Cody Kiss & Tell: Brexit, auto sales, gold, banks and more

Here is the transcript to this week’s Live Q&A Chat. Visit the Trading With Cody Chat room on the Trading With Cody iPhone App, the Trading With Cody Android App or at the  Chat Room.  If you have any questions about our service, just email us at support@tradingwithcody.com.

Q. Any recommendations on position sizing/minimizing fees? If your account is say $20k and you’re paying $8.95/trade…. should you look to buy a position around $900 total (where the fee to buy would end up being about 1%)? Is there any way to do tranche buys when you’re playing with a smaller account size like that and not get killed by fees?

A. Great question! If your portfolio is worth $20k, you probably should look for a cheaper broker than one that charges $8.95 per trade. There are a lot of options for you, including opening a Tradier Brokerage account which charges $3.49 per trade (Visit Tradier Brokerage). The discount brokerage business is likely taking most trading commissions costs towards $0.00 in future years, but we’re not quite there for mainstream investors yet.

Q. Do you think the Brexit stuff will cause auto sales to slow ? Tough question. I know….

A. No, I don’t think Brexit will be a negative impact on consumption or consumer sales or auto sales, etc.

Subscriber follow-up: Autos continued: If you don’t believe that the Brexit stuff will affect global auto sales, an interesting stock to look at is NXPI. Very cheap, nice synergies with the FSL acquisition coming in C2017, and they are selling the standard products biz for $2.7b to a Chinese-led consortium. this money will be used to pay down debt. The sale should close 1st calendar quarter of 2017. NXPI is Netherlands-based company so their tax payments are very low. NXPI has been creamed and BOFA downgraded it last Monday based on a macro call…saying that auto sales will slow in Euro due to Brexit crapa…

A. I’ve looked at $NXPI in the past, and I’ll dig into it again now off your recommendation. Wow, I love it when a tech supply chain industry analyst uses random macro economic/geopolitical analysis to change his rating on a stock. Industry analysts are not often also good economists.Thanks!

Subscriber follow-up: The bofa analyst said that the bofa european economy team made the call…and he changed his estimates bc of what they said. Team work! 😉

Q. Cody, I hope you feel better. What sectors so you see the most growth and value right now? Thanks.

A. Sectors with the most growth in the next five to ten years: #AI, #VirtualReality, #Wearables and a few others. Sectors with the most value right now: I don’t see any particular sector that screams “cheap value” right now to me.

Q. Not really a question, more an observation. Was going to buy some more gold coins figuring the market rally would be met with a gold sell-off… Nope.

A. Haha, yea, that’s right. $GOLD has recently started repricing in some of the endless fiat currency wars in a race to devalue the developed world’s currencies.

Q. Any current thoughts on $gwph that was high (8/10?) on your short list. My short position is down about 25% since I started shorting and they recently announced the results of some stage 3 trial that sounded quite significant.

A. I went back last week and re-read my original analysis for $GWPH and it makes me want to stay short this stock for a while longer still.  Read the origina report here.

Q. I know you’re generally not a fan of the banks, but do you have any interest in any of them? Does Schwab SCHW look attractive at all?

A. Schwab has been a well-run brokerage for many years, and I can think of much worse bank stocks than $SCHW. That said, I see no reason to buy $SCHW when it also benefits from the extreme welfare/subsidies/protection/0% rates/etc from the Republican Democrat Regime.

Q. Any thoughts on MercadoLibre MELI?

A. I wrote this about MercardoLibre a few months ago: “$MELI wants to be the Amazon of Latin America. The company’s got a couple hundred million dollars in debt and a little more than that in cash, so net cash is just okay. Analysts expect MercardoLibre to grow revenues 10% this year and earn about $3 per share. So the stock is trading at about 30x this year’s earnings estimates, which is about the same valuation at Facebook $FB. I think it’s hard to invest in great companies in the greatest country of all time, the US, and the fact that $MELI is based in Argentina, which isn’t exactly a stable, tech-driven, consumer-led economy would keep me from gambling on this stock unless it got a LOT cheaper, like at less than 10x earnings.” I still wouldn’t risk my money in this one right now and would still rather $AMZN. 🙂

Q. Unless you’re still in your post-fever delirium, a “Probably? :)” from Cody means you’re close to a “yes.” Does that mean, with my July $22 call (more leverage/risk/time premium), it’s time to let go (with its major gain)? Please advise. Loving the gain, the stock, your optimism, but . . .

A. I’d probably suggest going ahead and locking in some profits on the $SNE call options if you’re asking about….at least partial profits by selling part of them. I might do that myself soon too.

Q. Hi Cody. Are you selling your calls in QQQ? Two big up days. Who knows what tomorrow will bring.

A. I might trim a small part of the small $QQQ call option position I started scaling into during the Brexit crash. Not just yet tho. That doesn’t mean you shouldn’t trim a tranche of them yourself if they’re worrying you/getting too big.

Subscriber followup: Thank you. I bought a tranche on Monday and am up nicely so I’m gonna sell 1/2.

Q. Cody you mentioned before you would not be surprised to see SNE at 30 would you trim there?

A. Probably? 🙂

Q. With the Brexit vote a reality now, has your overall bullish stance on the markets changed? Are you any less bullish now?

A. Not really. I wrote about Brexit and its impact on the US economy and stock markets for yesterday’s report. Read my report on Brexit.

Q. Any news on $AXGN? Nice move.

A. Correct, I mentioned  $AXGN in  my report yesterday too.

Q. Dang! Wish I would’ve pulled the trigger on the QQQ calls – fear was in the air, and I was fearful too pull the trigger after yesterday’s action. I know, sell when greed is prevalent and buy when fear is sucking all the oxygen out of the air!

A. Don’t look back and don’t be too aggressive the next time you/we think fear is sucking all the oxygen out of the air either, because you just never know.

Subscriber comment: I have been busy, but just took a close look at your TA where you posted a picture of Amaris for her birthday. I am so glad that she is doing well. You folks have been through a lot, but to see her defeating all the odds is such a joy.

Thanks!