Here’s the transcript from this week’s Live Q&A.
Q. Cody, do you ever sell puts to enter or add to a stock at lower price or pocket some premium?
A. I don’t do it often but for a stock like TSLA or other highly volatile names where the premium for the options are so high, it can make some sense to sell puts. Then again, shorting options can really hurt you so it’s usually best for most people to just buy the stock instead.
Q. Cody. Futures are up. What is the game plan for the rest of the week or next week?
A. Buy, sell, buy sell! Just kidding. Being cool, letting the pitches come as they will is the plan. I’ll put some money to work on the long side if stocks tank again and I’ll probably trim a little and/or add some more puts if stocks rally hard.
Q. Hi Cody, It seems probable that the market is not done going down. We will obviously be waiting for your call to buy more puts to offset further losses on our positions. Can you tell us the levels you are focusing on the S&P to help us prepare?
A. I hope that you’ve already got some puts to help hedge against this recent decline. I don’t know that I agree with this statement: “It seems probable that the market is not done going down” so I’m not sure I’m about to get aggressive in buying more puts anyway. I’ll take the pitches the markets throw to us and swing at the good ones and try to hedge against the bad ones. I’d let you know that I’m buying more put options when/if I think the pitch looks right.
Q. Is Hong Kong a concern for you? I mean I’m sure it’s all a concern geopolitically, it just seems to be getting worse out there.
A. Yes, a collapse of Hong Kong to communist Chinese rule, would certainly impact global economics and geopolitics. But I do think HK will settle down into something like it was a few months ago.
Q. Cody – Do you agree with Kudlow that the “Chinese economy is crumbling due to trade fight? “
A. Pretty much, I agree with that statement. The Chinese economy is certainly struggling if not crumbling.
Q. What is the impact of the sharp RMB depreciation on your Great Bubble Thesis?
A. My Bubble-Blowing Bull Market thesis, which we’ve been riding for 10 years now, isn’t terribly dependent upon how the Chinese continue manipulating their currency vs the USD. In some sense, a lower RMB is just another developed country racing to devalue their fiat currency. Bitcoin and gold are probably the purest and best plays on fiat currency races to devalue.
Q. Bitcoin was originally created with everyday payments in mind, but it is currently owned more for a store of value. Where do you see its status in, say, 10 years? Still just a store of value, more of an actual currency, or both?
A. Both. All those billions of dollars that have been and are being spent on making bitcoin products and infrastructure are likely to help make bitcoin the de facto standard cryptocurrency for the long-term.
Q. Taking into consideration the massive amount of energy that is wasted in mining Bitcoin, are there any stocks that could possibly benefit from making the process more efficient?
A. I like the concept you’re getting at but I don’t know of any companies that focus on that. Maybe MPWR might be a possible play on more efficient bitcoin mining, but I’ve not heard them mention that either.
Q. Hi Cody, I know you don’t like to give price targets so my apologies in advance. But for the Google stock I think you have something on your mind for December. Could you give a price range and your best guess for example $1150 or lower 30%, between $1150 and $1200 20%, etc? Would love to hear what’s on your mind for Google, thanks!
A. I think GOOG could take off as its earnings report was so strong relative to the other FAANG stocks. Google looks like its fundamentals are strong and maybe GOOG can run to $1300 by year’s end.
Q. Hi Cody, thank you for answering my previous question, but then I have another question. You said that we should buy GOOGL put options 10% out of money, that is now around $1285. The option for 100 shares for that price costs around $3,000, then I only earn money when the price is at $1315. Could you explain to me why this is an interesting deal, maybe I misunderstand it? With the GOOGL options, do you intend to trade just the premium or you hope for bigger move above $1300 to have it in money?
A. I am not making a big bet on GOOG call options here, but I do think GOOG could be a leader if the market rallies into year-end from here. GOOG could get to $1350 or even $1400 by year end and that would clearly make these options sparkle. But you are both correct that it’s a risky trade, as most all options trades are.
Q. The $NIO has been about halved since you last said you weren’t interested… just checking to make sure you still aren’t interested at these levels? Heh.
A. I have looked at NIO further and just couldn’t get comfortable with their model of using other care builders to make their EV cars. So, no, not very interested in NIO. BYD is a better Chinese EV play but I’m still not comfortable with it yet either.
Q. Good morning Cody. What do you think about MDR? It has beaten to death, but can be very interesting long term, maybe?
A. MDR “designs, engineers, and constructs upstream offshore oil and gas facilities, downstream oil and gas facilities, gas-fired power plants, liquefied natural gas import and export terminals, atmospheric and refrigerated storage vessels and terminals, water storage and treatment facilities, pipe and module fabrication, hydrocarbon processing facilities, pipe fabrication and manufacturing, and refining and petrochemical facilities. The company also provides gas processing, refining, petrochemical and coal gasification technologies, as well as a supplies catalysts, equipment, and related engineering services. It serves national, integrated, and other oil and gas companies, as well as producers of petrochemicals and electric power.” Given that I believe oil and gas and fossil fuel energy is in secular decline, I can’t get into buying a company that depends on fossil fuel companies to survive. I’d rather short MDR than buy it, at least for the long-term.
Q. Is SQ’s earnings that bad or is it a great time to pick up some shares while it’s down?
A. Yes, I nibbled some more SQ yesterday.
Q. It looks like Arista has been hit after good earnings. Any interest?
A. I like ANET but at 23x next year’s earnings estimates and growing the topline 15-20%, I might wait for a more tempting valuation.
Q. Cody, Will you be doing more YouTube videos in the future? When you discuss the current markets/stocks with knowledgeable guests it makes for great content (and I’m sure other TWC subs would echo this).
A. I don’t know. I didn’t feel like my followers/subscribers and I were getting enough out of doing The Cody Show but there’s always opportunities for me to get more involved in TV/video stuff, so maybe. I do sometimes read someone’s thoughts and I go: “Man, I’d love to interview this person about this stuff…” so maybe I’ll start doing vids again eventually.
Q. Will the Cleveland Browns make the playoffs this season?
A. Yes, the Browns will make it to the AFC championship where they will lose to KC Chiefs who will then lose to the Packers in the Super Bowl.
Ok folks, that’s a wrap! Thank you.