Here’s the transcript from this week’s Live Q&A Chat.
Good morning all. Let’s do this. Sorry I’ve not been around in the Chat Room much lately, I’ve just been in full hedge fund launch mode and as my wife told me this weekend when I got home Sunday night from the office, “Starting a hedge fund is like having a baby. I’m ready for the hedge fund to be born already.”
Q. I know it is dependent on your risk tolerance and the rest of your portfolio, but if you had 30k to invest right now, what is your first and most favorite move? (that could include buying puts).
A. My favorite move would be moving slowly. Maybe nibble a little bit of the stocks you’ve seen me nibbling on lately or on some of the highest-rated names in the next Latest Positions Update that I’ll send out. Don’t be greedy, don’t be scared. Be slow.
Q. Sell on Rally, buy the dip : With today’s rally, shall we sell something, nibble some puts or do you think better wait?
A. If you don’t own any put hedges and/or you were losing sleep last weekend when stocks were at their lows, then yes, I’d suggest adding some put hedges and/or raising some cash levels today with the markets up 3-4% from their intraday lows yesterday.
Q. With Trade wars with China I has two questions for you 1) What sectors would benefit and what sectors be most impacted 2) For your current list which companies will be more negatively impacted by the trade war and which companies would benefit from it.
A. a) I’m actively trying to find the sectors and companies that will benefit from and that will be hurt by the The Great Trade War with China. b) I had a research associate of mine research how much exposure each one of our companies have in China. We’re still putting data into the spreadsheet and trying to find exactly how much exposure the companies themselves say they have rather than guesstimates from 3rd party researchers.
Q. 1. With trade war uncertainty. The number of high tech vendors depends upon China for the parts and sourcing. It will be difficult for these vendors to find an alternate source. What be-be the impact on companies like Apple? 2. A number of Online retailers depend up cheap products coming out of China. So would it indirectly Amazon and Shopify with less online business? 3. Do we need to get into more of defensive stocks for the next 2-3 years live Verizon, Intel and Microsoft?
A. 1. You know I’ve been warning about how these supply chain crises for six months now. They’re here now. It’s not good for Apple near-term but longer-term it probably doesn’t matter much. 2. Maybe it’ll be best for AMZN and SHOP to have fewer crappy plastic electronic gadgets from China for sell. Not sure it matters much to either one long-term either. 3. Yes, isn’t that what I’ve done for the last year? I added INTC, VZ and GLD and very few other names while I have sold down my longs and reducing my number of longs.
Q. If the Great Trade War with China does come to an end, do you believe new highs can be hit in this cycle or are we range-bound and down?
A. How do you define “the Great Trade War with China comes to an end?” The global supply chain disruption cat is already out of the bag. Markets can bottom and we can go to new highs, sure. But risk/reward scenarios right now are not exactly “steady Betty” and “Bubble-Blowing Bull Market” like they had been for the last seven years.
Q. I appreciate your advice on the stance we should take in today’s Is-It-The-End-Of-Bubble-Blowing market. Hedging, for sure, is part of the smart strategy. If I’m not mistaken, your last specific commentary there was, ” “I’m going to simultaneously, slowly, start nibbling on some QQQ puts that have strike prices around $160 or so that expire out in January… I’m going to simultaneously, slowly, start nibbling on some SPY puts that have strike prices around $260 or so that expire out in January.” January is soon upon us! Any thoughts on moving out on strike date and adjusting price?
A. The puts expire in the 3rd week of January and that’s still another six weeks away. I’ll just have to trade these puts and/or roll to new ones based on the pitches the markets give us. Remember that I’m launching a hedge fund on January 1 so there’s that too.
Q. In today’s market & economy, can you list our portfolio in order of strength? This will help continue a defensive positioning. Many thanks.
A. I’ll be writing a Latest Positions with new ratings and analysis for all of our positions soon.
Q. Cody, your last trade alert, which was Friday, was delivered three minutes before the closing bell…You really do have an email problem…I really don’t believe that you sent that email real-time, three minutes before the closing bell did you?
A. Yes, I did send it out as I was doing the trade described right before the close on Friday. It wasn’t until near the close that I decided that the sentiment had gotten panicky enough to sell some of my put hedges. So I did it. And I wrote about it as quickly as I could and told you guys I did it.
Q. Microsoft has held up extremely well in this downturn. Obviously they were revolutionary but what about now for a nice risk/reward setup? Not going to get 10x your money but won’t get that with AMZN, AAPL etc either.
A. I ran MSFT through my WiNR Ratio program as a long-term investment idea and it came out just ok. As you hit at, there’s just not enough potential upside to get me terribly excited about the stock, though I do think it could go up 3-5x over the next decade if they can be one of the Cloud Revolution Oligopolical Winners (GOOG, AMZN. CRM the others?).
Q. Thoughts on STNE, the brazil payments company?
A. Brazilian payments company that could become paypal of latin america. But they’ve got fishy financials, and I don’t trust the Brazilian system or markets. I ran STNE though my WiNR Ratio system and it came out in the bottom 20% of all stocks I’ve analyzed in my system, because of the added higher risks noted above and despite it being a very fast growing Revolutionary company with a low P/E.
Q. Any interest in CWH Camping World at these very depressed levels. You called it right when you wrote about it some time ago and I was wondering your take now.
A. Yeah, I warned everybody that CWH’s valuation was way too high back when it was at $45. Now down 70% from those levels, the stock is worth a look. But as I run it through my WiNR Ratio program, it comes out below average, even at $15 a share here. I can think of worse ideas than buying CWH here at $15 but I can think of lots of better ideas too.
Q. You’ve haven’t spoke much of Ethereum since your tiny nibble earlier in the year. Do you still believe the Ether will be a crypto survivor?
A. Yes.
Q. Any thoughts on Elastic ESTC? Is it revolutionary?
A. I ran ESTC through my WiRN Ratio program and it came out as middle of the pack here. Elastic ESTC is a big data pioneer. But there’s lots of competition and execution risk high as its just a $5bb market cap. I do consider the company to be more than average on the Revolutionary Factor scale that I use as an input on the WiNR program.
Q. You mentioned CRM in the cloud competition of the future. How did they turn out in your WiNR ratio? How about VMware? I am in tech industry and both are everywhere.
A. I haven’t run CRM or VMW through the program yet and I will do so later and let you know if either comes out way high or way low. I’d love to talk to you about what you do and what tech trends you see as someone in the industry. We’ll email you offline to engage. Thank you!
Q. AAPL lost nearly $200B in a very short time, unbelievable. Do you think it might follow the rise and fall like NOK, BB, Motorola? They all had a stunning product one day.
A. Anything’s possible, but all these questions today about how Apple might be done for makes me think it might be a good time to nibble some more.
Q. What do you think of XLNX ?
A. I ran it through the WiNR program and XLNX came out below average, but not terrible. High revolution factor. Not a great valuation though.
Q. Are there any stocks in our portfolio that stick out more than others for nibbling at this point? Thanks Cody.
A. Only those that I’ve been nibbling lately. I’m not terribly thrilled about all the valuations and set-ups here, as you know.
Wow, my brain’s fried. That was a lot of Q&A and analysis and looking at financials and P/Es and tariffs and so on. I’m going to get a coffee. Lots still to do today! Thanks all. See you around in the chat room here later.
