Cody Kiss & Tell: Looking Past the Nonsense

Here’s the transcript to this week’s Live Q&A chat. Join me next Wednesday at 2pm EST at http://tradingwithcody.com/chat or send me an email with your question at support@tradingwithcody.com.

All rightie, cowboys and cowgirls, get saddled up. Let’s ride.

Q. Happy New Year, Cody. Was just wondering if you had any short term trades in mind for the debt ceiling/sequester train wreck that’s coming in two months.

A. Here’s my initial thoughts about the prepackaged hype over the next debt-ceiling/fiscal-cliff/austerity crisis that’s coming. Has the market finally learned to look past this nonsense? For all the weakness and panicky headlines in the markets during this last manufactured crisis/resolution, there wasn’t a true panic of the sort we’ve seen with the repeated Eurocrisis panic cycle. I couldn’t believe that the reporters and pundits were already trying to rescare the world into another cycle of tax/fiscal/entitlement negotiations. Other than traders/the powers-that-be tanking the markets into that next cycle of hype, there’s nothing economic or meaningfully political in the actual bill that will again at some point be passed by the Republican/Democrat Regime and will be full of all kinds of new corporate welfare and subsidies just like this one was. There will be no meaningful recovery to our economy or our society until the banks and bankers are restrained and prosecuted for their crimes and the entire financial system reformed and that ain’t ever gonna happen with the Republican/Democrat Regime in power.

Wow Cody. Thanks for telling us how you really feel.

Q. Cody, what will it take for the NAZZ to have a similar run like it did in 1999–March 2000? All the growth is tech?

A. To get a 1999-2000-esque kind of blow off top bubble rally like we had back in the day, you’d need the Federal Reserve and the Federal Government to agree to do whatever it takes to blow up new asset bubbles with unprecedented money printing and debt borrowing all plowed into domestic assets and corporate margins/earnings despite the fact that earnings and margins were already at all-time highs. Oh wait, we have that. What we don’t have though is domestic domination of that asset bubble blowing, as we are now sending trillions of dollars annually overseas via the IMF, the EU, the ECB, the UN, and of course in the wars in Afghanistan, Iraq, Pakistan, Syria, and a few other nations that nobody in the mainstream media will mention. I’m not sure we can truly have the dot-com/tech/real-estate bubbles we had previously when we’ve been funneling so much of that borrowing/wealth/resources into wildly corrupt and violent foreign economies.

Q. Cody, I invested 50% in stock and 50% cash. Is it a good time to increase my portfolio with stocks and options?

A. We’re back to the “Have your cake and eat it too” answer. I can’t tell you what percentage of your capital should be risked in stocks vs cash vs real estate vs alternative assets vs bonds, etc without knowing intimate details about your age, your income, your potential for inheritance, your desires for long-term and short-term asset management, etc. If you think you want to buy more stocks given all the analysis you get from me and other trusted sources, then I’d suggest scaling in slowly but surely and trying to learn to navigate the panic/euphoria cycle that drives our markets these days.

Q. Cody, what do you think about REITs? I was thinking about putting some of my portfolio into them. Also, my mom who is retired gets her income from dividends and stock sales. Do you think she should move some stock to REITs so she can save a bit on taxes?

A. The whole real estate industry is so convoluted, socialized, subsidized, and otherwise contorted that I’d be leery about trusting my money with any of those public REIT sharks. Maybe there’s a place for some small exposure to REITs but be very careful about selecting the ones you risk your capital with. The whole reason we have to do this whole Revolution Investing approach to our portfolios is because the Republican/Democrat Regime and the Global Banking Syndicate and the Global Corporate Complex has pushed their own quiet Revolution of no interest for savers or retirees to the point they have. And they’re pushing ever harder. I think you have to stay long some stocks as long as they can continue to enable record corporate profits and profit margins and/or create new asset bubbles.

Ah thank you Cody. You always provide valuable insight and make sense of this confusing stock thing. The service you provide to us is priceless.

Q. What is your advice on the AAPL April calls? I have an average cost at $7.75. Earnings are due in January which should help. However, I believe they report after options expire in April.

A. First answer to your question is that you really shouldn’t pay much mind to the price you paid for those options because at this point your only concern is where they are headed from here. I’m still bullish on AAPL and am holding some April calls myself, but I always suggest trimming a little bit of your biggest longs after a big rally and then a huge euphoric pop like we are seeing.

Q. Cody, as we all know the investor sentiment can outpace any technical patterns. We have been repeatedly hearing about double top in case of AAPL and this pattern will lead to tremendous price decline. Though we know that AAPL fundamentals are intact, do you think that there is change in investor sentiment for the bear term trading?

A. Freudian slip – “Bear-term trading?” I just don’t think that the value of AAPL’s stock price and direction thereof can ever be successfully navigated using some lines on a chart of its past trading. If I had a dime for everytime a technical analyst told me that AAPL’s historic descent from $7 to $700 was over along the way…well, that’d be a huge pile of dimes to go along with those huge gains in AAPL that they missed while they were fretting about their pictures.

Q. I know you say to usually trim after a huge rally like today’s but I have only a small position in July AAPL calls with a 730 strike which I bought at the beginning of December before the latest decline (great timing). I am fearful that if there is a very good earnings report later this month there may not be any room to get back in if I sell here. Does it make sense to trim some common instead? It doesn’t seem to me like the risk is worth it.

A. Yes, if you think you’ve got a big catalyst coming up before those options expire then it does make sense to trim some common instead of and/or in addition to trimming some calls. You’re obviously taking a bigger risk with the time expiration that comes with the call options though. Trading is an art, not a science, so good luck with the results either way!

Q. Will AAPL have a good earnings report this month? (I’d like to get that out of the way so I can relax).

Dundun. Dundun. Dundun dundun dundun. Yes, the earnings report shark for Apple et al is quickly approaching. Do we need to get out of the water? Or do we have our strategies and tactics for trading and investing in Apple already in place and this earnings report, which is the 39th quarterly earnings report that I will have to deal with since I first bought Apple back in March 2003, is just another blip on the radar? Feet to fire, I think Apple’s going to have a great quarter with the iPhone 5 and iPad Mini driving top and bottom line growth above analyst estimates. Will that mean the stock goes up after the report? Probably, but I can tell you from those 39 other earnings report that I’ve gone through as an AAPL long that it’s no sure thing they’ll beat and/or go up the next day.

Q. Cody, it appears that the semi conductors are bottoming—any views on lSI, FCS, ONNN, and CAVM?

A. Broadly speaking, I think this analysis from Goldman this morning is probably pretty on target for the semi industry and most of the stocks you mention: “Semiconductors : November Semis Sales Below Seasonal and Expectations. Looking for Better Times in 2013. On Monday, December 31, the SIA announced November monthly sales of $24.6 billion or a MoM decrease of 1.3%, below our estimate of up 2.5% and the average Oct. MoM increase of 2.7% due to below-normal microprocessor, microcontroller, analog and DRAM sales. We are maintaining our overall semiconductor forecast for a 2% YoY revenue decline in 2012 followed by 6% YoY revenue growth in 2013. We remain positive on the group as margins and inventory are close to the trough.”

Q. Hi Cody, another semiconductor: CRUS. I know you like BRCM, but I’d like to hear your thoughts on Cirrus. Thanks.

A. CRUS is probably also lined up here to boom in 2013 as inventories in the demand channel are low and margins are likely to climb next year. CRUS needs continued wins in next gen smartphones to keep the growth going. If it’s primary customers do the Nokia/RIMM thing over the next couple years, it won’t matter what the overall sector is doing.

Q. Cody, Happy New Year…and hopefully 2013 will show us the green……QCOM is on my list for a buying opportunity. QCOM seems to have there fingers in a lot of tech specs. Can you shed some light on QCOM? Do you see a nice increase in 2013? BBBY (bed bath and body works) is the other stock which is on my radar. It seems to me that BBBY is at huge discount with huge reward…would you be able to shed some light on this stock ……

A. I almost titled this recent in-depth analysis we published on Qualcomm when we added it to the portfolio, “Everything you need to know about Qualcomm”.

Q. Looking to add any new names to the stocks you already own on the LONG side this year?

A. Always looking to get rid of losers and add new winners, so yes, there’s a lot of names I’m constantly working on. Qualcomm was a new addition to the portfolio, as noted a couple weeks ago. There are several other good names I’d like to be long, but as I said earlier, I can’t own them all.

Q. Hi Cody, Happy New Year. How about adding more FIO & FB common before close today?

A. My Muddy Souls bandmate, Laura Cayer, once wrote, “They say you can’t have your cake and eat it too. I say I hate cake.” I like that lyric, but more to the point, I think both FIO and FB are headed higher over the next few years, so if you don’t own enough of them, I’d suggest doing a tranche buy in today’s strength and look to add to build to a full position in coming days and weeks.

Q. Hi Cody, Happy New Year, and thanks for your wisdom. Very helpful. what do you think about RAX and how do you compare with other players in the CLOUD business?

A. RAX has delivered results and as my first boss on Wall Street used to say, “Cody, what bizness are we in? We are in the RESULTS BUSINESS.” I can’t argue with the growth there and have liked that company for a long time, but I just can’t own them all.

Q. Cody, LNG has been climbing almost daily for weeks. Can this continue and would you recommend adding this type of Nat Gas play to a portfolio?

A. Certainly the LNG and nat gas could keep rallying. Rallies often last longer and go higher than you ever think possible. I continue to think that over coming years that energy/commodities that get consumed will be in steady bull market mode as inflation creeps into the price of middle class/lower-income needs.

Q. New subscriber, what’s your take on Ma and V. Would Fas make good buy for next tree month horizon?

A. Thanks for joining! MA and V are both digital/cloud plays if you think about it and if they can just continue to lobby well enough to protect their government-sponsored monopoly-esque charges/feeds/network, they’re likely headed much higher in the next few years. I don’t like them well enough to risk my own capital on them though.

Q. How do we put our pic next to our name? Break the monotony. Lol!

A. If you’d like to add a profile picture to your chat questions, simply visit gravatar.com and follow the directions. Your profile pic will automatically appear the next time you ask a question.