Here’s the transcript from this week’s Trading With Cody Live Q&A Chat from the Trading With Cody Chat room.
Q. It is hard to keep up with all the reincarnations of Q & A Chat and The Cody Willard Show.
A. We’re going to start doing the Trading With Cody Live Q&A Chat each Tuesday at 9am ET (just like today) from now on. As a Trading With Cody subscriber, you can always email us your question for the Live Q&A Chat to firstname.lastname@example.org and we’ll include it in the chat. We also send out a full transcript of each week’s Trading With Cody Live Q&A Chat to Trading With Cody subscribers. The Cody Willard Show will stream live on Facebook and YouTube and elsewhere each Wednesday at 12pm ET. But just as easy as the live stream is that you can always watch and/or listen to the latest full episode and/or see daily short form clips at (click on each icon to see our respective page):
Q. Your recent cautious outlook is well-noted. With this being said, are you also looking on the short side for possible TWC additions?
A. Yes, always. There are probably some terrific shorting opportunities in the middling tech stocks that trade at 10+ times sales right now. I also know there are developing Revolutionary trends like driverless cars that will kill the need for the masses to buy car insurance, but I think in that example, it’s too early to short PRG (Progressive) or other car insurance companies. I welcome short ideas if you have some in mind!
Q. Hi Cody, question for your Q&A Is it possible for private investors like us to develop a portfolio similar to venture capital/private equity firm using public companies? In the past you’ve invested in some companies mentioning to consider it like a venture capitalist investment. Do you think it is something you could develop further for us? I often read of big companies like Google, Softbank, Alibaba etc. investing in revolutionary companies but obviously they can do it in private companies. I know we have exposure by owning some of these big names in our actual portfolio, but is it something you think we could do even more, like creating a small portfolio of venture capital/private equities type investment in revolutionary names in its infancy or you think it’s not possible just using public companies?
A. This is a really interesting idea! I’m actually going to start investing in some actual start-ups at a crowdfunding site that I’ve partnered with (more details to come in the next few weeks) but what you’re asking about is something else. When we’ve invested in AXGN or TST, I called them “venture-like investments.” If we could find a full basket of other small-cap and/or wildly cheap tech stocks that have good balance sheets and strong upside potential that we’d put our money into…wait a minute, I’m afraid I already spend thousands of hours each year trying to find those kinds of investments and pointing them out to us. It’s hard to find those kinds of venture-like opportunities in publicly-traded stocks when the markets are at all-time highs like they are right now, which is why there aren’t more of those kinds of stocks in my portfolio right now. But the short answer is that yes, a private investor could develop a portfolio similar to venture capital/private equity firm using public companies (and could probably make a lot of money doing so, if they were to be careful and patient in picking the stocks),
Subscriber follow-up comment: Cody, thanks a lot for your answer, looking forward to know more: “I’m actually going to start investing in some actual start-ups at a crowdfunding site that I’ve partnered with.” And thank you in particular for the end of your answer that summarizes very well your Trading with Cody philosophy (and which is why I’m happy to be a TWC4life): “and could probably make a lot of money doing so, if they were to be careful and patient in picking the stocks.”
Q. Here is a little about SEDG from Robert Marcin on Scutify: “Fine numbers from $sedg. 60% organic growth with a guide to %40 in sept qtr. co continues to take large market share with its revolutionary hd wave product. after 50% growth in 2018, i expect organic growth of 20-25% in 2019 with geographical and end market expansion. I also expect $4 eps next year, well above street estimates.” I would like to KNOW more how he arrives at these numbers.
A. Robert Marcin is the best value investor I know and he and I bounce our new investment ideas off each other often, especially when he’s found a value investment opportunity in tech or when I’ve found a value in a Revolution Investing idea. He’s the one who got me turned onto SEDG. He’s also an old friend. Anyway, Robert talks to people inside SEDG, he talks to analysts who cover SEDG and he does a bunch of other homework and analysis on his own on all of his positions. That’s how he comes up with his own estimates for revenues and earnings for next year. He’ll probably be right about next year’s earnings, and he has been right in his analysis and predictions that analyst estimates were too low for the past couple years that we’ve owned SEDG. If SEDG does earn $4 next year, throw a 20 multiple on that and you’d have an $80 stock by the way.
Q. Cody, Any thoughts on ATRC? Was turned onto them by somebody in nursing field. Revenues about 200 mil. 1 bil market cap
A. We can also rinse and repeat my answers about most of the small/mid cap stocks I was asked about in last week’s Live Q&A Chat. This is a company growing about 10-12% per year, it’s not profitable and it’s not expected to profitable next year either. But it’s trading at 5x sales! For a 10% grower that’s not profitable? Not a stock for me right now.
Q. A lot of Ethereum’s detractors consistently bring up scaling as its main obstacle and why it may lose out to other cryptos. What’s your take on that front?
A. Scaling up is/was also one of the main obstacles cited for bitcoin and why it may lose out to other cryptos. Certainly, the ability to scale up to facilitate trillions of dollars of economic transactions is a crucial question to ask about any and all cryptos that exist right now in 2018. I think in both bitcoin’s and Ethereum’s cases that there are so many hundreds of millions and/or billions of dollars being invested in getting them to scale and work at scale that solutions for their scaling issues might be found. Trying to find the winners in the current batch of existing cryptos is like finding a dandelion at Augusta. They exist and they do bloom, but most will get killed long before they ever get a chance to grow.
Subscriber follow-up comment: That’s why I subscribe! Thanks for insight
Q. Who was your favorite and/or most memorable guest back in the day of Happy Hour on FBN?
A. Hmm, interesting question and believe it or not, I don’t think anybody’s ever asked me that before. Maybe it was:
- When Tony Hawk rode into the Bull & Bear Bar in the Waldorf Astoria on his skateboard for his interview — and then let me ride around in the bar on his skateboard during the interview.
- Or sliding a beer across to “Norm” (George Wendt) from Cheers.
- Or just chilling with Bode Miller during and after the interview.
- Or seeing the crowd and truly being impressed by the literal “coolness” of LL Cool J.
- Having Neil Patrick Harris, my oldest best friend in the world, on the show was always a mindblowing treat.
- During our two-hour special from Wall Street itself when we shut down the street for the show, I bet Donald Trump Jr his inheritance vs mine that oil would hit $30s before it hit $150s– and I won the bet. But DTJr wouldn’t ever come back on my show…that was funny.
- Our first ever guest on Happy Hour was Ivanka Trump, who was peddling her (at the time) new jewelry line, I think. I actually sent her a Thank You note after her second or third appearance on our show asking her on a date. She didn’t write back and she never came back on the show after her brother lost his inheritance to me either!
- There was the time I got KISS’ Gene Simmons and later Paul Stanley to introduce my “Illuminati Alert” by saying, “Wake up KISS Army, it’s time for Cody Willard’s Illuminati Alert”.
I’m going to think about what my favorite memory from the show was when I have time to think next time.
Subscriber follow-up comment: Cody, I LOL’d at the Ivanka part… and the KISS bit is outstanding.
And here’s a discussion from over the weekend in the Trading With Cody Chat Room that I wanted to share to. Great community vibe and support for new subscribers and old alike in the chat room most every day, so be sure to stop by.
Subscriber #1: Be careful about selling all position (before earnings or else) because often you will not go back in that position and you risk losing a great opportunity. Think of $AXGN, many here sold when it went up 2-3 times and didn’t come back until much later if not at all. It’s human nature, you don’t want to buy something higher than you sold. Think if Cody would have done that on $AAPL when it went from 1 to 7-8$, think what he would miss.
I tell you this by experience, how many times I’ve done that type of trading in over 25 years and felt great for a while but felt really stupid after some years. Happened here as well, bought FB when Cody told us, sold when if went to 40$ and bought back only at 125$!!
For newer subscribers, this is actually the most important (by far) lesson Cody gives us. investing vs. trading, And investing for the long term (nor few months or 1-2 year). I think now I’ve learned and really grateful for Cody teaching and also for staying always straight on his philosophy despite many asking for trading advice.
I would like to learn much more from Cody on money management (size of positions, re-balancing or not a position, how much trimming, etc. etc). I think money management is the key to success in investing, combined with Cody’s philosophy on investing and his stock picks, is giving me huge results both in % terms and especially in peace of mind (probably even more important!). I still have to work a lot on money management but getting there, hopefully.
Subscriber #2: My thoughts exactly. We have all been scared out of or hesitated into a position that we later regretted immensely, even Cody!! If we take a look at any chart for 25, 50, 100 years stocks go up. Even bad stocks go up (albeit less than great ones) only the worst of the bad actually destroy wealth. Psychologically few people ever will buy into a stock at a higher price then they sell. Thinking why compound a bad decision. It’s our choices of selling low buying high that destroy wealth
Markets historical rise of 10% a year is doubling our money every decade, but Cody is looking for 3x, 5x, even 10x over that same period. So there will be more volatility. However if someone gets out of an investment that’s 10%/year and doesn’t get back in for a few years it’s not a huge difference, but when the stocks we are holding are potentially up 30%/year over that same timeframe it’s a major missed opportunity to build wealth. Obviously we all have different investment time frames
And that cannot be discounted, my age and liquidity needs are different from others and that allows me to tolerate volatility much better. If I loose 30%, I’m cranky and furious but it doesn’t change my situation much since I’m looking 30+ years out. If my father were to loose that same amount, it’s the type of loss that could change a lifestyle. For those of us who chose not to take Cody’s deep dive (tailored advise) we must live with the fact that we will have different returns than other.
Subscriber #3: I bought TWTR, SEDG, WDC after earnings, small tranches. I missed the initial boats on many Cody picks and bought later at higher cost basis since these stocks remained at an 8 rating (e.g., TWTR, SEDG). What I’m seeing is that basing buys solely on the rating Cody gives is not enough in-and-of-itself. There, IMHO, needs to be more, which Cody gives: buy tranches, scale into positions, go slowly. An 8 rated stock can drop a lot in the interim – eg TWTR, SEDG, INTC. It’s a long game.
Subscriber #1: I do trimmings when Cody gives the signal (and sometimes also when he doesn’t) but I don’t wait for him to tell us to buy back because he rarely does that lately, when I see the price down 10-15% for no fundamental reasons (and Cody is still positive on the stock,) I sometimes buy it back.
Subscriber #2: We all know how tough it is to make money and then keep it after. The one question we must constantly ask ourselves “is company xyz still growing well enough to most likely be worth more in the next year” if the answer is no, then we should consider it’s repercussions on our portfolios. If the answer is yes, then we probably should not worry to much about it’s earnings report caused volatility. Remember that the people selling, don’t have our specific time horizons either.
Cody back in real-time here to wrap up this transcript. Like I always say, we’re trying to maximize our upside potential and minimize our downside risks — for the next 10,000 days (about 30 years).
Ok folks, that’s a wrap. I’m headed to Zocca Coffee for some ‘feine and yogurt to go with my banana and orange.