Here’s the transcript from this week’s Live Q&A Chat including discussion on medical companies, earnings, Pearl Jam and more.
Q. Cody – Would you please give us a position update?
A. Yes, coming this week.
Q. Cody – In the past (it’s been a while), when you updated your latest positions, you would insert a column that suggested a price to consider buying. Would you consider doing that again? Thanks
A. Yes, I’ll do that this week or next too.
Q. If the FED cuts rates by 25 bps, is that enough to keep the market going higher in the near term? Does this cause a pull back? Or do we need 50 bps to keep the market going higher?
A. I’ve written quite a bit about this topic over the last few weeks, and I think it’d be better to go back and read some of these posts rather than me trying to answer this very big question in a chat. Here’s some to get started: “As for the markets, I think the earnings season (and the stock market’s reaction to it) is more important than the Fed’s pending rate cut announcement. The conventional wisdom is that if the Fed cuts 50 basis points, the markets will rally big. If the Fed cuts 25 bps, the markets will rally a little bit. And I’m not sure anybody expects the Fed to sit tight, but if the Fed were to sit tight, conventional wisdom is expecting the markets to fall. As I’ve explained before, conventional wisdom about the Fed is usually wrong — as the markets might actually start to worry that the Fed is seeing a crisis ahead if they cut 50 bps.” https://tradingwithcody.com/2019/07/22/earnings-fed-china-set-the-market-and-ill-be-on-fox-news-this-week/
Q. Need advice: I have SHOP with 300+% gain (call it I got lucky). Their earning are going to come out on Thursday. They will probably get hammered, I have no clue. What can I do for protection? I hate to sell and pay lots of capital gain. Any ideas?
A. Congrats on the trade. I’d consider selling 1/3 or more, as I’m not a fan of SHOP and think it’d be wise to make sure you keep some of those gains. You can also buy some puts dated out a month or two, maybe 10% out of the money or so, but they will be expensive for that name. I think SHOP could be in trouble in a few years.
Q. Cody – Are TSLA earnings reaction just a healthy pullback in price before it marches upward?
A. I’d written yesterday: “Tesla’s earnings report was fine, fundamentals in tact, etc. That said, I hate seeing the CTO JB Straubel move from executive to advisory role. That bothers me a bit, but I’m still thinking TSLA looks good risk/reward long-term.”
Q. Given your outlook on TSLA and the pullback after earnings, would you consider this a good place to add another tranche (I opened a starter position earlier this year)?
A. Yes, I think this is a good spot to nibble a little more TSLA if you don’t feel like you have enough. Give yourself room for another nibble too though, perhaps.
Q. Regarding Tesla. Long story short. Got the Model S last week. Amazing car. Incredibly fun to drive. FAST! You know who really loves it? Kids. My daughter is a freshman in HS and all her friends were jealous. My son is in 6th grade. Same thing. There were some minor delivery issues that shouldn’t have happened and to be honest were pretty careless. Musk needs to hire somebody to run the business because with these minor mistakes I am sure there are much bigger issues behind scenes.
A. Is your Gvn2fly username sourced from the Pearl Jam song? https://youtu.be/Eigy86Nvnzo I’m not sure Elon should hire somebody else to run the business, despite the fact that they’re still working out logistics on delivering 1/2 million cars a year, up from 10,000s of cars a year three years ago.
Q. Yes, Pearl Jam. Whatever Musk decides to do, the product is amazing and hopefully profits will start to reflect the product. My kids and their friends who love the car now are future potential buyers and there are lots of them. Hopefully, Tesla can make a car for the masses in the 35k range sooner rather than later.
A. Did you know that the Model 3 can be bought for $37,000? That close enough to $35k to be mass market? Methinks so!
Q. My daughter’s middle name is Pearl.
A. My daughter Lyncoln wanted to come with me to my office for a bit this morning when I left the house at 6:30am…and we’ve been listening to Pearl Jam together all morning since I grabbed that Given to Fly video.
Q. Cody – Are you nibbling on more BTC futures as its mid 9k level?
A. No, not yet, though I might buy a little of my Bitcoin futures back closer to $9,000 or so.
Q. I’ve seen countless year-end Bitcoin price predictions, from 5k to 30k (and some even more outrageous)… care to weigh in with yours, for giggles?
Q. Hi Cody, What is your take on Beyond Meat after earnings last night? Stock dropped 10-12% in AH. Would you rather be long or short?
A. I think it will be very hard and at least 2-3 years before BYND could grow into their current valuation. A lot will have to go right for the company. I’d rather not be in BYND long or short, but if I had to choose, I’d choose short.
Q. Hey Cody, Have you researched MRNA, a biotech company producing a promising class of drugs for therapeutic treatments based on messenger RNA as a delivery mechanism? Cramer gave it a thumbs up months ago and it popped briefly before inching downward. If they manage to discover cures it will take off. Thanks!
A. I’ve looked at it a little bit. Here’s how the company describes its business: “Moderna, Inc., a clinical stage biotechnology company, develops therapeutics and vaccines based on messenger RNA for the treatment of infectious diseases, immuno-oncology, rare diseases, and cardiovascular diseases. As of February 15, 2019 the company had 11 programs in clinical trials and a total of 20 development candidates in six modalities.” The problem is that I don’t have a good gauge of whether any of their trials will work out and if they don’t the stock is likely headed much lower. I keep an eye on this name though, just not convinced the risk/reward scenario is good yet.
Q. Cody, Have you checked in with AXGN and how they are doing coming into earnings ?
A. Fundamentals seem to be fine at Axogen, but I have no idea how the last 90 days of business were compared to the few analysts who cover it expectations.
Q. Cody – Couple medical device companies on fire lately – NVCR, NVTA….not sure they came on your radar. Any thoughts or is it something you can look into?
A. I’ll take a look, thanks.
Q. Cody – thoughts on TMUS and MO in terms of adding selling or hold?
A. Yesterday, I wrote: “T-Mobile popped as it looks like its got the green light to merge with Sprint. There’s no way the 13 states still supposedly suing to keep this deal from going through are going to stop the merger now. I’m sitting tight on my TMUS common and calls for now. If you have big gains in the call options and/or if the exercising the calls would make you too big in TMUS, you might consider trimming down some.” As for MO, I’m mostly holding it steady here.
Q. Cody – With some air coming out of the “Stinky Green” bubble, is there a level where you might consider $CGC somewhere down the line – or is it still too early to think about?
A. I didn’t know what “Stinky Green” meant until you got to the ticker CGC, which is a cannabis stock — so now I get it — marijuana is stinky green! Haha. I still think it’s too early in the marijuana bubble-popping playbook to get crazy buying these names, but they’ve come down quite a bit this year and I can think of worse ideas than putting a toe in the stinky green water.
Q. Cody – at what level would you add to your SMH short?
A. Remember that my SMH short is a hedge, not an outright bet on a collapse or anything. As a hedge, I’d add to it just about here around $120 if you don’t feel like you have enough of it.
Q. Are you planning to add to your BIDU common especially if it takes a hit after earning?
A. We’ve still got a few weeks before they report, but depending on how the report goes — yes, I could see nibbling some more if it gets hit.
Q. Cody – Off topic – Can u please call Jerry and tell him to pay Zeke….lol…..Doesn’t Zeke’s presence make Dak’s life much much easier?
A. Eh, Dak ain’t very good either. Zeke’s good, but not worth what he wants. I’m the opposite of a Jerry Jones fan, but that doesn’t mean I like the Cowboys. Make the Cowboys the property of Dallas and maybe I’d cheer for them.
Q. Cody – been reading that silver’s ratio is very low compared to gold and it can rally substantially. Any thoughts on adding SLV or physical silver ?
A. I like GLD better than SLV. Silver is too dependent on industrial uses so it’s not as good of a pure hedge as gold is.
Q. Cody – Does that surprise you that AMZN failed to make new highs after earnings? Seems to get close to 2k level and stumbles.
A. No, the company said spending was going up and growth might slow a bit, so the stock pulled back a little bit. Makes sense to me.
Q. SQ coming into earnings had nice run is this a trim or a keeper long term.
A. It’s a keeper long-term, IMHO.
Q. Cody – Will TWTR start rallying after latest earnings? It always seem to run to 40s and back off.
Q. Hi Cody, Netflix. Results horrible, cash burn excellent 🙂 Do you consider NFLX revolutionary enough to overlook its share price expensiveness, or would you think about shorting this one like I am thinking about? Thx!
A. Your question answers itself — too expensive, but wouldn’t short it because it’s such a great and Revolutionary company.
Ok folks, that’s a wrap. Lyncoln and I are going to jam out to some more Pearl Jam and do some magic card tricks for each other!