Market update, AMBA vs. GPRO plus Cody Kiss & Tell: Oil, Texas real estate, Sony hackathon and more
Greece stocks down 20% in three days’ time. Strangely, it’s not in the headlines at all right now, as it was a few years ago when it was in a financial sovereign crisis. Back in 2011, I wrote: “If you truly think that a default in Greece is going to happen at some point (likely, IMHO, but probably two to five years away) and if you think that such a default by the government in Greece would damage the world’s economies (not at all likely, IMHO, as Greece’s entire economy is smaller than Apple’s market cap)” $AAPL‘s market cap was $350BB at the time. Now $700BB. Greece? Still a mess.
On another note, Interesting how largely $AMBA has outperformed $GPRO in the last 3 mo’s. Both stocks up about 65% since $GPRO‘s IPO, but $AMBA is up 40% vs $GPRObeing down 4% in the last 90 days. Wonder what this comparison chart will look like in five years.
I think $GPRO has gone done because it bubbled up as a momentum favorite when it came public and got way ahead of itself. I think $GPRO, with little proprietary technology, will face declining margins and tough sales comps in years ahead and that has always kept me out of it. I do like the GoPro cameras I have, but they do need a better interface and operating platform.
No trades for me today, markets bouncing back big, steady as she goes.
Here’s the transcript for this week’s Live Q&A Chat. We’ve got a new TradingWithCody.com site and soon an app coming, so stay tuned for more information in the next couple weeks.
Cody: Howdy folks, let’s rock n roll. Ask me anything.
Q. Whats your take on the decline in OIL and its roots? Also is it an eventual boost to the US economy and consumers as they save at the pump, heating homes etc at least for the next few months?
A. Oversupply is the largest factor in oil’s decline. That, and here’s a great point: “What is forgotten in most analysis for energy is the ongoing and rapid efficiency gains. Even though most homes now have more appliances, the home energy consumption is stagnating and perhaps starting to go down. http://tinyurl.com/c7x5bco -> US homes used 10.01 quadrillion Btu in 1993 and 10.18 quadrillion Btu in 2009, almost no change.”
Q. Also (though I know you touched on when-and-whether-to-get-back-in-with-oil in your latest Alert, is it way too soon to think about the effect of the oil-price hemorrhage on things like Texas/Dallas/Houston real estate? And less than way too soon on fracking and the water stocks?
A. Great question about the impact of crashing oil prices on real estate in Texas. I think Eastern NM and West Texas are going to be more exposed to a real estate crash catalyzed by fracking’s crash specifically. Houston and larger areas have other and larger companies based there…the West Texas oil-belt has a huge way to fall if fracking truckers in the area were making $90k a year last year and nobody can make money fracking now.
Q. Cody, a few weeks ago I asked you about CVX and told you that I’m long common stock long term because they pay a good dividend and have plenty of cash on their balance sheet and are well positioned in the energy sector. Today you mentioned that you may start to scale into some of the best run large cap energy companies with stellar balance sheets and assets. And a few days ago you listed a few you were doing your homework on but didn’t list CVX as a possible buy. Why is this? I’ve done a ton of homework on it and it looks great, why don’t you like Chevron?
A. Oh I’m looking at $CVX too. That wasn’t an exhaustive list of energy stocks I’m looking at, it was just the names I was looking at that day. I’m doing a ton of homework on the energy sector and individual energy stocks.
Q. Hey C.W, ask you anything? What was the name of that basketball that interacted with your smart phone that you talked about on here months ago? Great gift idea for my son as he has his new iPhone. Membership dues right before Christmas is killing me LOL!
A. Coolest gift idea ever for any serious hoopster of any age. I want one and I retired from playing competitive pick up basketball ten years ago. http://shop.94fifty.com/
Q. I have about a 1/3 position in FSLR, I’m down about 25% on this trade so far, would you buy another 1/3 now, or wait?
A. I’ve been considering picking up another small tranche of $FSLR myself, but I’ve got more than a 1/3 position already. $FSLR might suffer while energy sector is in crash mode, but using scales to move in is the right idea. Maybe do a 1/4 or a 1/5 position next and then keep going more slowly than you might in a more “normal” tech stock tranche approach.
Q. What’s your take on FEYE right now?
A. FEYE should be absolutely killing it right now as a pureplay on network security. It’s another one that I can’t get comfortable with management at and don’t want to own it personally. I’d rather own $PANW as a network security play, as I do like management there.
Q. Any concerns that the North Korean hackers can have a meaningful negative impact on $SNE?
A. Not really concerned about the North Korean hackathon’s impact on Sony. It’s not like Target losing their customers credit cards. It’s a distraction for Sony management, but there are bigger factors that will drive the stock in years ahead.
Q. What did you think of the sharp selloff and immediate rebound in BKS after earnings a few days ago. Any change in your opinion?
A. I still think $BKS is wildly overvalued and I think their Nook business is a joke. Holding my BKS short steady for now.
All right folks, that’s a wrap. Thanks for the feedback and questions and for being a subscriber, as always!
