Markets bounced. Have to see if it sticks though. I got filled on some of the puts I was bidding on with lower strike prices than the ones we sold. Facebook reported strong earnings after hours. I’ll have much more tomorrow.
Here’s the transcript from this week’s Live Q&A chat from before the market opened this morning (so some of it is already dated).
Q. Hi Cody, I hope this finds you and your family well. I don’t know how to do options. What do you think of short ETFs, such as PSQ? Thank you. Blessings.
A. I don’t like or trust those short versions of ETFs. Cash is better if you don’t want to do options or shorts.
Q. Is this finally the big pullback to the bubble blowing market? Sure seems very different than the past. Usually by the dips have worked after a few weeks, Now it;s sell the rallies…
A. Definitely a different tone to this pullback than any other in the last eight years…not sure when it will be over but today was capitulatory and I think we might stabilize the markets here.
Q. Some of these quarterly reports are confusing. Was AXGN’s just reported good? Thanks.
A. 2018 Financial Guidance Management reiterates 2018 revenue will grow at least 40% over 2017 revenue and gross margins will remain above 80%. Additionally, management continues to expect to have at least 80 direct sales representatives by year end. Introducing 2019 Financial Guidance Management expects full year 2019 revenue will grow at least 35% over 2018 revenue and gross margins will remain above 80%. Yes, looks like continued good stuff to me. That said, I have no idea if the market will like AXGN tomorrow.
Q. NVDA has taken about a $100 hit and now down to $185. Still too high to wade back in? Thanks.
A. The good news is that the momentum lovers now hate NVDA and many of the weak-handed holders have puked it out. The bad news is that there’s still a lot of people looking for it to pop asap and I just think we need to reign in those kind of expectations and get some more fear into the markets for me to more confident about calling any kind of a bottom here. If you don’t own any NVDA, I can think of worse ideas than starting a toehold position. But I’m not ready to nibble back any of the shares we sold, which I think we sold out most recent tranche at about $100 higher.
Q. For the Q&A — ditto on NVDA (a) congrats and (b) questions. I’m, uh, asking this for a friend of mine. Driven by euphoria and optimism then mellowed by caution and a guy named Cody, my friend has tranched out of NVDA a couple of times, scoring some nice gains along the way. He’s now down to almost nil, and he somehow feels under-advised as to whether he should be (more) long or, in some way “hedgey-short” on it. FTF, I’m asking, too, about its short- or mid-term future (not 10,000 days, in this case, since we didn’t last that long this first time around). Asking for my friend, of course. Thanks.
A. Like I said earlier, I think NVDA is probably not a bad buy as a tranche right now at $185 or so, but I wouldn’t rush in and build a full position this morning. You can have your cake and eat it too, but you got to try smaller portions, dude.
Q. When asked where you expect $NVDA to be by year end, you answered $200. At that time (and even few months after that when it was cruising past $250), I felt its never gonna happen. Kudos to your analysis. Now looks like $NVDA holders would be happy to take it.
A. Well, I wouldn’t have minded being wrong about that $200 year end answer. Thanks for the kind words. I do think $NVDA will eventually get back to its highs, but it might be a high-beta version of the Nasdaq for a while first.
Q. UA on fire!
A. Yes, might be time to trim a little if you haven’t yet.
Q. Cody, have you ever done a volatility trade (lets say FB tomorrow) , in the hope of making money either way it moves, just with enough volatility of course ? Can you tell us what that would look like?
A. Sure, I’ve done those straddle saddleback saddletop straddle sideways Gilligan island volatility options trades many years ago. I don’t think they typically pay enough dividend to justify the capital risked. And over the years I’ve found that I should sparingly trade near-term options around earnings reports and only do so when my conviction is level is at an extreme high.
Q. What are your favorite dividend stocks?
A. VZ and INTC.
Q. Just an information, fun (?) question on how (a) the markets and (b) people operate: are there any theories, or do you have one, on why the month of October has hosted more than its share (I think) of significant market drops and/or true “crashes”? (NB: I am not predicting or wishing for anything here.)
A. I’ve read Trader’s Almanac and other theories about why October is a bad time of season for stocks, but any time I’ve ever tried to use those kinds of seasonal timing tools, it seems less prevalent.
Q. Morning Cody, would appreciate your thoughts on our IWM, IBB and EWY positions.
A. Yeah, we should probably cover some of them soon.
Q. What are your thoughts on WDC? Will you be buying more at this price? Thanks.
A. No, not buying more. Am really mad at the management there. I’m writing up my analysis.
Q. Cannabis stocks keep getting smoked (har har). Any thoughts on some of the better names to keep an eye on in the coming years? $CGC is one I usually see being mentioned as a probable survivor.
A. Yes, I do think it’s getting closer to being time to start scaling into some of the best Cannabis Revolution names. But I’m not in a rush!
Q. When did you last send out your “where would you buy list”? I saw one from February but that might be out of date with the market acting the way it is..
A. I’m on it! Hopefully will send one out tomorrow.
Q. Time to nibble on canopy …?…
A. See my answer about the Cannabis Revolution stocks above. I’m in no rush.
Q. Cody – you think gold pulls back here…dollar stronger.
A. I’m not sure that the dollar will continue getting stronger in the months ahead and regardless I don’t think that gold will trade opposite the direction of the dollar in tandem anyway.
Q. Is Symc a buy here?
A. Man, SYMC first hit this price level of $18 back 15 years ago and it hasn’t created a dollar of value for investors in the years since. Unless they get a completely new management team in there or something, no thanks.
Q. Cody, Is this a last gasp on IBM’s part paying in the stratosphere for RHT? Why does it take a year to close a cash deal? They said expect to close Late 2nd half 2019.
A. IBM might be a buy if their balance sheet wasn’t such a wreck already and now going to be more wrecked after this RHT acquisition. No idea why it would take a year.
