Why policies matter in our analysis, Gold/silver purchasing, AMD and more
I’ve been waiting all day for my transcription service to finish typing up the questions and answers from this morning’s conference call portion of this week’s Live Q&A Chat. They haven’t finished it yet, so you can expect a part 2 of this week’s transcript later. In the meantime, here’s the transcript from the actual Trading With Cody Chat room from this week’s Trading With Cody Live Q&A Chat.
Q. Cody, Just for fun. Will you ever be able to do a Q&A session without ranting or even mentioning about Democrats, Republicans or politics? I don’t think you can!
A. If we are going to talk about the economy and/or the markets in depth, then it’s always important to keep in mind policies, especially in this day and age when, as I explained in the inaugural Revolution Investing newsletter in late 2009: “One might argue that taxing Main Street and the Average Joe and borrowing from Joe’s grandchildren in order to prop up giant banks and other giant corporations with trillions of dollars of corporate welfare programs implemented at breakneck speed in the last two years has worked its magic – giant corporations are doing great, and the Main Street and the Average Joe are indeed paying heavily to keep those dividends flowing to corporate America’s shareholders. But away from the political side of the argument –and much more important to investors and traders is simply trying to figure out if those dividends and earnings are sustainable for 2010 and 2011. And see, the very reason we’re calling this product you’re reading ‘Revolution Investing with Cody Willard’ is because those trillion dollar corporate welfare programs and the new bills for health care and financial regulatory agencies and rules that now override the economic paradigm we’ve been living under in this country since the 1930s were ramped up by several orders of magnitude.” I also saw this quote today and it’s rather pithy and germane: “CELEBRATING ‘THE LONGEST BULL MARKET EVER’ WITHOUT MENTIONING TEN YEARS OF ARTIFICIAL STIMULUS AND INTERVENTION IS LIKE CELEBRATING LANCE ARMSTRONG’S TOUR DE FRANCE RECORD WITHOUT EVER MENTIONING DOPING.” – SVEN HENRIK (NORTHMAN TRADER) ON TWITTER
Q. Cody, I read some “Everything You Need to Know About Investing in Gold and Silver” (conveniently found right here) over the weekend. Regarding buying gold (1 oz., as an example) online, is there any difference in whose name is on it? Some are from Credit Suisse, others Perth, RMC, etc etc. Prices may vary 50-100 bucks or more so I was wondering if there are any other differences.
A. It does matter a bit, and that’s why the prices vary a bit. In a time of crisis and/or if gold goes up 500-1000% in our lifetime as I expect it to, then that difference will matter less over time. That said, here is an insightful interview with the former CEO of APMEX (a source on eBay where I personally bought some gold and silver), from four years ago on my podcast (featuring a guest appearance by my former co-anchor Rebecca Diamond from Happy Hour Fox Business –here’s an old clip from the show).
Q. Hey Cody, I thought you might find the attached research notes interesting. Answers to many AMD questions are contained in these short notes. Server units, ASP, server revs, etc. Of course, no one knows how market share will shift, nor can anyone accurately model what revenues are going to be for AMD in C2019/2020…due to their technology lead and potential for server share growth. At the present time, AMD has minimal server market share. Last time AMD leap frogged INTC technology wise with their MPU’s, AMD was able to garner 26% market share in servers at their peak. Cheers!
A. Hmm, the target price in the AMD note that you just sent to justify why AMD should go higher (I think that’s what you’re getting at) is from an AMD bull sellside analyst from 3 weeks ago who has a price target of $25 for AMD. We’re now at least $1 past that $25 level as I type. See, what I’m saying? There’s probably a lot of years’ worth of growth assumptions already priced into AMD at this level. I could be wrong of course! We’ll see in the next few months.
Q. Hey Cody, Hope you and the family are all happy and well. How about COWN as a backdoor play on pot? They are involved… And it is an inexpensive stock. Best.
A. You know what, you’re right that IS an inexpensive stock, trading at only 5x next year’s earnings and at just 1/2 sales estimates. It’s an asset management company and that’s not a glamorous or high growth industry. Of course, if they were to invest well enough to outperform their peers that would really change things for them. The odds of a broker-wide company to actually outperform their peers is about 1 in 1 million (his name is Warren Buffett) so I’m not going to be buying COWN anytime soon. Sorry.
Q. When you had Mr. Celente on The Cody Willard Show last week, he mentioned that a spike in oil prices could be the “event” that leads to the next downturn. Just curious… if one was to ever want some exposure to oil (and since you’re not a fan of ETFs), what would be your recommended way of going about it?
A. Let’s back up — I’m NOT not a fan of ETFs in general. I’m just not a fan of using GLD or other precious metal ETFs as a long-term safe guard against financial crises. In general, I’m fine with using ETFs in your portfolio. As far as getting exposure to oil, then, I’d probably suggest using the largest, most popular oil ETF. Otherwise, I’d wait for the next oil crash and then I’d buy some XOM or something.
Q. $AMD Looks like a hammer high volume reversal.
A. Long day, long week, long months ahead. Hammer high volume reversals can portend downside or fade away.
Q. Cody A couple months ago on June 25 you sent out a trade alert discussing a possible short sale in $COOL. At the time you noted that put options were just beginning to trade and that the stock had just fallen (to around $2 as the result of a Citron research report. Well $COOL hit a near term low of $17+ in July and is now back above $27 after having sold off right after you are alert. Any thoughts about revisiting your thesis? E-Trade has shares available, although it is “hard to borrow”.
A. Yeah, it’s doubtful that we’ll ever be able to borrow any significant number of shares of COOL to short. I might look at some longer-dated puts way out of the money, but the cheapest I see are the $20s dated out in February 2019 for $4.40, which means the stock would have to drop below $15.60 in the next five months. I actually think that this stock will be back below $5 in two years and probably will be below $15 in five months, but that’s not a great risk/reward set up.
