Cody Kiss & Tell: Tech exposure, Silicon Valley Mood, Gold and much more

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

Cody: Howdy folks, let’s rock n roll. I got my 9.5 month old daughter, Lyncoln, helping me with today’s Q&A, by the way. She loves computer keyboards. Lyncoln spent the early part of election night at my parents’ house celebrating — congratulations to my father who won a seat here in famous Lincoln County NM as a County Commissioner.

Q. As you know, I’m in technology sales, Cody. The mood out here is Silicon Valley is getting a little more somber. Don’t know if you’ve heard that or not. The VC’s are starting to be stingier with next rounds of funding, company spending, profitability…there are starting to be some reductions in force (layoffs) as well. I see you are moving a little more to the safe side. Any thought on this phenomenon and might this be the canary in the coalmine for high beta, low revenue growth stocks?

A. “Mood” is a tough thing to gauge, but as bubbled up as we’ve been in the tech world, a little bit of somber and worry in Silicon Valley would probably be a good thing. I do think the bubble in tech is far from over and that there might be much more upside in social networking and Twitter and Facebook, but I do think you want to be more selective now and less aggressive now than we were back in 2010-2013 or so.

Cody: This just came through on Scutify from a very successful VC dude about Silicon Valley’s mood: ‘@CodyWillard We definitely felt it a month ago…. Just a general “check yo self before u wreck yo self” consensus moment…. *Not however about valuation but about burn rates…anecdotes of competitive spending reminding some of 2000. Overall though the startup/app market is robust. We just raised a bunch for an app coming next month, and our first Angel almost has too much money…. Early innings still and the “somberness” is healthy. No one, founders and angels alike wants to be an idiot.’

Comment: That’s what I’m seeing too, Cody. Wanted to flag that for you. Burn rates are under scrutiny, manpower buildouts are being pulled back, travel policies being revised…

Q. Are you putting money into non-tech investments or are you keeping cash to invest at the bottom? If there is a serious downturn in the future does it make sense to stay in cash waiting for a good entry point or to try high quality bonds?

A. I’ve no idea if and when the “serious downturn in the future” will happen, and I’m not going to try to time it perfectly. Just ebb and flow. Scale in with tranches. Raise cash levels slowly when markets are at all-time highs. Same as usual stuff. I might get outright bearish again like I was in 2008, but for now, just being a bit more defensive. Remember that you’re not in the same risk profile as I am and you don’t have a Scutify Social Network company that is accounting for a growing part of your assets as it grows. As the largest shareholder of Scutify’s parent company, I’m much more exposed to tech right now than I’ve ever been in my life no matter what I do with my stock portfolio and more levered to tech than probably anybody here reading this.

Comment: Thank you very much for your help. I do have my non-home assets in tech however. I need for it to grow steadily but not explosively over the next 20 years as I need to leave money behind for a child who won’t be able to care for herself.

Q. What new direction out of Technology, Cody?

A. Cash for now, just ebbing as the markets flow. Added some Whole Foods recently too. No rush into anything new.

Q. Hello Cody, as a subscrtiber form Europe, the Czech Republic, due to time difference I am not able to participate on today’s chat as scheduled, so I am sending my question in advance, pass it on Cody pls! your feelings/analysis about gold/silver? Not talking about buy and hold for next 10 years or longer, doing it continuously. But more about timing now, more aggresive trades? Like GDX, GDX calls, AGQ. Your feet to fire bottom target on gold? Regards, keep on rocking!

A. I like the contrarian aspect of your timing on wanting to buy $GOLD for a trade here as its crushed of late and hated by anybody but gold bugs right now. I think trying to game a move up in gold, even a short-term one would probably be dependent on trying to game the dollar’s inverse move to gold. That is, as I’ve said for the last few months, gold’s moving basically opposite of the dollar’s strength vs other currencies. Short-term, gold is probably a high-beta version of the dollar’s moves — if you can catch a quick buy or two of gold (or even GLD for short-term purposes, tho I never recommend owning GLD ETF paper promises of gold for the long-term) in some moves against the grain (meaning a lower dollar in the broader context of the stronger dollar rally) you’ll make some big short-term profits. As for actually pulling that off…it’ll be tough, of course. I might buy some $GDX call options again some day, but not right now, not yet.

Q. It wasn’t many months ago when you were talking about gold being a coiled spring ready to blow up any minute. It blew up, but in the wrong direction!

A. Hmm, when I’m wrong, I like to own it, but I’m not sure I remember calling gold a coiled spring and I just tried to find the last time I wrote about gold other than here in a Live Q&A in response to answering a question and here’s what I found: “Who cares about tapering. The damage to the economy and our currency is already done. Gold will show that over the next few decades whether they taper this week or next month or stop all QE entirely tomorrow.”http://tradingwithcody.com/2014/07/10/market-notes-must-reads-trading-ideas-and-deep-thought-of-the-day/ And here: “I think we’ll look back in five years and see that the $1200 level in spot gold prices was a pretty great long-term buying opportunity. I do own gold and silver in coin and bullion form and I plan to own them forever that I’ve spent the last year or so buying and building up, slowly but surely whenever gold prices have taken a big hit.” http://tradingwithcody.com/2014/07/07/everything-you-need-to-know-about-gdx-vs-gdxj/ I stand by that analysis though.

Q. Hi Cody. No worries. Sorry if I get a little anxious when things go sideways.

A. Hey, I am here to help and part of that is trying to help you guys keep from letting the anxious feelings affect your trading/investing.

Q. Cody, What are your thoughts on BABA?

A.  From the get-go, since its IPO, I’ve just not had the guts to buy a Cayman-based Chinese Internet company, no matter how universally-loved and accepted. I’ve also said and still think $BABA will continue to up, but it’ll have to go up with out me personally invested in it.

Q. Ssys is getting pounded now. Is it a buy? Same question for twtr.

A. I like SSYS management and they like to say that 3-D printing could grow from $3BB in sales to 21 billion by 2020 from $3 billion last year. If they’re anywhere near right in the magnitude of growth ahead and if they can keep a leadership position as competitors come in, I think SSYS remains a good long-term Revolution Investment. As for TWTR, I’ve been scaling into it recently, as noted here: http://tradingwithcody.com/2014/10/30/twitter-facebook-scutify-and-the-future-of-social-networking/ And here: http://tradingwithcody.com/2014/10/27/trade-alert-full-earnings-report-analysis-for-twitter-and-invensense-plus-a-tiny-speculative-options-trade/

Q. The problem with 3D so far is limited industrial use. Will ssys be able to break into that world?

A. SSYS pretty much dominates the industrial world of 3-D printing right now. Their newer in the consumer industry, but grew that division, which came from an acquisition, organically over 80% this last quarter.

Q. Still on SSYS, do you see any viability as a relatively shorter-term (as opposed to longer-term Revolutionary) investment — bouncing back from today, etc? Or can we expect recovery/growth only around the next ER or later?

A. Frankly, I am surprised at how hard SSYS got hit today off a minor earnings guide-down, so yea, I could see it popping back relatively quickly. Feet to fire on that one tho.

Q. I hope you can help me on another front. I’m trying to intelligently unwind from some call options that I’ve made a while ago. Can you talk me through your thoughts on FSLR earnings tomorrow? I have March $70 calls if that helps and if you have any advice you can share.

A. March is four months away, which means you got a full one more quarterly earnings report before those calls expire, so keep that in mind no matter tomorrow’s FSLR report. I don’t have much edge on the near-term fundamentals vs. expectations in FSLR’s last 75 days of business (excluding weekends), but — feet to fire, I do think sentiment around solar and First Solar specifically is low and that if they report anything strong and can guide decent too, the stock would have a good chance of responding to that with a pop. Longer-term of course, I think First Solar’s a pretty great Revolution Investment.

Q. What are you thoughts about GPRO from current levels for short term. Its down 5% today to $78 after earnings increase from $66 to 85.

A. I’m a bear on GPRO looking out five years from now, but for the near-term it’s just a battlefield of a stock and one that’s about impossible to game successfully repeatedly.

Q. Latest thoughts on HIMX? is this a good entry point?

A. If your time horizon is five years and you don’t mind taking big risks to try to get big rewards, HIMX is probably a good scale-in tranche candidate right now. Shorter-term, it might have some hiccups as they try to figure out and navigate the other markets they are in besides the Google Glass, which is why we own it as a long-term play for when Google Glass goes mainstream someday.

Q. What’s the next catalyst/leg up for Google? I’ve heard postulated that money has moved from FB/GOOG to BABA?

A. I think Android’s world dominance is the only catalyst we’ll ever need for more upside in $GOOG $GOOGL. FB’s still underowned by big money managers and mutual funds. GOOG and FB won’t trade in tandem, I wouldn’t think.

Comment: I was referring to people moving money out of FB/Google to catch BABA…maybe that money will run back towards google if things do get a little more somber

Q. Would also love an update on your look into SIMO. Thanks

A.  I’ve decided against SIMO for me personally. I’m reducing tech exposure just now. SIMO’s got a lot of upside still if they continue to grow and win new contracts. @RobertMarcin on Scutify is the man to follow on SIMO.

Cody: Lyncoln says one more question and then to carry her around and play with her for a while and stuff.

Q. Are you expecting M&A activity after the bloodbath from YELP TWTR TRIP etc?

A. Not really. If somebody made a run for TWTR, the tech bubble would take off in another frenzy in a hurry. Any of those names you mention being bought would probably spark another leg higher. But I don’t necessarily think it’s about to happen and wouldn’t try to time it anyway.