Today’s chat transcript: RVBD, GMCR, SNDK, AKAM, and more
Here’s the transcript of today’s chat. We broke the questions and answers down into two sections as usual — Economy/markets/trading/strategy and Stocks. See you next week at 2pm EST at http://tradingwithcody.com/chat for more Q&A where you can ask me anything.
Economy/markets/trading/strategy
Q: Cody: Thanks a lot. Are you net short or long?
A: I’d written this on Monday and not much has changed stance-wise since then: So yes, I am now almost half in cash in the portfolios right now (but that can be misleading too, as I always tell you guys when we discuss portfolios because I have more cash on the sidelines elsewhere and I expect to make even more cash in coming years from my hard work, writing and media businesses than I will from my stock portfolio…). Anyway, to be clear, I am definitely moved to a more cautious and less exposed stance in the portfolios during the last couple weeks and I am planning to let the pitches come to us from here. I see the wind ups, let’s see the delivery. I am still net long but less so than I was two weeks ago and MUCH less so than I was at the bottoms in August/September.
Q: Market’s getting hammered today while Europe was down 2% we were down 3-4. Now the Dow is down nearly 400. Panicky? Time to buy some?
A: It’s not quite panicky yet IMHO. Remember yesterday when I asked who’s more scared, the bulls or the bears and it came out 10-1 bears? All that’s happened with today’s 3% sell-off is that the bulls and bears are both scared, but neither are panicking (Yet).
Q: Hi Cody, I have a $7k loss in my portfolio for this year. I want to cover some in two months. The market is heavy down today. What do you suggest I do — are you buying today or wait??
A: You say you have a $7k loss in the portfolio and you want to make it back by year-end. First, if you’ve only got $7k left in the portfolio, then I would say there’s no way you can safely make 100% in the next two months. If you’ve got $70k left in the portfolio, then you only need to make 10% in the next few months and I would think that’s very do-able. As for how best to do it, well — you do realize that I’m doing everything for my own portfolios that I think is the best way to safely make big money in the markets over time and that’s what you get to see me do in real-time every day. Thanks for subscribing and good luck!
Q: Hi Cody, thank you for your insights. Do you see down days till Thanksgiving — i.e., this bear is difficult to skin and post-Thanksgiving the Santa Claus rally may occur.
A: I think about those GS and BAC long positions and whether I’m going to hold them or sell them all the time. I trimmed them both down a bunch last week when they were ripped at much higher levels than they are right now. But am holding the remainder for now. Cake, eat, too? I wouldn’t be shocked if the markets fade lower into Thanksgiving.
Q: Cody: You were excellent in finding the bottom. Do you use technical or fundamental indicators or talk to your contacts in finding tops or bottoms?
A: Thanks for the kind words. For my long-term investment theses, I rely on bottom-up fundamental and top-down marketplace analysis. For short term navigation, I mostly rely on sentiment, psychology and news analysis. I’ve never drawn a line on a stock chart in my life.
Q: Regarding the bottom question, if this sell off continues through tomorrow, might you be looking to buy again Cody?
A: Yes, if we had another 2-3% down day tomorrow, I’d probably start buying, but I still wouldn’t be trying to catch a bottom.
Q: I’ve been trimming like crazy this week. Thanks for the heads up on that.
A: When the “Who’s more scared” indicator is to 10-1 bears, as I noted for you guys in here yesterday, that it was a significantly bearish threshold. I didn’t know the markets would crash 3% plus the next day though. Wow. Congrats on the successful selling.
Q: Cody, love the service and I’m a big fan. One thing I am surprised to hear you talk about is using “house money” as a reason for holding onto AKAM. I would peg you for a “there is no such thing as house money, just ‘my money.'” How do you draw the line between investments using winnings and money coming from elsewhere?
A: Yes, you are right! I shouldn’t have written that and I cringed when I read what you wrote, because I’ve argued that very thing many times. Thank you for pointing out the fact that all money in my portfolio is MY money and none of it is anybody else’s and thinking otherwise is terrible logic.
Stocks
Q: Hey Cody. Thanks for the great service. Did I miss you selling INTC? It hasn’t been listed in your last several position updates. Thanks.
A: Yea, I don’t think I’ve been long INTC since I started this service actually. The stock’s up about 10% since then and my portfolios are up much more than that so I guess I’ve not been “wrong” not to own INTC, but I do like it and I do think it’s a very safe way to invest in tech with lots of upside long-term.
Q: Would you buy Dow Calls here?
A: No, I’m not looking to try to catch a near-term bottom. I’d rather let this play out for a few days and see if prices either settle or really get crushed. This is ugly, but not bloody and the old saying isn’t “Buy when there’s ugliness on the streets” but rather “Buy when there’s blood on the streets.” Patience is still one of the most important assets for your portfolio.
Q: Thanks for curbing some emotion…rock on.
Q: Cody: I am still a new subscriber. I have two questions for you: 1. Which index puts did you buy (NASDAQ?). 2. As I understand that you still have almost 2/3 of the calls. What is your relative long/short position? Thanks.
A: I don’t have Nasdaq puts. I bought some puts in LPS and BK and what not last week and also sold down a bunch of my calls and a little common in the last couple weeks too.
Q: I have some RVBD 12/17/2011 25.00 calls. Any thoughts on how close these should ride to expiration date when I have other calls dated in 2012 and 2013?
A: I assume you’ve got some profits on most of those RVBD calls if you bought them when I was buying them back when the stock was in the low $20s. The simplest way to think about how to handle your options is to realize that the closer-dated expirations are riskiest and if you’re considering RVBD a long-term investment in addition to a trading vehicle then you can let the longer and higher-priced calls give you continued leverage to the upside and trim/sell down the closer-priced calls on strength. Assuming there is more strength.
Q: 3% on the averages but CY, FIO, SNDK, and BAC are all down 4-8% — just ugly after Europe closed down 2%.
A: The stocks you cite are extremely high-beta stocks, which means that on days when the markets go up, they usually go up even more and on days when the markets go down they go down even more. As you’ve been reading my stuff for more than a decade now, if I recall your name correctly, then we both know that this kind of day-to-day action is a distraction from our mission of making big money safely over time.
Q: Hi Cody, What are your thoughts on Siri’s growth and declining mobile revenues for Google? Thanks.
A: Siri’s awesome and it’s only version 1.0. (Buy Nuance!) I don’t think Siri’s any more of a threat to Google than the iPhone it rides on is anyway. Android and iPhone will be slugging it out in the mobile arena dominance for a long time. Siri’s not a GOOG killer.
Q: Are SPY puts near term a good idea?
A: What’s with you guys wanting so badly to buy/sell/short/call/put these indexes? If I had an edge on how to game the macro/EU I’d be doing it. Let’s wait to see if we can buy some panic or short some jubilation. We’ve had neither. We’ll get both sometime. I’ll be jumping up and down screaming “BUY” for you guys like I did for Whoopi Goldberg when she was on my show and asked me my opinion of Google when the markets were in crash mode in early 2009. When the time comes. This isn’t the time.
Q: GMCR earnings report today — any comments?
A: Funny how things change in a couple weeks’ time, huh? I don’t like the GMCR set up now with earnings season mostly over and with the EU winds blowing as violently as they are. I’m not looking to make a move on GMCR one way or another today.
Q: Cody when is SNDK roughly a good buy for a starter position?
A: Below $50 SNDK is a decent nibble/starter. But I’d use wide scales because that can be one volatile stock.
Q: We know your general thoughts on alternative fuels. What do you think about WPRT? It seems their Diesel to Natural Gas conversion kits make some sense.
A: Google “Cody Willard alternative energy” and see what my thoughts are. Quick answer: I like to short any and all industries that are wholly dependent upon welfare/subsidies/government largesse/scams for their business models. And that pretty much applies to every alternative energy company on the planet right now. PUKE.
Q: Any thoughts on GOOG through Christmas? Thanks.
A: Google’s probably one of my favorite stocks into year end. But I’m not a buyer of it at all. Yet.
Q: FIO pulled back 9% today. Is it a good price to buy? Thanks!
Q: How about a good entry point for FIO?
A: I’m liking what I’m seeing at FIO’s fundamentals and I do plan on making a more formal position in this name in coming days and weeks. I’ve still got some of those calls I bought before it popped on its earnings report last week but I do want to buy some common, and anytime a stock I want to own for the long-run is down 10% in a single day’s session, I’m probably interested in buying some of it.
Q: Whats your thought for Ford & AONE?
A: Google “Cody Willard and AONE” and see what comes up. AONE’s a long-time short in my Revolution Investing newsletter model portfolio and long-time subs of TradingwithCody.com know that I’ve tried to borrow some AONE to short and just can’t locate any size. I plan on keeping the AONE short in the Revolution Investing portfolio til they recapitalize, which I expect sometime in the next year or so unless they get a miracle money raise.
Q: Hey Cody, I asked about Mindspeed (MSPD not MIPS) last week, any thoughts? Plus it would be great to get your view on defensives in the current climate.
A: MSPD is so old school. Where’s the growth?
Q: Hi Cody. First: Does this change your mind about LPS? Second: Are you short stocks or puts, or both? On November 2, 2011, the court issued an order limiting the FDIC’s claims to breach of the contract and granting the Company’s Motion to Dismiss the FDIC’s claims of gross negligence, alter ego, single business enterprise and joint venture claims.
A: LPS is in so much trouble for so many different things that them finding some judge to cut them some slack doesn’t change a thing in my analysis. I’m short stocks and I own puts — and I bought more LPS puts last week.
Q: Any thoughts on ALLT?
A: I don’t know ALLT, sorry.
Q: Cody, great job lately. This is a random one but I have puts in PEET….a coffee stock trading at 35x-40x times earnings. Any opinion on it?
A: I’d rather be long PEET puts than long PEET calls, but I’ve no position and no edge there at all.
Q: Hi Cody, what’s your take on AKAM these days?
A: Holding my remaining AKAM steady for now and we are playing with the house’s money there as you guys know, so I’m fine letting them ride for now.
Q: I bought some BK puts when it was like 19 and they expire on January 2012. Do you think I should keep them until end of year or sell it when it goes back to 19? I am a little afraid about all the craps that media phrases about the EU on a day-by-day basis. One day they are positive, one day they are negative….
A: $19 for BK by January could be tricky. I don’t have a good answer for you on that one and I own some BK puts with similar times and strikes. I bought more BK puts last week as you guys on TradingWithCody.com know when it was at new recent highs and I’ll let you guys know how I trade these BK options from here.
Okay cowboys, that’s it. Another great rodeo session here. Any other suggestions about how to improve our site and/or our service are definitely welcome — support@tradingwithcody.com. Thanks, y’all come back now, hear?
