Here’s the transcript from this week’s TradingWithCody Live Q&A Chat.
Q. Thanks for the six reasons. I have a question for the chat. Can you explain how “greed is definitely the more dominant emotion” given the news of record outflows from the stock market in February? Thanks.
A. Sure. You left off the rest of what I wrote which is important because I’m not talking just about the stock market market and stock market investors/traders when I say that “greed is definitely the more dominant emotion amongst the general public for the last year as reflected in any five year or two year cryptocurrency chart.”
Do you remember 2008 and 2009 and even 2010-2012 or so? The general public was scared and not greedy. People weren’t sure if their mutual fund investments were safe much less were they throwing money at new fangled mostly unregulated instruments like cryptocurrencies. I remember thinking that “I can’t imagine anyone will ever day trade stocks again.” Alas, people day trade stocks and futures and Forex every day. The first time I ever spoke at a MoneyShow in 2011, it was far from packed and much of the focus of the speeches was about “protecting your wealth.” I told you recently about how at the latest MoneyShow that even talk I gave about why people should be scared of cryptocurrencies right now that old ladies and high schoolers mobbed me to ask me if they should be buying cryptocurrencies anyway. There might be some asset rotations going on from stocks to cryptocurrencies to bonds to Treasuries to real estate and so on…but I definitely stand by my statement that “greed is definitely the more dominant emotion amongst the general public right now.”
Q. Cody, You recently mentioned that you may begin to nibble in the blockchain/cryptocurrency space. Will this be stock(s), currencies or both?
A. I’ll be starting by buying one or two more cybersecurities in TINY tranches. Sort of like I did with bitcoin years ago when I started nibbling it at $100 or so. There are no good publicly-traded pureplays on blockchain that I know of.
Q. With today’s SEC Statement on Potentially Unlawful Online Platforms for Trading Digital Assets, do you have a list of platforms you think may be “safe” from this potential crackdown for trading cryptocurrencies? (Coinbase, Kraken, etc.)
A. There is no “safe” from the crack down, real and/or perceived, in the cryptocurrency world. Recall that I expect that 99% of the current batch of cryptocurrencies to go to $0 and that even the surviving/Revolutionary winners in the crypto world will be down 90%+ before the Great Cryptocurrency Crash is over.
Q. Regarding your answer: ‘There is no “safe” from the crack down, real and/or perceived, in the cryptocurrency world. Recall that I expect that 99% of the current batch of cryptocurrencies to go to $0 and that even the surviving/Revolutionary winners in the crypto world will be down 90%+ before the Great Cryptocurrency Crash is over.’ Actually, I was referring to the actual exchanges used to trade cryptocurrencies. Do you have any preferred ones you use (and why)? Thanks
A. No, I can’t vouch for an exchange (yet). And if I’m right that 99% of the current cryptos available at the major exchanges are headed to $0 — and if it’s possible to pay the exchange to list your cryptocurrency — and so on….well, don’t you think the SEC/government SHOULD be cracking down?!
Q. Hi Cody. Excited to hear you’re looking at some specific blockchain opportunities. We all know AI and autonomous driving are huge markets that have huge profit potential and wondered if you could give us a general overview of how big you think blockchain will be? Could it be the biggest thing coming in the next 5-10 years? Thanks!
A. Great question. I do think blockchain will create trillion dollar economies (and will save trillions of dollars of transaction and other banking fees) but as to whether that’s $1 trillion in ten years or $10 trillion in ten years, I haven’t grasped yet.
Q. Hi Cody, Hope all is well. I still have the April IWM puts. Should I roll these over to May QQQ puts or just nibble on some additional QQQ puts? I am still seeing a lot of Crypto ads and emails. Looks like we have a long way to go before they bottom like you said. Thanks.
A. I can only tell you what I’m to in this case and that I still have the April IWM puts and just added some QQQ puts. Just tiny positions to help hedge the portfolio. And yes, this is a great point, “I am still seeing a lot of Crypto ads and emails.” I tell people that the best time to start getting aggressive in buying the Amazons of Crytpos will be when people laugh at you when you tell them that you’re investing in cryptos. People who were buying AMZN when it had crashed 90% and most dot coms were going bankrupt were laughed at by their friends. That’s the parallel I’m looking for. And you are correct, I don’t expect we’ll see very many ads for “The next Bitcoin” when the bottom finally arrives.
Q. Hi, Cody: If you can’t answer this now, for today’s Q&A: Does your “sell-rallies-instead-of-buying-dips” note this morning make your” I’d-buy-it-if-it-dipped-to-this-price” list for stocks in the TWC portfolio pretty much inoperative? Seems like, as you’ve written, the two philosophies work against each other. If so, you’re now not recommending adding a tranche of something if it experiences a dip beyond your chart levels? Thanks.
A. Trading and investing in the stock market is risky and muddy. I don’t have a simple answer that “I’d buy a bunch here and there no matter what” but that I MIGHT nibble some more at those levels. It’d require some serious sell-offs in the market to reach my “Where I’d probably buy more” levels — and if the market were to crash to the point where we get to buy at those levels near-term — we’ll just have to see where we are when we get there. Always be prepared though.
Q. I sent an email yesterday but was able to login today. Yesterday you said you may nibble on some crypto just in case your wrong about a further crash of bitcoin. In a previous email you listed 5 crypto currencies you like. I’ve been following Dragonchain for 6 months now. I was wondering if you have ever looked into there platform? The Dragonchain platform was initially created at Walt Disney with the idea of making it turn key for any business to take advantage of the blockchain tech.
A. I haven’t looked at Dragonchain yet, but I will and if I deem it worthy, I’ll be sure to write up about it. Thanks!
Q. Hi. Cody When purchasing puts as a good hedge i have been purchasing 5% of the total value of my portfolio I noticed to day that despite the Dow and nasdaq being down significantly i am only down about half of what would be had I not placed any hedge Do you have any overview on a strategy of % to total portfolio Or is it not viable considering so many different investment strategies Once again you have taught me patience. Thanks.
A. Putting 5% of your portfolio into options, either calls or puts, is probably way too aggressive for most retail investors. I’d think 0.5% or maybe up to 1% or even 1.5% for the put hedges is probably more appropriate for most retail investors, even if I were outright bearish and thought the market tanking was a very high probability. Which I don’t right now — I’m just hedging a little bit.
Q. @cody You’ve looked years down the road (to 2020) for stocks like WDC & CALX in your latest position updates… any recent thoughts on PANW that far out? Last I read you wrote 250 could be possible this year.
A. I think $PANW could be a $1000 stock in five years if they maintain their leadership position in enterprise cybersecurity.
Q. Cody, are solar tariffs good or bad for FSLR, and how do they color your view of the stock?
A. Tariffs are good for FSLR. But in the long-term I own FSLR because I believe that solar is the best solution and most Revolutionary way to create energy, not because the Republican Democrat Regime listens to the solar industry’s lobbyists beg for welfare and protection.
Q. Last week you sent a trade alert that you were selling 20% of your position in AXGN, noting that the stock is currently selling for 20x revenues (I mistakenly typed 20x earnings). I had also read the transcript of the company’s conference call for 4Q earnings which sounded as though the prospects for the company are extremely bright. Olivepetunia Olivepetunia March 7, 2018 – 1:13 pm I went on to say that I am trying to balance my tendency to react to news immediately which can cause me to “over trade” with a desire to follow your guidance and invest for the next 10,000 days or so. Part of me wants to sell some now as you did and part of me says that I don’t own enough, given the bright future prospects. Olivepetunia Olivepetunia March 7, 2018 – 1:13 pm I think we also know that high valuations can be maintained for a very long time as long as the “story” remains intact. I have a modest position in the stock which I am holding for a little over a year and have taken some profits along the way, most recently in the low 20’s. Do you have any longer term goals or expectations for AXGN?
A. I absolutely think that AXGN can go much higher in coming years, or I would sell all of it. Maybe the best suggestion for you would be to consider selling 5% of it, even if it’s a modest-sized position for you.
Q. Cody, When do you plan to update your ranking of the recommended stocks?
A. I typically do the Latest Positions with updated rankings and analysis for all of our stocks every 4 weeks or so. Unless the market is going crazy up/down and the ratings have changed dramatically or something. So, probably next week or so is the answer.
Q. Cody, could we capture any BETA by shorting an individual stock (like Netflix or Amazon) with options, along with your other put suggestions?
A. I typically try to stay away from shorting a TERRIFIC company like NFLX or AMZN even if I’m bearish. Crappy companies with terrible or declining fundamentals are absolutely GREAT ways to capture some ALPHA.
Q. Cody, Why you preferred to sit tight on Twtr ? You want more data to believe their turn around story or do you think it raised so fast ?
A. I bought TWTR at $14 and its been a great return for us so far. Are you suggesting I should be buying more even as it’s gone from $14 to $34 since we bought it a year and a half ago or so?
Q. Saludos Cody and company I trimmed some SEDG on your headup BUT it didn’t feel right and yet what do I know and maybe it will go below 46 where I trimmed So this is a dance and I am clear and take full responsibility for what I decide to do and struggle to at times mimic what you are doing and not IT IS THE BIG picture that you often touch base with that is a perspective that I value so thanks !! And how do you manage the information you read the financials I guess it is a macro / micro move
A. Thanks for the kind words. Have your cake and eat it too by never being too aggressive and making small moves and being SLOW with your money. I just read ALL the time! Answer cont’d: As for managing the information — I just read ALL the time and try to be objective about politics and the economy as best I can.
Q. Cody, have we sold any RIOT puts??
A. I didn’t get filled on my RIOT put bids. I do think if you haven’t taken any profits on them, you probably should lock in some of the profits at least. The stock is down 70% since I sent out that first Trade Alert about bidding on RIOT puts.
Q. @skimdt: I don’t think Cody actually purchased any $RIOT puts. My impression is that he put some bids in, but they did not fill. With that said, I purchased some June $22.50’s and $15’s (at a very high premium), and I asked him about selling/holding a few weeks ago when they were up about 30%. He suggested maybe selling 1/2 or more, and perhaps holding the remainder.
A. Yes, this is correct, thanks Steve!
Q. Cody, What was best one or two concerts you have been to?
A. Maybe: Hung out sidestage next to the fuzzy guitars watching ZZ Top at the Beacon Theatre in NYC a few years ago. Went backstage and drank beers with the band before the concert started. Drank another beer with Billy Gibbons’ tour bus after the show and got to take out of its case and strum an old Les Paul of his. Or maybe: Hanging out with Bob Weir at his house for a couple days, learning “Friend of The Devil” from him and then watching him sing it in a tiny club. Or maybe: Having KISS’ agent give me and friends a front row seat at KISS/Aerosmith and then getting a call when the show was over to go backstage and hang with the band and listening to Paul Stanley tell a Rolling Stone’s editor, “You gave us a terrible review for this tour. What, you guys’ don’t like Christmas? Cuz our show is Christmas!” Or maybe: The first time I ever saw Pearl Jam, on Randall’s Island in NYC after having been a big fan of theirs for many years.