Cash, tax cuts, IRA, US Dollar, Bon Jovi HoF and lots of stocks

Here’s the transcript from this week’s Live Q&A Chat.

Q. Cody. I’m about 25 percent right now in cash in my IRA. It looks as though tax cuts are going through. Would you get in now, wait, or partially get back in?

A. Three points to make here. 1) I don’t think 25% is too big of a cash pile for most people’s IRA’s when the markets have been years into a Bubble-Blowing Bull Market phase like we are right now. Whether 25% is a big amount of cash or not depends on your age, your risk tolerance, your goals, your income, your upward mobility, your inheritance potential, etc. 2) I don’t think anybody should try to game the impact or the lack thereof or whether the market will be pricing in more upside because of tax cuts in their IRA’s. The tax cuts are just a continuation of the broader trend of corporatism from both sides of the Republican Democrat Regime during my lifetime. 3) If you think you want to invest some of that 25% cash position, then probably do a little bit now and a little bit more in a few weeks or a few months when the market does (probably) at some point pull back and create some panic/worry in traders and investors.

Q. Hi Cody, long time I don’t hear your view on the US$. Any comment?

A. I’ve been saying for years that there’s very little doubt that the US Dollar will remain the world’s reserve currency for many more years to come now, at least in regards to other developed countries fiat currencies. Bitcoin and blockchain technologies have the potential to change everything in the currency world wars if only because bitcoin and blockchain alternative currencies create competition and will make those running fiat currencies have to consider the wellbeing of their citizens (who can nowadays and in the future use alt currencies) and not just the wellbeing of their banker owners.

Q. Cody, There is a lot of talk these days about “rotating out of tech.” Case in point: the last dip in the market with the DJIA going up on days the NASDAQ went down. My gut feeling is that major players, mutual funds, quantitative traders, etc. are doing a bit of what we are doing: trimming tech holdings that have gone up substantially and, in some cases, reinvesting elsewhere. But I also feel that as long as the revolutionary stocks that we invest in continue to change the way people live, and the more people want to live a “tech-enhanced” life, the more our stocks will continue to advance and justify the multiples they trade at. That takes time and patience, and it doesn’t always work out, but with a basket of revolutionary stocks, it doesn’t take a whole lot of winners to substantially improve one’s ROI. Any thoughts?

A. Well-phrased is my main thought!

Q. Is the $UA bet basically a long shot? What really gives you confidence that the company will recover?

A. I don’t think UA is a long short. The company overbuilt inventory, missed some deadlines for launches and otherwise hit some near-term snags. But the company’s product lines, the distribution for their products and their brand itself keep the company positioned well for the long-term. Also, the company has invested heavily in technology and has underpinnings that could help it Revolutionize fitness if they deliver on the vision.

Q. Hi Cody. You are doing a great job. I think I’ve been with you for 5 years now. My only regret is I didn’t go with all of your picks. Oh well, there’s plenty of runway ahead. I know this is late but RIOT-will be a laugh soon. The premiums in the Puts was over 50%. Was that what you saw before your article? Lastly what do you think of Shutterfly’s business? It seems to be losing its relevance and I wanted to short it. I did buy the Puts in spite of the premium. Riot has 9k in revenues! Thanks.

A. Riot — laugh, haha. As for Shutterfly, there’s no revenue growth but the stock trades at 40x next year’s earnings…interesting short idea.

Q. The bitcoin trust ETF $GBTC which tracks bitcoin at 10% is trading at almost $2400 while bitcoin is trading between $16-17K. Is there a low risk way to arbitrage that spread?

A. Probably. But sometimes it’s probably best to just stay away from trying to game new crazes.

Q. I was wondering, and based on your answer re $12-$13 bid on RIOT made me wonder again — did you ever execute any of your RIOT puts?

A. No, I didn’t get filled on the RIOT put bids, unfortunately.

Q. I was looking at the RIOT Jun 25 puts on Fidelity and the bid ask was 12-13. Seeks like a steep price to pay based on the price of the common. Is that indicative of the underlying company being shady\unstable or the recent huge run the stock has had and thinking it can go down just as fast or all of the above and more.

A. Yes!

Q. Still holding onto those IWM puts? As the market continues to grind higher, I continue to scratch my head in bewilderment that the averages keep going up hitting all time highs.

A. Will tell you if I let the IWM puts go. They’re about break even right now I think. I do want a little hedge with them tho, so that’s ok.

Q. I recently met with a leader in retail execution systems and not a peep about RFID. I don’t like the immediate prospects of $PI. Since this one appears to be more risky by the day, would it make more sense to trade common in for some long dated calls…assuming there is even a market?

A. Too much risk in the long-dated calls for PI in my opinion. I’m with you in being worried that the company’s near-term isn’t as bright as will be required to get the stock moving.

Q. Since it’s nearing the end of the year I am cleaning out my portfolio, any chance you will update your positions again before the end of the year? I too am growing impatience with (PI) lack of performance so I am checking in to see if you are still “steady as she goes” or if you are recommending a change.

A. Yes, trying to finish that Latest Positions update tomorrow.

Q. Hi Cody, would you consider $GDX to catch a movement on gold?

A. No, I don’t want to have to hope that the miners rally along with the price of gold itself if I do decide to try to get some gold exposure for a quick trade. GLD is probably what I’ll use.

Q. Cody: I bought some very long-term Verizon call options, January 2019 and 2020 $52.50 options are surging hugely since you recommended common a couple of months ago. At the time you said you could think of “worse ideas” than calls. Your thinking now? Since common just passed my strike price and roughly where it was when you recommended it, and you’re still optimistic, why NOT stick with them or think about additional calls?

A. Congrats on the trade. I didn’t do it though, so it’s hard for me to answer what I would do. I can only tell you that I’m sticking with VZ common.

Q. hi, I sold some FB ON THE WAY UP how do I protect the large profit I have left?

A. Trim a little more is probably the best answer. No easy way to protect profits other than to trim.

Q. Hi, Cody! I’m a new subscriber. Re the 5G theme, why not SWKS and QRVO?

A. Thanks for subscribing! In the past, I have owned SWKS and QRVO (back when it was BRCM), but I don’t right now. The main issue with buying component suppliers is that their pricing power can be tricky over the long-term. See what happened with Apple investing in FNSR today and how that news is hurting LITE? Apple often pits suppliers against each other to get the best prices and this is just another example of that. Not only that but I like the 5% dividend and other things about Verizon here vs. other 5G derivative plays.

Q. Yes amazing calls Cody. Your thoughts about AXGN future ?

A. Axogen is an amazing Revolutionary company, growing quickly, creating their own industry, and partnering with the best surgeons in the world. The stock ain’t cheap, trading at 11x next year’s revenues. With at 40% topline growth rate, the company should be able to grow into this market cap and then keep going.

Q. And CALX ! And you were going to put in a call to management on this one I think and just what kind of results you are after making contact.

A. Still haven’t talked to management yet. Will let you and all Trading With Cody subscribers know when I do.

Q. What do you think of SQ and RDWR?

A. I feel like I missed the boat on SQ but I really like the company. As for RDWR, I’m not a big fan. The company is growing their topline at 5-10% per year and the stock hasn’t gone anywhere in 5 years because there’s no growth.

Q. We are about the same age. Were you a Bon Jovi fan growing up? I was huge fan in my mid to late teens. Slippery, New Jersey. Don’t care for the past 20 something years but glad they finally got recognition as they were the biggest band in the world for a few years. What about BZUN? I think you covered them a bit months back. Looks like a good risk/reward if you are into China.

A. I always thought Bon Jovi were poseurs growing up, but the older I’ve gotten, the more I find I like the bands hits when I hear them. BZUN is another fast growing tech company based in China, and it’s not terribly expensive, but I don’t like to invest in China very often.