of our stocks are not quite that extreme. I mean, most you know, Apple, Amazon, Facebook, Google, everything’s a risk, right? But I don’t think most of those had that kind of you know … it’s not like they were going to go bankrupt or something. And frankly this company could, they’ve put all their eggs in this basket and if Verizon and other carriers don’t start buying this company’s products and really investing in growing, spending on them, who knows what happens. It’s a small cap company, it’s depending on one product, unlike most of our investments.
Subscriber:Cody I have gone to the Calx website and am TRYING to understand what their software is providing for Verizon customers. I do not really get it. I am a long time subscriber needing the Edge YOU deliver! Which means what is really important to understand investing both today and five/ten years out !
Cody: So let’s step back and look. Fifteen, 17 years ago, 18 years ago, I worked in a tech incubator, and one of the things that we incubated was Nortel, the telecom equipment supplier, was an investor in this incubator. And one of the things we were doing was building free space optical networks and designing fiber to the home networks. And even back then there was this technology that was at that point somewhat burgeoning that’s called passive optical networks. And what it means, the word passive in there means is that it’s not driven by software, it’s not driven by chips.
Much of what happens inside of the switches are literally driven by splitting lasers through prisms and things and getting more bandwidth and turning it into readable pulses of light in this passive optical network. And the way you need to picture this company’s products is you … let’s break down the telecom network a little bit. You’ve got the core, and that’s where the internet, sort of the cloud itself. You’ve got back haul, you’ve got in Albuquerque or Dallas or New York City all of those … even just old-fashioned telephone calls and all of the internet live streaming and typing and anything you’re doing gets funneled into these giant cores. And those things are fiber optic cables that … hundreds and thousands of strands of fiber optic cables that then have hundreds and thousands of different light wavelengths that are split to create even more capacity. And that’s the core. That’s not where this company is supplying.
The companies that supply there are still like Lucent and Nortel, of course, but there’s Sienna, Ericsson, lots of these companies, and that’s the core. Even Juniper and Cisco. Cisco, and that was their main routers, those are in the core of the network. Juniper’s routers are not necessarily in the core, but that’s the next step here that’s moved to. Then you’ve got sort of the metro. It’s called the metro optical network, the metro network. And that is from the buildings. You’re taking those pipes, all of those calls, all the connections, and putting them into pipes that connect the building to the cloud. So in the cities themselves you’ve got smaller bundles of fiber optic cables that then also each fiber, each strand of actual cable, each one of those tiny, little, hair-size glass strands can have thousands of different lights running through them, too.
And this is where this company, Calix, the company that we just bought on Trading With Cody last week, the smaller cap supplier to Verizon, that’s where it plays. It plays in this metro area. So you’re not going to see it as a customer. It’s not the end. It’s not like the end user. Then from the metro you’ve got to the home, and that can be … in the case of 5G, it’s just wireless. In the case of DSL, it’s copper pair. In the case of coax cable … in the case of cable internet, it’s coaxial cable. Different media, the different medium itself that carries the transmission can be different there each and every place, frankly, but most of the metro, most of the core’s all fiber optics. And the passive optical network and those switches and the platform that drives the passive optical network in many ways are passive because they’re not active.
Now of course there is a whole bunch of software driving every platform, anything that’s got software and stuff driving it. So I hope that answers your question at least a little bit and explains how the networks tie in and where we play … we can own a service provider like Verizon, and Verizon, by the way, took fiber to the home. It’s called Fios. That product is fiber optic cable taken to someone’s actual home. You can have 3G. You can have LTE, which is 4G, at least that’s Verizon’s version. There’s different flavors of 4G and 5G. I don’t know if you remember the words GSM versus LTE, and all these are based on either CDMA or TDMA code division multiplexing access. What’s the A stand for in that? I don’t remember. Have to look it up, what the A stands for in CDMA.
But at any rate, guys, I’m not just trying to show off. I’m trying to underscore the fact that these networks are all tied in and there’s all these different platforms. You’ve got distribution, you’ve got the equipment itself, you’ve got the people who supply the chips into the equipment, you’ve got the cellphone suppliers. It all runs in this ecosystem known as the internet and the cloud and the system. There’s even a thing called SS7, which I’ve always thought was fascinating. When you dial someone’s phone number, the first thing that has to happen is it has to be contacted and start ringing, even in smartphone. So, anyway. Crazy stuff.
I was a telecom guy for a while. I wrote the Telecom Connection Newsletter, which many of my Trading With Cody subscribers today first subscribed to 15, 17 years ago.
Subscriber: Thank you, Cody.
Cody: Thank you. Thanks for joining. Let’s see if anybody on the app has a question. Partner in crime.
Subscriber: Alright, if I have 10 thousand dollars, and I was going to invest it in a single stock today, what would that company be?
Cody: I got to get more information from you. You’ve got 63 seconds left in your questions so I’m going to have to ask quick, you’re going to answer a quick. Do we have a whole bunch of money elsewhere in stocks already? And or in mutual funds already?
Q. Yes.
A. Okay, So it’s not like this is your one bet. This isn’t your nut or something that you’ve been waiting to invest.
Subscriber: This is not the nut.
Cody: Because the answer to that would be to spread it out over a few … I wouldn’t pick just one. The $10 thousand dollars in one stock right now … Why you got to put me on one … I hate choosing one, number one. So I’m going to have to go with three even though if you want just one cause … Oh, what the heck I’ll do it. Let’s just look at the portfolio real quick and let me think about it. Two words for you: Bit Coin. Kidding, kidding. It’s a frenzy out there. I don’t suggest buying bitcoin right now. You know, one stock right now, I might go with Verizon. Honestly. And/or Intel. These are both companies that I’ve purchased recently in the last few months. Intel, I started buying months ago when it was at 33 bucks, maybe. It’s up to 45 or higher. I don’t know. I didn’t look at it the last few days. It came back, it got hit recently for some silly … Well, not silly stuff, but as you guys probably saw those headlines, they had all kinds of hacker issues and the stock got hit for 10 or 15 percent. And as we talked about on Trading with Cody several times and answering these questions, I didn’t think it was a big deal. I didn’t think we would even remember that headline in two years and the stock’s come back since then. Regardless. Look, I like Intel. I think the company could double or triple from here. You’ve got a good dividend. It was four percent when we first bought it, but because the stock’s gone up and the dividend hasn’t been raised yet … “yet” being the operative word, the dividend’s lower than that right now.
I do think a Verizon is also fantastic. I think it could double or triple in the next five years and that would surprise everyone. Verizon hasn’t made a big move like that in years but I think 5G is going to be a driver for Verizon and in the meantime they generate a ton of cash and you’ve got a nice dividend … Four percent plus the stock also is up since I first bought it, little bit. Those are two. Those would be two that I would like for the next three to five years. And if you want to be crazy and risk that money, the one stock that we were just talking about that’s available on tradingwithcody.com exclusively (Calix CALX) because I don’t want to throw it out there.
That said, who the hell knows, stocks can crash. You never know.
Subscriber: You mentioned Verizon a while back and the stock really hasn’t done much work. Should I keep it or say try sell it. What should I do?
A. That’s what I’m saying. I like Verizon. I think it’s a screaming buy right now, frankly, I think 5G changes the trajectory of that company. If you’ve ever heard that phrase before, Ross, changing the trajectory of their company, but that’s what they’re planning to do is change-
Subscriber: I know The Voice Revolution, like the book you wrote about it last year!
Cody: Frankly that’s part of it, right? So the voice revolution entails being able to talk to devices everywhere all the time. You’re constantly connected and if you’re going to be having … if people are going to have constant broadband devices and not just their phone and not just their computer and not just their TV, but everywhere you go … you got your glasses connected, you got internet of things, your refrigerator, you’re watching the IM app inside of your toilet … I mean we got revolutions going everywhere, man and 5G drives that and Verizon is the leader of 5G in North America. They’re investing much more than anyone else in it. I think it’s going to pay huge dividends for Verizon shareholders over the next three to five years, including in the form of direct, actual literal dividends, but beyond that also. Capital growth, stock growth.
I hope, could be wrong. Maybe someone comes in, maybe it gets nationalized, what a crap … I’m going to tell you right now, there’s a zero percent chance that anyone in the Republican or Democrat regime, either side is ever going to nationalize the 5G network in this country. These guys are owned by giant corporations like Verizon and AT&T. They’re not going to do anything that Verizon AT&T doesn’t want them to do. So you don’t need to worry about nationalization of 5G, okay? Let’s just take that off the table. It’s ridiculous. Not going to happen in this world. Any questions on the call and or here on the chat? I’ve got questions from the chat room than I should probably get to.
Subscriber: Since you are high on Verizon, as I am, why are you only mildly positive about buying their very long-term calls? You’ve said, ‘I can think of worse things to do.’ Why not do it or recommend it, even though they’ve done well since another subscriber first asked you.”
Cody: We don’t always have to be greedy. And truly the reason why is this. Look, I would think over the next three to five years that Verizon goes up triple.
Now, if I buy call options that expire in three or four years and the stock is only up 50%, I might lose everything on those call options, because you might have bought it $75 strike prices or something, even if you bought them at $60 strike prices. Let’s say the stock goes up 20% and that’s it over the next five years. Plus we get paid 5% or 6% dividend holding it the entire time, maybe 7% dividend in five years if it’s still at 60 bucks or something. So I’ll be pocketing dividends and compounding my gains on those and hopefully getting another 20% or 30% from the stock in the worst case scenario there. Meanwhile you’ve got 100% losses on those call options. That’s why.
There’s risk, added risk, lots of added risk when you buy options, any call options, any put options. Selling them, trading them, butterfly spreads, Gilligan Island flips … made that one up. There’s always risks. I think I might … it’d be sort of funny. You know what I might do? I might start writing about on like MarketWatch, Wall Street Journal, thestreet.com, talk about it on TV and hype this whole new concept, this technical analysis trick that I’ve learned called Gilligan Island flips that doesn’t even exist. Just made it up with you guys right now. You’re all in on an inside joke. It’s not that funny of an inside joke, I guess.
Subscriber: Yeah, Cody, but the Verizon calls are almost triple what they were when … if you bought them two to three months ago, even with the minimal rise in the equity to date.
Cody: Well, thanks for the 20/20 hindsight there, dude. Yeah, if you bought them at the bottom and the stock went up 30% quickly, well yeah, they’ve got a nice gain on them, but there’s still risk. Yes, you could be rewarded handsomely. And let’s say you bought those and the stock does triple, you could have tenfold gains on those call options. But I’m telling you, the risk reward scenario for me, it’s not there for me. Maybe you throw one-tenth of one percent of your capital at it, then it doesn’t matter. But I wouldn’t go crazy with call options. You’ve never seen me go crazy with call options. Seen me do some occasional stuff, but …
And maybe this is the perfect scenario, I don’t know. Wait till the stock takes a hit. Next time Verizon and the stock market gets hit, goes down to 45%, you go buy those call options and then you watch, the stock won’t move for six months and then you’ll be down 30% on them and you’ll be like, “I shouldn’t have bought those call options.” Meanwhile we’re even on our Verizon and we’ve got two and a half percent dividend over those six months.
Subscriber: What are the catalysts behind TheStreet’s stock movement. What do you see in that?
Cody: The recent hit that the stock took or the pop that it has taken since we bought it?
Subscriber: I’m not worried about that. I’m just wondering what drives it, but I don’t know much about it. I know it’s like Jim Cramer’s company, I don’t know if he founded it, but I’m just wondering what you see going forward and what’s going to drive that stock and how do they make money
Cody: Okay, now, This is another small cap that I don’t want to pop for no reason, so if you’re watching this, don’t rush out and buy the stock and all that stuff and we’ve owned it since it was below a dollar so we’re up quite a bit on it already. I’m not selling any of it yet, but we are talking about TST, thestreet.com, which yes, is Jim Cramer’s company.
The reason I own the stock is they brought on new management. The new CEO, new chairman in the last year and a half. David Calloway, the CEO. Larry Kramer, the chairman. I’ve known both of them for 15 plus years. David is a friend of mine. Larry too, but I don’t know Larry nearly as well as I know David. I’ve hung out with David off and on at money shows in New York. I’ve had scotch with him, with both Larry and David in the … what’s that old, old … one of those bars there on Wall Street. It was fun, good stuff, and I love David. I, it just, I believe in him. I believe he’s got … the people that worked for him like to work for him and I think he can come in and that company … And so then to further that, so look, the company does 60 plus million dollars a year in sales and the market cap when we bought it was below with below 30 million. 30 million dollars or so. So it was trading at halftime sales, the company was burning a little bit of cash but just any growth, any margin expansion, any tweaking of their costs would kickoff potentially millions of dollars of cash. And then further, company had 30 million dollars in cash when we bought it.
So I was basically getting it for free. The stock market saying, “the company is never going to create any value”. It was trading below the value of the cash or at the cash.
When I bought Apple, by the way back in March 2003 the first time, it also was trading at or below its cash balance, which is a crazy thing to think about. That’s when it was split adjusted at a dollar a share and they had like a dollar 20 per share in cash. At the time it was actually like a $14 stock and it was trading at 12 bucks, something like that. But at any rate, I’m off topic talking about Apple. I was buying the street for almost free at that point. If David could come in and create and Larry could come in and create any value, stock would pop. If they generate five or 10 million dollars of cash, you throw a ten multiple on that, company could have a hundred million dollar market cap plus cash, 25 million that’d be, you know, a four or five time potential pop from where we originally bought it.
And now it’s up probably 30 or 40 percent since then. Biggest reason why it’s up since then, is yes, they’ve generated some cash, David’s got that business turned around and I hope growing. On top of that, they had a convertible shareholder who had you know … they had to pay him 50 million bucks or something before they could sell the company. So they would never have been able to even potentially look at selling the company without being able to write a 55 million dollar check on top of buying the company, the equity So at any rate that was taken care of that convertible was bought out and … So, you know, there’s hopefully some clear sailing here.
I wouldn’t rush out and buy the stock, but I do believe that David’s got this company turned and there’s some upside if it works out. It’s a small cap and very risky. Any penny stock, any stock trading at a dollar is … I mean clearly something’s not right, shouldn’t be trading at a dollar if it’s publicly traded. I mean heck, thestreet.com had a multi-billion dollar market cap back at the top of the dot com frenzy.
If you own crypto currencies right now, just remember there were a lot of great companies that even survived the dot com frenzy that ended up losing 99 percent of their value from JDS Uniphase to thestreet.com. And they’re still around, not to mention all the frauds and frenzy that was going on in the dot-com era and there are direct parallels to the frenzy and bubble that is crypto currency right now. Doesn’t mean that there won’t be crypto currencies and blockchain futures in the future. And now I’m off topic. If the street.com changed her name to the street.blockchain stock might go up like 500 percent tomorrow because we’re in a frenzy.
Subscriber: Hi Cody. I hope you and your family are doing well. I read your trade alert yesterday about some puts yesterday. About what percentage of your total capital investment approximately are you using to buy puts? I’m guessing only one or two percent. Thanks for offering a lifetime subscription to go to tradingwithcody.com. You’ve been an excellent stock picker. We get to save a whole bunch of money if you get a lifetime subscription.
Cody: Those of you who are already Trading with Cody subscribers, what are you doing? Get on it. Started offering that two days and the slots are going fast. You better or sign up soon. It’s a limited offer.
As for how much I put into the options, it’s probably even less than one percent, frankly. Um, I’m just getting started and doing a little bit of hedging. There are times I might own one or two percent, but as I noted in that trade alert yesterday, I’m just putting in a little bit of extra hedging and given some potential, you know, like gained some alpha that potentially if the market were to crash outright, not that I expect that, but if you had a good five or 10 percent pullbacks these puts could kick in. If you put half a percent and some puts slightly below the market in two of the indexes or something like I did yesterday and the indexes were to crash five or 10 percent, you could get a 300, 500 percent pop on those puts and you know, that’d be two or three percent that would then kick in because obviously your long stocks would be getting hurt in that hit with the market pulling back. So your overall portfolio would probably be down anyway. But that’s all right. I’m not trying to game every nuance and every curve in the markets.
Subscriber: You were kind enough the other day to mention three possible puts that could serve as a hedge: IWM, SPYs and QQQs, and then in fact dipped into IWM and SPY. You had defined the QQQs as tech heavier. Was there a reason you didn’t include the QQQs yesterday?
Cody: Not really, no. I just started with the SPYs and IWMs. I’m not in any rush to buy a whole bunch of puts. It’s not like I think the bubble blowing bull market that we’ve been riding for seven years is over. Catch your breath a little bit, buy some puts, put a little hedge on. I quote this all the time for Trading With Cody subscribers and it’s one of my favorite lessons that I’ve learned on Wall Street from one of my favorite old mentors on Wall Street, and that is … the saying was always, “May you lose money on all your hedges,” because theoretically, as Trading With Cody subscribers always hear from me, that should mean that the actual portfolio that you’re hedging should be going up a whole bunch. And if you’ve done a good job of hedging, then your gains should outweigh the slight losses you have from the hedges. And then when things don’t go right and your hedges do make a whole bunch of money, well … If it were easy, everybody, if it were easy, we’d all be billionaires, billionaire traders. Not just this guy.
Subscriber: Cody, the new tax law requires FiFo, first in first out, accounting for shares sold. This could create large tax liability if you’re trading around a core position. Is there a way to solve this problem?
Cody: This question was actually in the chat room this morning and then there was a whole debate among CPAs and other people in the industry debating whether the law actually passed with the FiFo accounting shares and all of this stuff. And the answer to your question is, look, that’s not my specialty. I’m not an accountant. I don’t want to be an accountant. I am, you know, I do try to avoid … I tried to minimize my taxes like anyone else, but I don’t let taxes wag the dog. Don’t let the taxes wag the dog. So I’m not worried about FiFo and all of that and it doesn’t change my playbook and I don’t think you could gain what it might mean for the stock market or if you were to try. Although that’s not even your question.
Subscriber: I noticed after reading a few articles on APTV that some mention LEA as a competitor. Did you see LEA at the Vegas show? Comments? Similar dividend yield although PE at about a 40% discount to APTV.
Cody: I’ve got a book coming out called The Driverless Revolution or something there about, and I’m going to have some stock picks in it and I’m doing a bunch of research and meeting with these companies right now and Aptiv is one of them. And I think, um, the thing is, valuation is probably not going to be the biggest factor. I’m going to buy the one that’s going to be the Amazon. There’s probably going to be three or four outrageous winners that dominate driver-less cars. But there will be suppliers into it that grow with this industry. And so if we can find a company that’s truly going to drive the driver-less revolution, pun not intended. I think we’ll, we’ll buy ’em. Valuation is important, but it’s not everything, especially when there a revolution to the size of trillions of dollars that’s burgeoning as there is in driver-less right now.
Subscriber: Hey, Cody, this is Steve. And I was just curious to what your thoughts are on the solar power industry in the US going forward here.
Cody: Okay. So if you’re a long-time Trading With Cody subscriber, Steve, which I think I recognize your username, been around for a while …
Steve: Yes.
Cody: … you know I own First Solar and Solar Edge, and we’ve got some terrific gains. Solar Edge was our second or third best performing stock last year. That’s saying something, because we had a hell of a year. First Solar also was doubled, tripled from its lows of last year and now trading above 70 bucks. So look, again, I think probably your question has somewhat to do with subsidies from the Republican Democrat regime that they shower of … instead of helping poor, hungry children, they send it to First Solar and Solar Edge as shareholders. Again, I always fight that stuff politically, including the tone of my voice as I say that and how I phrase it right now. But the fact is that I don’t think those subsidies are going anywhere, and beyond that I think First Solar has a business model here in the US that is going to be dominant. They’ve got the balance sheet to back themselves up. And I think Solar Edge has some technology that could revolutionize the solar cells, taking them from analog to digital.
And so the subsidies matter somewhat, but the reason I own solar energy stocks isn’t for subsidies. It is because I believe that solar energy is the future. I think it’s better than any other renewable energy that we’ve got right now, and I think the cost factors, partly because of companies like Solar Edge and First Solar driving them down with technology, the costs of solar are going to drop again another factor of 10. Solar will be a very big player in energy over the next 10 or 20 years, and I think these are two of the players that could drive that. So, good question.
Subcriber: Cody, I heard about a company, Energous Corp, that recently received federal approval from FCC in its wireless technology. Do you have any thoughts about this company?
Cody: Yes, I’ve written about it in the last few weeks and several years ago, and I’m not a fan. Small cap that I don’t trust, don’t trust at all. Looks awfully hypey, to be kind about it. Most small caps, micro caps, they’re publicly traded Pink Sheets that issue a bunch of press releases but don’t do much revenue. Be careful.
Subscriber: Prediction on the Super Bowl, Cody?
Cody: Is that this week? Just kidding. I got bad news for Philly fans. You know what I’ve decided, I shouldn’t talk politics, because all I do … I don’t like Democrats or Republicans. I’m fighting that whole regime, and so all I do it make everybody mad because most people are Republican or Democrat, so what good is this? Just avoid the topic. Meanwhile, maybe this is the same thing. I know there’s Philly fans, but I have bad news for you guys. I wouldn’t just take Patriots. I mean, I think Patriots are going to run the score up in game. It could be 45-10. I’m thinking 49-6, 37-13. I say a 24-point spread. I’ll take a 20-point spread, and that’s still aggressive enough I’ll feel great about if it turns out I’m right. Bet it.
Thanks, guys. Peace, love and happiness. Fight the powers. Think free. Be … what’s the other words I always write? I’m beat. Goodnight.
