Transcript of yesterday’s chat…
Yesterday, I met about 100 of our subscribers in the chat room at TradingWithCody.com/chat and we had a blast and learned a lot. Here’s the transcript, lightly edited and condensed. We also organized the transcript so that general market/investment/trading/strategy questions and answers are at the top and questions about individual stocks are at the bottom.
If you’d like to ask me questions, simply meet me in the chat room next Wednesday at 2pm EST.
Q: What is your overall perception of the debt deal that went through? The market didn’t react as well as I expected, but do you still see a rally in the near-term?
A: As I said before the debt deal was done — it was all a propagandic distraction and didn’t matter to anybody or the markets. I’m focused on the trillions in ongoing stealth bailouts for banks and big corporations driving a new bubble…not what the powers-that-be want us to look at.
Q: Hey Cody, I wanted to know if it was possible to show your positions with a percentage breakdown next to them of the entire portfolio?
A: It is “possible” to break my portfolio down for you guys like that, but that’s not the reason or mission behind this service. I’m trying to teach you guys how I fish, not just show you a snapshot of my positions. Besides, I’m young and plan to be adding lots and lots of more capital to my personal account in coming months and years and that will skew any snapshot I publish for you about my portfolio. Point is, everybody’s portfolio is and should be different and I can only give you some guidance about what I’m doing.
Q: Saw you answered this, but I think its not quite genuine. To know how you fish, its critical to get a sense of what you mean by going big, or a “large” position. Buying something, and buying something that it a big part of your portfolio changes the lesson we are learning and the understanding of how you view that purchase and how you view that in light of your trading philosophy.
A: I’m being genuine. I’m not going to disclose my positions with that kind of transparency. It’s beyond the scope of this service. I don’t manage people’s money for the same reason.
Q: I’m trying to decide whether I should be buying stock or options of MRVL and CSCO. Can you give a ballpark estimate of the breakdown b/t calls and stock of either? (EG. MRVL-60% stock, 40% call options).
A: That’s the same type of question that I can’t really answer for you. It depends on whether you have a million dollar net worth or whether you are trading with $20,000. Or maybe you are a billionaire who’s just playing around with stocks. Or maybe you’re a 60 year old IT professional about to retire…it depends. I can only tell you what I’m doing as a 38 year old, upwardly mobile, hard working single male.
Q: Hey Cody, I’ve noticed that you like earnings plays when you have a contrarian opinion. What sources do you use as your yardstick against your view?
A: The main sources I use as my yardstick are analyst reports. I read dozens of tech analyst reports every morning — from analysts at JPM, Gleatcher, Goldman, etc. They don’t give you much information other than what the consensus and groupthink is looking for. And that information is invaluable when it comes to trying to game an earnings report. I’ve been reading these reports every day and doing these types of trades for 15 years now and you can see the patterns. Though I’ll still be wrong sometimes.
Q: Where we can follow analysts at JPM, Gleatcher, Goldman, etc?
A: I get those reports because I ran a hedge fund and traded with those guys and then became a D-list Wall Street celebrity TV star and they keep sending me the reports for free without my ever asking them too. It’s still not a level-playing field for the average guy at home. But that’s why you subscribe to someone like me who does this work and has the network and history behind him. In theory anyway.
Q: What do you like outside technology and do you think you are too levered to tech?
A: I’m only levered to the long side of tech because that’s what my analysis tells me to do. I’m also long an auto supplier and an inflation ETF. I’m also short alternative energy and financials. You have to decide what’s right for you and your portfolio.
Q: What is you reason behind investing in ~10 stocks instead of ~20-30? You seem to follow them all pretty thoroughly, and it would de-risk the portfolio a little. Do you follow Modern Portfolio Theory at all?
A: I used to ask guys what the hell they were doing trying to quantify things they try to quantify and then use as selling points in “MPT” and its ilk. I am doing what I think will make us the most money with the least amount of risk over the next five to ten years…and that keeps me focused on about 10-15 longs and 5-10 shorts. That’s just how I do it. Other approaches work for other people.
Q: Cody is legendary… http://www.youtube.com/watch?v=hd9h2-51tZs “Corporate bigwig!” LOL. Telling the truth on Fox, amazing.
A: That’s a very funnily-titled video. But I was right!
Q: Can you offer a comment on GDP and how you think it will fair for the 2nd half of the year. And as a follow up, if the s&p starts to trade at a lower multiple, do you see that spilling over to tech? Thanks!
A: I would guess that the US GDP as our government reports it after they manipulate it will be up a couple percent in the last half of the year. And let’s say the S&P does trade at a lower multiple…that might be because the E goes up faster than the P too, no?
Q: B. Berkowitz of Fairholme Fund recently reportedly went “all in” on financials…in your opinion is this ‘left field’ or insight-fully early?
A: If I thought the financials were buys I wouldn’t be short the financials. I am clearly on the other side of that guys “all in on the financials” trade, as I’m nearly “all in SHORT on the financials”.
Q: About the market action taking place. Did you observe the Head and Shoulder pattern that developed in the SPX,DJX and COMPAQ. Also yesterday we broke through the neckline. Lots of great technical analyst are talking about a topping pattern,do you think we are buying into a major top here ?
A: I don’t believe in classical technical analysis like you’re talking about there. So to be frank, I couldn’t care less what those charts are saying to the TA guys on TV and in print.
Q: What do you think about the possibility of QE3?
A: I don’t care about QE3, remember? I explained the trillions of ongoing stealth bailouts and monetary policies are much more important than the distraction of a few hundred billion for QE3 or not.
Q: Could the low today (SPX 1234) a short term bottom?
A: Yes today’s low could be the lowest point that we’ll ever see the S&P trade at again. But it might not be. Doesn’t matter. Gotta stay flexible regardless of when/where the bottom comes.
Q: Do you think I can buy GLW now? How about CSCO going into the earnings on 10th?
A: I can’t advise on specific stocks for individual people, but I can tell you that I’m holding my GLW steady and will likely add to it at some point before their next earnings report. Cisco is getting to be one of my largetst positions, so there’s an answer for that one.
Q: Is it time to short more SLV?
A: I’ll let you know when I start rebuilding the SLV position, which has been just a placeholder since we nailed buying those puts and then selling them for big profits near the lows. Better to be lucky than good and we got lucky on that trade. Nothing new there yet.
Q: Any view on QLIK or TIBX?
A: I don’t have an opinion on QLIK, but I do know and have always like the management at TIBX. No position in the name right now and I’m not sure what the Street’s looking for there right now, etc.
Q: Cody, how should we treat your other cloud picks (ADI, FIRE JNPR etc) do you hold positions in any of them or should they just be regarded as potential buys in the future??
A: I tell you all the stocks I’ve got positions in. I can’t own every cloud stock, and there are a lot, including JNPR in the mid-20s that I do like.
Q: Thanks for the great earnings calls on SNDK, AAPL, GOOG!
A: ROCK ON! I love catching some great short-term trades like that and the fact we didn’t lever up before any loser reports is a good thing too. Lucky though, to be sure.
Q: I dont think SLV should be shorted right now. We raised the debt ceiling and now the dollar is again devalued. So the metals are the ones that will maintain their buying power and hence rise in accordance. What do you think on this view Cody? I know you have been short SLV for a while now.
A: I have a big piece on Silver and Gold I’m about to send out to you guys. Stay tuned for it this afternoon.
Q: Thoughts on OIIM after earnings?
A: I haven’t looked at OIIM lately, but the fact that it hit a 52-week low this morning after that report but before spiking intraday means I’d be patient. Patient. Patient on that one.
Q: I’ve been long on FTNT and done well. They lead the UTM space for security and will play well in the cybersecurity M&A consolidation space. Have you looked at adding them as one of the app revolution players as security is more than just a cost center these days?
A: I do know FTNT but I haven’t worked on it lately. I’ll get reacquainted with it and let you know.
Q: What are your thoughts on ZAGG?
A: I don’t have an opinion on ZAGG at this point, but will check it out and let you know if I like it.
Q: Thoughts on PAAS as a silver ETF?
A: I think it’s hard enough to game silver itself, much less a management and entire corporation dedicated to silver. Not for me.
Q: Can you discuss your choice of RVBD over FFIV or APKT?
A: It’s a tough choice between FFIV and RVBD. I just don’t like the management or the market positioning of APKT as much, though I do like that company a lot too. Can’t own em all unfortunately.
Q: What’s the right time to scale into some of our stocks?
A: I don’t know when the perfect time will be to step back in, but you’ll see me deploying my cash slowly but surely over the coming days and weeks as the pitches come.
Q: Cody, are you still teaching at Seton Hall? Let me know when you stop by Austin!
A: I’m still registered as a professor at Seton Hall, but I’m in NM now, so we’ll see what happens.
Q: ARMH trades well in a lousy tape – your thoughts?
A: ARMH is a great company positioned better than anyone else in the chip world to benefit from the tablet and smartphone revolution…but I’m just worried they’ve got overly hyped already.
Q: Cody what do you think about CAT, is that good stock to own?
A: CAT is a great company that is one of the biggest beneficiaries of the endless corporate welfare and easy monetary policies of the Republican/Democrat Regime in power. But I don’t think it’s got nearly the long-term upside potential that our tech stocks do.
Q: Hi Cody, I brought Visteon, VC when you recommended at around 64 and sold around 30% of them at 70 at its peak. Now it dropped to $58. Are you planning to add this position at these levels, or should we wait for it go lower and settle down?
A: I’m long VC and plan on buying more soon. Got a great analyst report on the company this morning that I’ll quote from in a column about VC later. Stay tuned for that too.
Q: BCSI looks cheap, but can they get there GTM right and glean share in WANOP to make a run? They won secure web proxy services, but that’s a topped out market and their only chance at real growth is WANOP. I love RVBD, but is there room for #2 BCSI get back in the game?
A: I’ll look at BCSI again, I haven’t considered it from that perspective. Good points and good thought process. Thank you.
Q: How about HTC, I know its traded in Taiwan Exchange but they are making the best smartphones out there after APPL. Ever do the analysis on if there is value in that stock?
A: HTC is an awesome company! But I don’t like to invest in companies that aren’t traded/regulated here at home. I am mad at myself for having missed that one though.
Q: Hi Cody , I bought MRVL this week and last week when you suggested. Its got a bit hammering of about 8% from there. Is it good to hold it till they announce their earnings in couple of weeks from now ? ( have Jan 2012 calls)
A: I wouldn’t have bought more MRVL if I didn’t think it was a good one to hold.
Q: Thoughts on ADTN?
A: ADTN hasn’t traded well at all in the last few months, but that’s largely because the stock probably had gotten ahead of itself in its huge run up before that. I still like it, but it’s a very small position for me for now.
Q: What’s your opinion on QCOM?
A: QCOM’s probably the second-best chip pureplay on the tablet/smartphone revolution. But it’s also very expensive.
Okay, guys, thank you all for reading and for subscribing! Please don’t forget to tell your friends, family and colleagues about TradingWithCody.com.
