Tech

Gold heading higher “is a certainty” and other must-read articles

September 21, 2011 By cody Leave a Comment

Here’s some of what I’m reading this morning along with my thoughts on each topic.

Gold Heading Higher Is A Certainty – I am a gold bear, but not short yet. Jay’s got a catalyst for gold coming up that I’d not considered, but the trend is up, and I’m not fighting it.

Near-term trading strategies from the Wall Street All Stars – In the Platinum Conversation on the home page of WallStreetAllStars.com, I asked the other contributors how they’re standing right now and if they’re making any new moves. Quite a few bulls. Guys liking tech, including RIMM, Priceline, Amazon and Google and Apple. But nobody’s buying right now. Is that bullish or bearish?

Indicator Update 9/18/11 – I like to follow Jeff Miller’s economic commentary because he filters through a lot of the nonsensical economic indicators and trends to try to end up with some sort of meaningful near-term and longer-term economic conclusions. His leaning bearish for the very near-term and I can’t argue against that much just now, especially after last week’s big rally taking us to some new highs in a lot of our stocks, I’m not a stomping bull as much as I was a during August’s big crashes.

UBS raises loss estimate to $2.3B and Obama seeks $3 tln in cuts – Lost in all this discussion about yet another rogue trader at yet another brokerage/bank/conglomerate is the fact that US taxpayers are spotting these UBS traders the entire nut they’re trading with. Obama and the Republican/Democrat Corporatist Regime he fronts is looking for billions of dollars in cuts to social security and food stamps and so on, even as UBS remains on welfare. Remember this? “Federal Reserve data showing UBS AG and Barclays Plc ranked among the top users of $3.3 trillion from emergency programs is stoking debate…” Short the banks, welfare-funded trading won’t last much longer.

An Explanation and Some Reflections – I know a few folks over at Netflix, including Reed Hastings, the CEO and author of this strangely apologetic but still arrogant “reflection” and I can’t tell you what the heck he’s doing with this. I didn’t think the DVD and streaming pricing changes that Netflix put through a few months ago was that big of a deal. But if he thinks the revolt from the customers over this issue is about him needing to communicate better and not about the pricing and the lack of decent stream-able content on the site…then he’s got another thing coming. And changing the shipping service to Quickster (Qwikster? Qwixter? What was the new name of the DVD service again?) is not exactly clarifying much of anything. I’d have thought Netflix would be tempting after this big pullback, but as I wrote the other day (see Revolution Investment ratings for Akamai, F5, Netflix and six others), “There’s not a lot of cash for the company to work with so they’ve got to execute perfectly. That raises the risks.” Netflix has not been executing the last few months and that’s going to keep me on the sidelines.

And be sure to check out my Revolution Investing newsletter, published here on Marketwatch.

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 Apple and Google.

Filed Under: App Revolution, Economy, Stocks, Tech

Weekend links: Five must-reads for every investor

September 17, 2011 By cody Leave a Comment

Here are some Revolution Links to what I’m reading and thinking about today.

Value Investing and Financials – David Merkel is an old mentor and investor of mine. He’s the best value investor I know and he’s saying that the financials are not value stocks despite their ongoing crashing. He’s also underscoring something very important here about the financials — “a lot of the outperformance of financials stemmed from the willingness of the Fed to engage in a reckless monetary policy”. I’ve been short the financials including Wells Fargo since early this year because this stuff is all finally coming home to roost.

Summarizing RIMM – New, updated RIMM analysis from the best tech trader I know. His summary after last night’s earnings report: “There are plenty of reasons in RIMM’s report to warrant even further selling in the shares. We could be seeing new lows for the year tomorrow after the sellsiders slash their estimates and forecasts for the PlayBook offering. I think the PlayBook is a definite goner.” I agree with pretty much everything he writes in the article.

Did Donald Trump call the peak in gold? – A couple years ago when oil had spiked and was at $130 or so, I once confidently bet Donald Trump Jr on national TV that oil would see the $30s before it’d see $150. In fact, his brazen bullishness on the commodity at that point emboldened me in a contrarianism kind of way. Oil peaked at $147 and subsequently dropped to $35 and I won that bet. You know what the payoff was supposed to be? His inheritance against mine. He hasn’t tracked me down to pay off. Anyway, I’d rather see Donald Trump saying gold is going to $10,000 an ounce instead of being in my camp as a gold bear. I am still waiting to re-enter my GLD short. Now I’ll probably wait longer. Sigh.

BofA, JPMorgan Fail to Make Fannie Mae Grade for Loan Servicing – Like I said, I’m short the financials, especially targeting the TBTF banks like these guys who can’t even do the job they say they’re doing. And when they do do their “loan servicing job”, it’s often full of robosignatures and title-chain nightmares. BofA should declare bankruptcy instead of laying off 30,000 people to prop up cash flows and supposed profits for the near-term so its management can continue looting before they eventually collapse again under the weight of their horrid balance sheet which no amount of layoffs can fix anyway.

Economists Who Are Always ‘Surprised’ Should Re-Think Their Models and Assumptions – This would be hilarious if it weren’t so damn tragically true. “Surprised” is another word for “dead wrong”. Should we all be “surprised” these incompetent idiots at the Fed and Treasury and other higher ups in the Republican/Democrat regime keep their jobs? Being surprised constantly…it’s like the Apple analysts who are always “surprised” that Apple can sustain this torrid growth. There will be people who will be surprised that Google’s Android has crossed the one-billion units sold mark sometime in the next few years.

And be sure to check out my Revolution Investing newsletter, published here on Marketwatch.

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 Apple, Google and net short Wells Fargo.

Filed Under: App Revolution, Economy, Revolutionomics, Stocks, Tech

Revolution Investment ratings for Akamai, F5, Netflix and six others

September 17, 2011 By cody Leave a Comment

Earlier this week, I met a bunch of subscribers to my independent service, TradingWithCody.com, in our chat room for a special “stocks only chat” in which I analyzed 18 different stocks that they wanted to know about. Here’s the second half of the transcript of that chat. You can read the first half and find my Revolution Investment ratings for Intel, Micron, Level 3 and six others by clicking here.

Q: AKAM looks like a buy. What do you think? I am ready to pull the trigger. Thanks! A: AKAM – It’s certainly in the right spot, with a proprietary network of servers and switches near end-users of the Internet around the developed world. The Internet would likely run noticeably slower if Akamai didn’t exist. And that’s saying something. At $22 a share and with nearly $3 per share in net cash, the stock’s trading at 12x this year’s earnings and at about 10x current estimates for next year. I think those estimates are too low although pricing pressure has been crimping topline growth of late for these content delivery companies. But at $22 a share, the long-term outlook for this stock is very bright. Revoluion Investment rating: 7/10

Q: Firstly Cody, I want to thank you for your service. You have helped keep my head straight during these tumultuous times, and have helped keep my portfolio from falling with the market. Any view on FFIV? A: FFIV is one of the highest-profile tech stocks on the planet. While people consider FFIV’s competition to be Riverbed and Cisco, some networks are built using all three company’s products. Saving costs and expanding fuctionality of existing bandwidth is a great proposition for most tech purchasing managers and FFIV will likely continue to see growth for many years to come. It’s not cheap at nearly 20x next year’s earnings but it does look cheaper when you consider the net cash on the balance sheet of $10 per share. Rev Inv rating: 8/10

Q: Cody, how about GLUU? A: GLUU – a penny stock that’s not expected to earn any money this year or next and with $12 million total on their balance sheet. It’s a lottery ticket at best. Rev Inv rating: 2/10

Q: Can you analyse INFY for me? It’s the biggest IT stock in India. A: INFY – If you believe that corporate America will continue to get huge tax benefits by laying off Americans and hiring supposed replacements in India for the next ten years, then INFY might be for you. If, on the other hand, you’ve ever dealt with outsourced services to India as a supplier (I’ve hired Indian programmers over the years to help me build websites…never have had a good experience or a product that they’ve built even come to market) or as a consumer (I get paid randomly late if at all by some of the biggest companies I write for and every time I ask “what the hell?” they say, “Payroll and accounts receivable is outsourced to India” and that’s the entire explanation) then you probably should think twice about betting on such outsourcing trends being sustainable. Rev Inv rating: 2/10

Q: Cody, do you like OCLR? A: OCLR – another newly-minted tech penny stock. The company sells components against competitors like JDSU and they all had so much overcapacity back in the late 1990s that they’re still slugging it out trying to rightsize their ships. At less than $5 and with $2 per share net cash per share, this is another one I like just because it’s so down and out cheap. If they can actually earn 25 cents or more next year, this stock will be closer to $10 a share but I’d expect it to struggle to ever get much above that recent $18 a share high it saw late last year. Rev Inv rating: 6/10

Q: Any thoughts on HLIT? Cody’s writing and philosophy is really one of the best things about this advisory service. plus cody’s a great writer. and yeah his buy/sell rocks too. A: HLIT – The company seems to be in the right positioning and the right industry — helping video play on new networks. But the growth and execution have been lacking there since as long as I’ve followed this stock. At $5 a share with $1 per share net cash and with earnings expected to grow from 40 cents to 50 cents in the next year, it’s pretty cheap. But I can’t get comfy with a long-term vision for this one. Rev Inv rating 3/10.

Q: How about COGO? A: COGO – if you believe this Chinese company’s financials, it’s very tempting. The stock trades for less than 5x next year’s earnings estimate and they supposedly sell all the right components for tablets, smartphones and every other growth industry on the tech planet. I have yet to see a small cap tech stock from China work out for investors. I don’t think this one will either. Rev Inv rating: 2/10

Q: What about KITD? A: KITD – Is a better version, but not by much of HLIT. The company sells into what should be an incredibly high growth market – “It offers KIT platform for managing Internet protocol (IP)-based video assets across the browser, mobile device, and IPTV set-top box enabled television sets.” And likewise, hits on all the right catchphrases “Our platforms”. But the company just doesn’t deliver the sustainable growth I’d expect. If they actually earn the 87 cents that analysts are expecting for next year the stock might act all right. But color me skeptical on this one. Rev Inv rating: 3/10

Q: What are your thoughts on Netflix? There has been a very high short % of float going back at least a year, and yet the company keeps performing. Do you think this will continue considering their pricing change and losing Starz’ library? A: NFLX – under assault from it’s suppliers (Starz and other content providers are rebelling), competitors (Amazon, Apple and even YouTube etc are all ramping up services) and spending like crazy to expand in new markets around the world…NFLX has lost the confidence of many investors of late. But the company’s become the de facto standard of Hollywood video watching on the Net and the iPad and that’s going to help fuel much more growth over time. There’s not a lot of cash for the company to work with so they’ve got to execute perfectly. That raises the risks. Rev Inv rating 6/10

Ok guys, that’s it for today. You can imagine my brain’s mushy now after analyzing all those stocks. See you back here at http://tradingwithcody.com/chat next week for a normal chat where you can ask me anything and I’ll answer it. Thanks for reading, thanks for asking about all these stocks and thanks for subscribing!

Click here to read the first half of transcript and find out my Revolution Investment ratings for Intel, Micron and seven other stocks.

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 Apple, Google and Cypress.

Filed Under: Economy, Stocks, Tech

Stock picks from the best tech investor I know

September 15, 2011 By cody Leave a Comment

The best tech trader I know is probably the one and only Jay Somaney of TSG Capital Partners. Yesterday, he wrote an article called, “Adding To Techland Holdings” and I about fell out of my chair when I saw the headline and read the article in which he writes such things as:

“I think techs will report outstanding numbers for Q3:11 in the next month or so. I have added to several positions in that area including Amazon and Priceline.”

I about fell out of my chair because I don’t know much of anyone who’s buying tech right now. Do you?Indeed, just after seeing his article I was stopped yesterday in the grocery store by someone who wants to talk stocks. He asked me, “So, Cody, what are you buying these days?”

I explained to him in a quick elevator-pitch kind of tone that we’re seeing some historical growth trends and marketplaces created in the smartphone/app/tablet revolutions and that I’m long a lot of tech in that space.

“Names, Cody, names,” he prodded. So I answered with a quick list off of some of my longs like Cypress, Google and Apple. Or Intel and the more speculative Level 3.

“Really? Tech? Tech is for idiots in this market,” he said, explaining, “alternative energy and some speculation in the Iraqi dinar is what you should be looking at, Cody.”

So I’m wondering, is there anybody else out there who’s out and out bullish on tech? Most people I know tell me one of two things when I mention tech as a good place to invest: “Tech’s in a bubble.” Or “Yawn.” You guys tell me. Is tech in a bubble, is it an afterthought or is it the place to be?

Filed Under: App Revolution, Stocks, Tech

Five articles that will stop you in your tracks

September 15, 2011 By cody Leave a Comment

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!

Filed Under: App Revolution, Economy, Stocks, Tech

Must-reads: Greece collapse is bullish, Dick Cheney on twitter and more

September 12, 2011 By cody Leave a Comment

Greece and the banks and Germany’s will to bail out other Euro countries. Have you heard?! These are the headlines that matter today…at least according to the mainstream media. I haven’t done a “Must-reads” posts with links in a while. Here’s some of what I’m reading right now with some Cody-commentary on each.

Something Stinks in Euroland - Simon, an old friend of mine, finishes his article quoting another old friend of mine, Michael Darda, “There is potential for very large systemic global shock,” he says and paints a picture of European government defaults, and multiple countries leaving the euro.” I agree with that part. But what about the next sentence, the conclusion: “Eventually it could drag down the entire world economy, he says.”

I sure don’t think that Greece and Euro falling apart would be bad for the economy at all. Indeed, as I wrote the last time we were supposed to panic over Greece in Let the Euro die and the bull market resume - “Did you know that the DJIA was up 20% per year for the five years heading into the initiation of the Euro? The markets gave more than 10% annualized returns for the decade before the Euro started. And in the decade since, the markets have been roiled and rangebound. In the first five years after the Euro started, the markets went straight DOWN. Not up.”

Semi’s (and I dont mean the truck) – Some rather objective trading analysis for a tech sector and stocks like Texas Instruments, NSM and Altera that have been hit in the recent market downturn.

Hacker Rattles Security Circles and My Interview with former Vice President Dick Cheney - I didn’t listen to the interview, but this quote from the former VP of the “Free World” caught my eye, “On tonight’s show host Michael Castner asks the VP if he plans to tweet. Cheney says: “You loose your privacy when you get plugged into that system.” One of the truest statements from the Republican/Democrat Rulers in a long time. And yes, I’m on twitter anyway, @codywillard.

TV Viewing Still Growing Making TV Stocks Attractive - A more bullish take than my own (see Sell! Sell! Cablevision admits their business model is “badly broken”, for example) on the TV industry in an Internet-video world.

Bartz quits Yahoo board: report - Yahoo’s up 12% since Bartz was given the heave-ho. It was up 4% during her years running the place. Yahoo’s probably got more upside than downside for the next few months. Microsoft would also get a boost if they’d give CEO Ballmer the heave-ho, IMHO. Ho, ho, ho.

Indicator Update for 9/11/11 – Good discussion of current economic indicators layered up on top of a trading outlook. From the article: “In conclusion, most of these charts still support a bullish outlook (albeit a less bullish outlook compared to a year ago), especially in the context of a market that once again has become extremely bearish. Although there has been some deterioration in the economy’s growth fundamentals over the past year and in recent months, but there is still no indication that the economy is at risk of another recession.” Italics are mine. I mean, “No indication”? Interesting.

Cody Willard: Trading updates on Apple, Cisco, gold and much more and Who says markets can’t go up during a recession anyway? – I met a bunch of subscribers to my independent service, TradingWithCody.com, for our weekly chat and we had a blast, as usual.

Filed Under: Economy, Politics, Stocks, Tech, TV

Best stocks to be long and short into year end

September 9, 2011 By cody Leave a Comment

I met a bunch of subscribers to my independent service, TradingWithCody.com, for our weekly chat and we had a blast, as usual. I’ve broken the chat down into two disparate (but not desperate!) sections:

1. Economy/markets/trading/strategy questions

2. Questions about individual stocks

Click here to read the Q&A about the economy, markets, trading and strategy. Read on for the stock Q&A. And be sure to check out TradingWithCody.com where I post all my trades in real-time.

Stocks

Q: Do you see all the cheaper tablet alternatives, especially in Asia (where there is an expectation for Apple to take off), affecting Apple’s margins, and hence growth plans, significantly? A: Great question about the margins at Apple and how they could be affected by mass cheap tablets…but the iPad is so much better and still ain’t exactly “expensive”…and further, I expect Apple will someday start selling iPad 2 for $200 or so after iPad 3 comes out at full price. Or maybe they’ll wait for iPad 4. Who knows. But Apple will likely have some very cheap iPads out there for you to buy in a few years just like they did with the iPhone after a few years.

Q: Cody, great job so far. Been with you for 4 months or so and have been very pleased. On August 17, we bought near term ADSK calls–actually the only near term calls we have ever bought. They are well out of the money at this point and was wondering what your thoughts were on this equity. A: Oh, the ADSK — that thing has been wildly volatile lately. The fundamentals, barring a complete collapse in the macroeconomy, are fine. I plan on holding ADSK for a couple years, but I don’t know if you’ll get lucky enough to get those near-term calls profitable in the next few weeks.

Q: Any views on INFN? A: The company’s only valued at $800MM total. They’ve got nearly $300MM in net cash in the checking account. That means you can buy the company at essentially $500MM enterprise value. The problem is that they aren’t profitable last year and will probably break even next year or so….so what’s the catalyst? I like the stock at these levels as a value investment, but I’m not pulling any triggers on it personally.

Q: Hi Cody, I have been a subscriber for two months and I am extremely happy with the service. I missed the entire LPS trade, and I would like to get into it. Do you think LPS is a short at this level, or shall we wait for a bounce above $19.00? A: Thanks for the kind words. I was just looking at LPS’ chat and also doing a bunch of homework on just how badly they really look to be screwed…I don’t see how that stock ever gets legs again, frankly. I might add to the short or buy some more puts in this one this week no matter where the stock is.

Q: Think LPS might get a pop if Obama recommends some mortgage problem help in his speech? If it does move then, would Friday be a good time to consider buying the puts? A: You just made my day with those kind words. Thanks for subscribing from the beginning! Yes, LPS could pop on something like Obama saying he’s going to prop up housing prices and try to brush under the rug the fraud in the industry. Indeed, the only catalyst I can see to the upside for LPS at all is political favoritism somehow coming into help them. In five years though (two years?), I think LPS will be gone. Hasta la vista. Zero.

Q: When do you think it is it time to short GLD and SLV? A: I think the big 4% drop in gold today might be a good indicator that the shorting time is nigh. But I’m not pulling any triggers til I really see the gold bugs start to cry.

Q: Do you ever trade AIG? Because today’s 10% pop is beginning for something. I know it is trash stock but for trade? What do you think? A: I wouldn’t gamble on AIG with my worst ex-girlfriend’s money. It is a, IMHO, totally insolvent, criminal enterprise that needs to be shut down immediately but continues to thrive using welfare funds. Game it at your own risk!

Q: Cody, I love what you are doing for us,thanks a lot. Do you think we can do any trades, not investments, on RIMM earnings coming soon? A: I don’t like the RIMM much from the short or the long side right now at $31. When it hit $24 or so, I answered a question in this chat room saying something like “RIMM’s too low to short now” and it popped big since then. I don’t see any particular upside catalysts for the stock in the near-term, but the chart itself has turned up nicely and maybe just some tradeable action there. Not for me though.

Q: I am holding January $17.50 Cisco calls which are slightly in the green again. Do you see upside for Cisco toward year end or is it best to close out? I also hold January 13 calls so I am optimistic–thanks for your stock and market strategies. A: I’m also holding a wide array of Cisco calls. I wouldn’t own them at all if I didn’t think the stock was about to go higher into year end. I hope/pray it will. But hoping and praying isn’t an invest-able strategy. That said, I do think Cisco is trying to bottom here near $15 or so and I’ll probably continue to be a buyer. Going back to an earlier question about shorting puts….Shorting Cisco out-of-the-money puts wouldn’t be the worst idea ever. But I’m sticking with Cisco common and calls (though as I recall I was a seller of some of my calls when the stock popped after I’d been buying the calls before its earnings report even though I still have a wide array of those calls left).

Q: Cody, thoughts on ZAGG? I’ve had good results writing put options as they provide a decent return and the stock has been stable during the downturn. Potential upside for calls/common as the iPhone5 is due to be released? A: ZAGG’s a tough one. I spooked myself out of it when a colleague asked me about it a few months ago and I’m still not comfortable with it. Be careful with that one. My “spidey senses” go off when I study ZAGG and I can’t tell you why because I don’t know why ZAGG makes my spidey senses go off. But it does. So I stay away. Good luck with it tho!

Q: I had a question about Micron. It seems to be trading at a 30% discount to book value. Is this undervalued enough to buy, or do you not like the company enough? A: I don’t look at “book value” in my investment strategies much at all. I look at net cash, earnings, cash flows, EBITDA, margins…and also top down analysis like market positioning, sector growth, etc. I do like MU near $6, but I’d rather own SNDK at $37.

Q: Great call on the RVBD calls at the bottom. I loaded up as you did and they’re nicely profitable! Would you consider our latest downturn a triple bottom? If so, we have rebounded very nicely. How long is your gut telling you the rally might run for? Would it make sense to slap some out of the money puts on RVBD if it gets up around $27-$28? A: I do think we are trying to put in bottoms, but that doesn’t mean we have for sure. I’d like to see some of these stocks get back to where they were a few months ago before the next rally is truly over. But that’s a tall order.

Q: Cody, I am a new subscriber, but have been following you for a couple of months and I am really enjoying the service and your sense of humor. What do you think of AVAV? A: AeroVironment, Inc. designs, develops, produces, and supports unmanned aircraft systems (UAS), and efficient energy systems for various industries and governmental agencies. I don’t want to invest in companies that are dependent upon expanding wars for growth. In the next five to ten years, I expect our war expenditures to drastically decline one way or another. I’d look to eventually get short AVAV.

Read the economy/markets/trading/strategy Q&A by clicking here.

Check out TradingWithCody.com by clicking here.

Filed Under: App Revolution, Economy, Revolutionomics, Stocks, Tech

Tech names poised to break

September 3, 2011 By cody Leave a Comment

Gotta blame it on something, Gotta blame it on something Blame it on the rain that was falling, falling, Blame it on the stars that did shine at night – Milli Vanilli

I mentioned earlier that it “felt” like the markets were likely to follow the Ruidoso weather pattern of late — sun in the morning, rain the afternoon. In other words, I was looking for an intraday fade today and that’s indeed what’s transpired. Wonder what the mainstream media are blaming today’s sell off on? Let’s look:

Stocks Sink on Corporate, Euro News

Ah, that explains everything! That ol’ “corporate, Euro news” sell-off catalyst that they talk about in the text books. What? No? Oh, my bad.

Anyway, other than selling those Ciena CIEN calls for a big one-day profit that I explained in this earlier blog post, I’m sitting on my hands still. Here’s some more of the feedback I got from subscribers just this morning:

Cody you are the MAN when it comes to making great earnings calls! Nailed CIENA today thanks to your insights. Your earnings calls alone are worth many times the subscription price of your great service! — Ron

Great calls, Cody! You made me some money this morning! — Bill

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. At any rate, I’m actually not just hand-sitting. I’m doing lots of homework on the stocks we own to stay up on top of the news, trends, etc. Anybody else notice that Riverbed RVBD and Sandisk SNDK are up big from recent lows where we were buying calls? Gotta have some patience to let these things play out after making the bets we’ve made, as I keep preaching. Anybody else looking at Apple AAPL and wondering if it might have a good 10%-15% move in it if it can get through the $400 level? Google GOOG got legs above $540 or so?

Speaking of preaching, Milli Vanilli and the stock market, before we go, take a look at this funny comment from this classic MTV video now on YouTube, not on MTV:

In a way, all of todays groups are some kind of a version of Milli Vannili with overproduced fake music, lipsyncing, autotune, and frontmen/women who cant sing worth a ****. I actually have more respect for these guys than today’s fake ****.

Think about that comment and think about how doomed Live Nation LYV really is, when you extrapolate what a complete collapse of stadium/platinum selling artists is going to do to that company and that industry in the next couple decades.

Come to think of it, I’m not really sure how I made the connection from Ruidoso rain to Milli Vanilli to today’s market action to Live Nation’s being doomed. But it worked, no?

Thanks for reading, see y’all tomorrow.

Filed Under: App Revolution, Revolutionomics, Stocks, Tech

A trade is a trade is a trade: Time to sell this tech name down now

September 3, 2011 By cody Leave a Comment

Flattish to down open early here this morning. Since nobody cares about Greece’s sovereign debt problem or the U.S. budget crisis this week, maybe some macro economic news in Estonia was softer than expected today and we could focus on it. Maybe a report out of Singapore about their savings rate increasing again should get us panicked tomorrow.

Then again, let’s continue to try to focus on what matters instead. Speaking of which, yesterday in the closing hour, I’d bought some very high-risk Ciena CIEN calls because they were due to report this morning and as I’d mentioned at the time — sure was a lot of Ciena negativity (Cienagativity?) heading into the report. As I wrote at the time on my TradingWithCody.com in I’ve now bought a little calls in…:

Ciena reports earnings tomorrow morning before the open and I’ve read nothing but explanations of why they are likely to really miss and guide lower and get crushed tomorrow. And that might very well happen.

I think expectations are very low for Ciena heading into that report tomorrow morning. The problem is that if the company does disappoint there’s probably a 10% underside. That said, I’d expect Ciena comes in okay and that the stock pops tomorrow.

I’ve now bought some Ciena calls dated in October, working on strikes between $13 and $15 or so. This is a very aggressive kind of trade, using such close expiry dates and out-of-the-money calls to boot, which means we’re likely to either catch a bin tomorrow or will end up with probably close to a total loss on the capital risked here. We’ve had some pretty consistent and decent luck with these pre-earnings trades. –

The report is out and it’s pretty good, especially for those bulls who were looking for some margin expansion from the synergies of the major Nortel optical acquisition. With both Cisco CSCO and Ciena, the margins are likely to expand in coming quarters thereby driving earnings much faster than revenues. Juniper JNPR, F5 FFIV and Akamai AKAM on the other hand, are topline growth stories as much as they are earnings growth stories for the next couple quarters at least. Margins are the main reason Ciena is up today — the topline was just okay. Then again, with as much negativity as there was around Ciena heading into the report, maybe “just okay” is good enough to stimulate this pop today.

At any rate, Ciena is indeed up more than 17% as I type this. The October calls we were buying yesterday are up double or more in value in less than one day’s action. And I’m selling them down. One of my old mentors used to always tell me, “Always remember that a trade is a trade is a trade.” Meaning that you don’t want to confuse a trade with an investment. We bought these calls as a trade and the trade worked out so let’s lock it in. I’m keeping only about 1/5 of the calls I’d bought yesterday along with the core common stock position in Ciena that I plan on holding for the longer term.

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. Here’s some of the feedback I got from subscribers just this morning:

Ok Cody, you convinced me, I’ll subscribe. After the CIEN trade I followed you on, I made 75% in 20 minute this am, more than enough for a 1 year subscription. Thanks, I’ll be following you. – Jeff

Thanks for ciena trade– made my week. Keep up the great work. – Teri

You’re one of my heroes. You nailed the internet/connectivity, social media revolution before anyone else. You deserve your success! — Barry

Rock on.

Filed Under: App Revolution, Revolutionomics, Stocks, Tech

We can learn a lot about trading from horses and cowboys

September 2, 2011 By cody Leave a Comment

Monty Roberts, the great horsewhisperer whose autobiography I am currently reading, talks about how horses are “lean into” animals. That is, they lean into pressure. You want a horse to turn left, you don’t get a team of wranglers to push him on his right side — you can simply, by yourself, usually get him to go left with a couple hands putting pressure into his left side. Think about how you can make a horse turn left by applying pressure to his ribcage with your heel while you’re riding him.

Now think about how that applies to your trading. Are you a “lean into” animal? I would think great traders are a lot like horses, in that they lean into and go counter to whatever direction the pressure is coming from.

Meanwhile, on another but perhaps similar saddle, the only fish I caught the whole weekend while spending a magical weekend with my father on the mountain rivers of southern Colorado, was one single 19″ rainbow trout. Fish are not “lean into” animals. No pics this fishing trip — it was just for memories.

And what about the markets’ action, you ask? It’s been a wild ride for any us longs left who remained in this arena after that wild mustang, Mr. Market, had bucked most of the weaker-handed cowboys out of this market.

Here’s a great example of Monty Roberts’ magic with horses:

http://www.youtube.com/watch?v=9Dx91mH2voo

Monty breaks a horse and saddles him and gets a rider on him in less than thirty minutes

As for trading right now, I’m continuing to mostly handsit here and not force things. We did a lot of buying, scaling, nibbling in our favorite longs such as Apple, Google and Sandisk and some short covering while the markets were much lower than they are now, and the positioning we’ve got now, with lots of calls that are kicking in on this rally, some core common stock and some short bets against Wells Fargo, LPS, and Live Nation and others is about where my playbook tells me to be for now. All that said, at some point, I plan on doing a little more scaling into some of my smallest positions down at the bottom of my weekly holdings list (see: Latest positions and some trout to catch…). But no rush and will look to “lean into” whatever trades I do make next.

We can a learn a lot about trading from cowboys and horses. Seriously.