I got a lot of great feedback about my “Revolution Investing Must-Reads” links column on Monday, so I’m going to start doing these links-with-Cody-commentary columns more often.  Here’s what I’m reading today and a few thoughts about each headline:

Bicycle Stability Versus Table Stability - My old friend David Merkel wrote this piece back in 2007 and republished it today…because it’s just as relevant in the current economic set up as it was back then. As David puts it in his reprint summary: “Is this still true today, 9/14/2011?  Yes.  Yields are rising for low quality companies, and falling for high quality companies.  Analyze your portfolio and see what companies could survive for two years without raising capital.  This is an environment where a company that has to raise capital could find the doors shut.”

Japan puts ex-spokesman in charge of nuclear crisis – I’ve been worried that one of the next so-called Black Swan events that could roil these markets could end up being yet another re-run of recent past Black Swan events.  More to the point, is it possible that we’ve overlooked just how bad the damage and ongoing fallout over the Fukushima disaster is and will get?  Yes, of course. That said, (first, my heart continues to go out to all the people affected by this tragedy) the market would likely panic on any such new developments from the Fukushima disaster but that such panic would probably be a buying opportunity as it was last time.  And finally in regards to this headline — does the fact that the Japanese Prime Minister if putting a spokesman in charge of the crisis a good sign or a bad sign?

Bank Of America: ‘Phase I” Of Cost-Cutting Will Eliminate 30000 Jobs and UBS To Layoff 3500‎ – Banks and bank profits are way too big as a percentage of history, as I’ve outlined several times before (see How to fight the bank bailouts and profit while doing so, for example).  These are not the last of the big lay offs from the big banks that we’ve spent trillions propping up only to see them eventually shrink to size anyway.

Broadcom’s acquisition makes it a buy –  What does Netlogic make that Broadcom wants so badly? “Netlogic’s products are designed into various systems, such as switches, routers, wireless base stations, access aggregation, radio network controllers, security appliances, networked storage appliances, service gateways, and connected media devices offered by original equipment manufacturers.” You know, that whole App/Smartphone/Tablet/Cloud infrastructure thing we’ve been investing in.  This won’t be the last 50% pop in this sector.  Hopefully we’ve got the next one on our sheets already. (See exactly what stocks I’m investing in at TradingWithCody.com, by the way.)

At TechCrunch Conference, Talk of a Bubble – Been a while since we saw talk of “Talk of a Bubble” in the headlines. As usual, I’d much rather be on the other side of the worries in the headlines and if they’re still worried that tech’s already in a bubble…I’d consider that very bullish for tech.  Oh, and by the way, anybody else notice that Amazon, Priceline, Apple and several other of those old “bubble stocks” are much higher than they were back in those “bubble days” anyway?

Oh, and I’m doing a special “Stock questions only” Q&A with subscribers of TradingWithCody.com today at 2pm EST.  You can get a free one week trial signing up here if you’d like to ask me to analyze a specific stock for you today.  I’ll give each stock I analyze a Revolution Investment rating on a scale from 1 to 10.  See you there!

It’s a brand new week.  And the markets are up again.  Last week, when we were under DJIA 11,000, I wrote:

I do think we’re getting closer to bottoming sooner rather than later.  I’ll rephrase — I think this market might finally be putting in a bottom around the 10,800 level or so.   And I’m going to be a steady buyer any time we dip from 11,000 as I have been doing thus far. (I think this market might finally be putting…) –

We are now up nearly 7% from that 10,800 level, and while I wouldn’t dare say we have for sure bottomed and moved on from below the DJIA 11,000, the further and longer we steadily move away from that level, the harder it gets to test it again.

Meanwhile, Riverbed’s now up nearly 20% from where it was last week when I bought the calls in the name:

As I’d written at the time (see: I’ve now finally stepped up and done my first purchase of some…):

Riverbed’s been dripping steadily lower as I’ve been patiently waiting to add to it once again since we had sold most of our calls when it was indeed over $40.  (see: Let’s talk about some important trading strategies that I’m employing right now, for example).

I’ve now finally stepped up and done my first purchase of some Riverbed since then.  I’m buying calls dated out to December and January around the $25 strike price. –

Cody back again in real-time here.  I’m not selling any of the calls just yet.  Indeed, I’m holding steady all of the calls I added near-the-lows, including our recent Apple, Google, and Autodesk positions (see: I’ve stepped up and done some buying despite the emotions taking over out there…, for example), all of which have now rallied nicely off their lows, giving us some profits, at least for now.

I’m aggressively long as I’ve been a buyer below DJIA 11,000, and sometimes aggressively in the last couple weeks.  And that’s got our positioning set up nicely to increase our longside leverage if we continue to rally and to limit our downside exposure if we fall back to those recent levels.

I also asked everybody last week to weigh in on whether the bulls or the bears were more scared.  The answer, coming from more than 100 respondents, was almost unanimous: the bulls.  Before I go, and now that we’ve rallied nearly 7% from the lows…I’ll ask again. Has it changed yet?  Who’s more scared, the bulls or the bears?

No trades for me yet today.  Easy does it now that we’re being rewarded for having bought aggressively into the teeth decline back when it was so hard to do so.

If you’d like to see how every trade I personally make in the coming days, weeks and years, come check me out at TradingWithCody.com.  For a limited time, you can get a free one-week trial with just your email address by signing up here.

Here’s the second part of this week’s Q&A.

I meet up every Wednesday at 2pm EST with subscribers to my independent serviceTradingWithCody.com in our chat room. For readers here of my blog here on MarketWatch, I’ve broken this week’s chat down into two articles again.  The second article (below) is full of our discussion about individual stocks that I’m investing in and trading right now.  The other article, which you can read by clicking here, is full of subscriber questions and my answers about the markets, the economy and general trading strategies.

Get into next week’s chat by signing up for a free one-week trial of TradingWithCody.com with just your email address. Click here.

Stocks

Q: Do you like Google more, less, or the same after the Motorola purchase? I’m reading mixed things about it but it seems like $530 is a very good entry point. A: I think the biggest untold story with the Goog-ola (Google for Motorola deal) is the set-top box business. Google TV and Android Apps are going to try to gain de facto standardization in the living room…Google’s going after Microsoft’s XBOX platform every bit as much as they’re going after the iPhone with this purchase. I like Google more now than before.

Q: Is AAPL at all threatened by Google’s move? Do you like AAPL as much as before? A: I think Apple is definitely having some “holy cow this changes everything” meetings in Cupertino CA this week. But Apple will be fine.

Q: What are you hearing about advance orders for the next gen iPhone and iPad? A: I’ve not heard much about pre-orders for either — I think the iPad 3 is pushed out for a few months for lack of components to build masses of it. iPhone 5 is coming in a few weeks probably and it will be huge, of course, IMHO.

Q: Have you ever looked at Constant Contact CTCT, they have 0 debt opening new offices and my company uses it all the time. They provide a great and cheap way to market your business during times when money is an issue. They are near their 52 wk low. Your thoughts? Have you ever came across it in your research? A: I just looked CTCT over a bit, and they don’t have any debt, but they don’t have much cash either. They are pretty cheap and growing according to the analysts, but the fact that the only headlines are BS press releases from the company throws up some big red flags. Got a feeling this company is a lot of hype and little substance. I’m not going to dig further on it and maybe that’s my bad. Q: Ok, thanks for looking into it Cody!! I really appreciate it.

Q: If I wanted to buy some LPS puts what would you suggest?? A: I want to buy some LPS puts too! I’ll let you know as soon as I see the markets throw us a new pitch for LPS with what looks to me like good timing and pricing.

Q: I am holding LPS Sept put at the 25 strike as I know you are as well. As we get closer to Sept what are your plans for these puts? Since you believe as I do it still has downside are you going to roll into the Dec puts and if so at what strike? A: Oh man, I don’t know what I’m gonna do with these LPS puts. This stock has driven me mad even as it’s been one of the most profitable short bets of my career. I plan on staying short this thing and would love to get shorter on sustained rallies in the name, but sheesh, it just fades lower and lower and never upticks to give me a chance go build it. I’ll detail my strategy as I execute it…after I’ve figured it out.

Q: What is your strategy, if any, moving forward with RVBD? A: I’d gotten rather lucky with the Riverbed trade as we’d sold most of our common and calls when it was near its highs and I’d explained this strategy in detail as I was doing it. The calls I own are now far out of the money but they still have a few months on them, so I’m holding them steady for now. I do plan on buying my full Riverbed common and call positions back in coming days or weeks but am in no rush.

Q: MRVL is going to report tomorrow. What are your views on this? I already own some Jan 2012 calls which I bought when it was around 12 last week and have some gains in it too. Should we hold? The reason I am asking this is , unlike in someof the last successful earnings plays like CSCO, SNDK, GOOG more people are bullish on MRVL onmarketwatch.com (getting this from reading articles and analyst estimates). What do your sources say about it. Are they more bearish than bullish? A: I think the analysts are mostly looking for an ugly report and have been taking their estimates lower in recent weeks. That’s because RIMM’s a big customer of Marvell. I think that concern is more than priced in and that the company might even surprise to the upside tomorrow night. Q: I think you are right. I did see the analyst estimates going down in the last 15-20 days. And RIMM. That seems to be a priced in too by the recent moves. Thanks. I was skeptical to hold or not to hold. But since I own long dates calls I wont worry now. A: One lesson I’ve learned over the years about EVERY SINGLE POSITION ALWAYS is this: Worry. You should always worry. Complacency is the enemy. (I’m not saying you’re being complacent, I’m just saying — I ALWAYS WORRY.)

Q: I have the MRVL common and heavy calls I bought and already some of them are 10% up. Wondering is that good to keep or sell them. For ADSK also, I have calls. Can I buy more calls for ADSK expiring in Aug in two days? A: I can’t tell you what to do with your positions, but I can tell you that I’m buying a little bit of ADSK calls today and a little common too. And I’m holding my Marvell calls steady for now, as I’ve been a buyer of them in recent weeks, as detailed in real-time here on the site.

Q: ADSK reports tomorrow; large call activity on August 15 4x normal; buy before E? A: I don’t look much at the “call action” before a report — I look more at the stock chart itself and mostly at the analyst reports heading into the report. The analysts aren’t universally bearish on ADSK, but they are pretty bummed about it and talking it down. Such near-term analysis and trading into earnings isn’t science — it’s art. So I’m using a water color brush instead of oils. (I took that analogy too far, didn’t I?) Q: I have noticed your exceptional calls, prior to earnings — CSCO, GOOG, SNDK come to mind — so stick with the water color.

Join me for next week’s chat by signing up for a free one-week trial of TradingWithCody.comwith just your email address. Click here.

Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody was net long Google, Apple, Riverbed, Microsoft, Autodesk and net short LPS.

I meet up every Wednesday at 2pm EST with subscribers to my independent serviceTradingWithCody.com in our chat room. For readers here of my blog here on MarketWatch, I’ve broken this week’s chat down into two articles again. The first article (below) is full of our  economy/marketing/trading/strategy discussion.  The second article, which you can read by clicking here, is full of subscriber questions and my answers about individual stocks.

Join me for next week’s chat by signing up for a free one-week trial of TradingWithCody.comwith just your email address. Click here.

I have your car towed all the way to your house and all you’ve got for me is *lite* beer? - Biff Tannen

Economy/markets/trading/strategy

Q: Why do you buy common stock at times and other times you buy calls? What factors go into you decision? A: There are lot of factors that go down into deciding between common and calls. Some factors include: 1. How expensive are the traders pricing the calls? If the calls let me get long-term upside leverage cheap, I’ll usually put in a little bit of capital there, even if I also own the common. 2. Do I expect near-term catalysts? If I do, such as we have done with the Cisco, Google and Sandisk call buying before their earnings reports, which I expected to be catalysts, then I’ll get more aggressive in the calls, even if I have to pay up on the premiums. 3. How much common do I have in the name and how long have I held it? That is a nuanced factor, but one that seems to play into my decision-making on common-vs-calls often. Great question.

Q: What is your view of the financial sector medium term? I have started scaling into FAS looking for some recovery by YE. A: I’m short the financial sector and looking to get shorter in it in the medium term if there is any strength in these insolvent-but-for-fraudulent-accounting-and-welfare banks into year-end.

Q: If one is bearish on Financials it would seem that the market would have a hard time advancing without this sector. I will be keen to see when your stance on Financials changes. A: Think about my stance this way — if the financials finally get their commeupance and crash, perhaps the rest of the stock market will too. But I don’t think they’d be crushed as bad as the financials would anyway. Meanwhile, if the markets bubble and the government allows the banks to survive in tact despite being fraudulent and insolvent, then I think my stocks will far outperform on the upside too.

Q: What are you seeing that makes you think we will see a Bubble forming and stocks rising for the next 10 years vs a bear market forming and double dip recession? A: That’s a HUGE question and not one easily answered in a Q&A chat like this (reminds me of trying to debate anything meaningful in TV soundbites!). But long story short — the Fed’s 0% rates and the trillions in additional explicit and implicit quantitative easing is likely fomenting asset bubbles as we type. The “forced trade” from the ultra-low interest rates from the central planners of the Republican/Democrat Regime is indeed going to force people into risking their capital and creating new asset bubbles. Including in smartphones/cloud/tablets. Q: Huge question- Ok but stocks act terribly to earnings and for now it FEELS like the only bubble they will see is if they chew lots of gum. I get the 0% rates to force people to grow assets in the only game left to grow them in that being stocks, but from 2008-9 great recession, 2010 flash crash and this years crash has most likely left people not just 2nd guessing but 3rd and 4th guessing the stock market and its casino like gamble like roller coaster not resembling anything trustworthy for money to grow over time.

Q: Hi,  I’m currently a member subscribing on a month to month basis.  Can I switch over to the yearly option? A: If you go and sign up for the annual subscription today, we will refund this month’s $99 fee and get you all set up.  Thanks for upgrading!

Q: In our last chat I was talking about the Head and shoulder pattern that everybody was talking about. Seems it played out badly for everybody. Now everybody is talking about a double dip. Whereas you are in for an App Bubble. What are your views on this ? A: Yes, the head and shoulder pattern did play itself out. I’m still going to answer the question about how I feel to be alone in my views rather than with the crowd — great. Much preferred. Contrarianism is a way of life. Still. Even when I’m wrong as a contrarian, which I was recently and will be again soon.

Q: I know you’re always talking about how the government has spent trillions in dollars in welfare to the banks and the wealthy. How have they done this? I know tarp bailed a lot of them out from bankruptcy. How else as far as direct and indirect means has the government been spending our tax payer money on helping the “banksters”? Does 0% interest rates and quantitative easing somehow cost the tax payer? A: The banks are borrowing money from the government at 0% interest rates and then lending that same money back to that same government at 3%.  That costs the taxpayers hundreds of billions if not trillions in free money for the banks every year that we allow it go on. The banks have trillions of dollars of mortgage securities that are worth twenty cents or so on the dollar.  But they are allowed to say that those assets are worth trillions.  So the banks are able to go on trading, securitizing, gambling and defrauding at will and then base their bonuses and shareholder dividends on those fake gains in their fake portfolios. The government also bought trillions of dollars in these 80% off mortgage securities for 100 cents on the dollar in the name of QE1 and QE2 and other names in the last three years. Fannie Mae and Freddie Mac were bailed out for $6 trillion which also goes into the pockets of their lenders/customers/partners — you guessed it, the banks. That’s just off the top of my head.

Q: What is your favorite short right now? Seems like you’re waiting on LPS to get a bump before jumping in more. A: I don’t quite have a favorite short right now. Matter of fact, as I think about it now, I think I’m likely feeling like most shorts do right now — our shorts just made us huge money and now we don’t know what to do with them. They’ve hardly bounced, but they act like they could pop more before crashing again. Ah, the psychology of a trader’s mind. Or should that be the psychosis of a trader’s mind.

Q: Do you think we’re gonna revisit or go lower than August lows and why? A: I think the longer we stay above the August lows, the more likely we are to steadily rally away from them. But until this market stops doing these 2% plus intraday dislocations, I’m leery about the near-term action and keeping cash ready to deploy in case we do crash not just to but even below those August lows.

Q: Sometimes you are very specific when buying calls or puts(which is great), but then like today you said with ADSK you where buying calls expiring in the next couple months… the average investor(like me) would probably prefer the specifics if possible…A: That is a great point and I will do my best to just outline each call option trade even more specifically. My mom was an English teacher for years and she always told me that her main job was just to get those kids to learn to communicate better. I’ll strive to communicate better.

Get into next week’s chat by signing up for a free one-week trial of TradingWithCody.com with just your email address. Click here.

Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody was net long Cisco, Google, Sandisk, Autodesk and net short LPS.