Teflon market led by our mega-cap techs

Here’s Part 1 of this week’s Trading With Cody Live Q&A Chat transcript. Part 2 will hit later this morning.

I hope you guys are ready to rock and roll today, because I am! Let’s give everyone a minute or two to call in. I will start off with the 5-7 minute intro and then I will open it up for questions and/or answer the questions of the people that have commented in chat room and e-mail.

This is Cody Willard and welcome to another episode of Cody underground, The Trading with Cody Q&A version. For those tuning in on the podcast, we do a live TradingWithCody.com Q&A every couple weeks or even more often. You can call in and ask questions and/or email questions, and I riff on whatever you ask.

Let’s jump in and talk some markets now.

Two points that I think are really dominate when you talk markets right now are:

• Incredible resiliency/Teflon nature of this bull market and the rally we’ve had.
• Amazon, Netflix, Apple, Google, Facebook, Nvidia and Tesla account for so much of the market gains, and even more interestingly, they account for so much of the stock market’s market cap

The first point is, the incredible resiliency/Teflon nature of this bull market and the rally we’ve had. Tied in with that is the Trump administration and politics of our country with the hope for tax cuts for giant corporations.

By the way, I will soon be sending out a chart that I have been putting together over the last few days trying to illustrate what causes this bubble-blowing bull market we’re living in, that we were positioned for the past 6 or 7 years and that we are profiting from.

This week as we talk politics and the markets, we are going to have to talk about the testimonies from Comey and the other intelligence (their term not mine) officers for our country. This morning the markets actually did sell off, not tangibly or large or some panicky reaction, but it did sell off during the commentary. Specifically, when the two guys that were testifying today said they would not comment on whether President Trump had asked them to get involved and/or help curtail the investigation into the Russian ties with the Trump Administration.

Comey, the former FBI Director who got fired by Trump, is reported to have notes that have been seen by The Washington Post that state Trump had specifically asked him to intervene and curtail the Russia investigation into the ties with Trump Administration. So there is potential for his testimony to be a catalyst this week. But if we keep coming back to the theme for the last 6 – 9 months, certainly since November, is has been what we have been rightly doing. And that theme is one of patience. We have positioned ourselves for this bubble-blowing bull market. Specifically, we have owned the technology companies that are driving this bull market. From Amazon, Apple, Google and Facebook, but also in Nvidia and Impinj. We have had some good hits in these revolutions that are developing and the stocks that are driving the stock market.

On the other hand, most traders, my hedge fund friends specifically, are constantly obsessed right now with trying to game these near term markets. They are bearish about the near term and they have been for 6 or 7 months off and on or even longer. They have been betting that the market is about to crack, at least about 5% or 10%. “Right?! It is due!”

Meanwhile, as you all know, we have been steady-as-she goes and I don’t see any reason to panic ourselves now. To try to game the politics and the testimonies this week are probably going to be futile anyway. Even if there is a 1% or 2% pull back from it, I am not going to try game that. We have a much bigger mission here of trying to find these great revolutionary companies, including Impinj, Nvidia, and the largest companies in the world right now being Amazon, Apple, Google, Facebook.

With that being said, I don’t want you rushing out and loading up on any of our names just yet. As you might know, I have been trimming a little bit of my own stocks here in the last few weeks. It is smart to catch our breath and not rush into things. If you don’t own any of our Revolution stocks, maybe put your toe in the water on some of them with the 1/3 position to get established.

We want to have your cake and eat it too, but there is no science when we are trying to establish our positions because we don’t know what will happen in the next month or two, week or two, or even hour or two. So get your toes in the water and nibble a little bit. If you own any stocks with me within the last few months or years, let’s stay steady there too. I am actively trying to find a couple/three, new shorts to put in the portfolio. Maybe another Pandora like short. What a home run we’ve had with that.

Another thing I will be sending out is the portfolio as it is right now with possibly some additions that we have closed out in the last few months to look at how our longs have performed in the last few months versus our shorts. We haven’t done much trading and I think our shorts have been really good hedges. Even the ones that have worked against us, aside from Hubs which we covered last week, have not gone against us very much. Even as our longs have doubled, tripled, gone up 50%, 30%, etc, our shorts have done what they were supposed to do overall too, having dropped in price over that same time.

Finally, I just note the other point, the fact that it is the Amazon, Netflix, Apple, Google, Facebook, Nvidia, and Tesla that are accounting for not just so much of the market gains, but even an insane amount of the stock market’s total market cap. These things are truly huge and as we talked about before the biggest reason for that is because in this internet and app revolution, it is generally a winner take all proposition. These companies revolutionize the world, revolutionize the markets, and end up becoming the dominate winner takes all in each of their sectors. Even if it is a “2 winners take all,” like the smartphone business with Apple and Google, the profits and the power of that is incredible. These are absolutely mega-caps nowadays, but they weren’t when we bought them. I don’t want to sell them yet as some of them might be trillion dollar companies within the next few months, year, etc. as the bubble-blowing bull market continues. Even if we do hedge a little bit, I am continued to be positioned, and continue to expect a bubble-blowing bull market dynamic to be driving the stock market and broader markets in general.

So with that, let’s jump into questions and answers. Chime in if you have any questions, otherwise I will go to the e-mail and chat room.