July 2, 2008 11:08AM
By Cody Willard
One of the themes of this blog and of Happy Hour that we covered extensively with Mort Zuckerman on our Wall Street block party last week is that investors should often just focus on the individual stocks and not the broader market. And indeed, I still maintain that caution is king as we now clearly are seeing the down part of the economic cycle. But I still see a stock or three, especially in the technology sector, that I think look ripe to pop.
First off is Apple. To review, I maintain that Apple has been and remains a great long term investment, as I wrote here in 2003, and recently I’d recommended buying some puts ahead of the WWDC conference when the stock was in the 185 range and then I recommended taking the profits on that trade after the stock had fallen about 5% that day to open back up the long term investment exposure of the “core” Apple long position.
I’d get long some Apple calls, say $50 deep in the money and dated three months out right now. The 3G iPhone is going to sell off the shelves in Europe and around the world. It’s going to be even bigger than the hype currently surrounding it. Flip the “flip it” this time, eh?
I just spent the last five days running around Milan and the coast of Italy with a local. And everywhere I went, people had their iPod on. And I asked everyone, granted in a very non-scientific manner, what they thought of their soon-to-have-ability to buy the 3G iPhone…and everyone under the age of 30 was excited. Many have put off upgrading their phone for the last few months as they anticipated the new iPhone was soon to be rolled out in their country.
And Apple is indeed rolling this thing out all over the world. And the price point is so much cheaper than the comparable Nokia offering, which by the way, is awesome too — it’s just too expensive and not exactly “Apple”.
And that was another interesting point during these discussions about Apple. I asked everybody if most kids in Italy buy Windows or Apple…and most said “used to be Windows, but now only Apple.”
For years I was ridiculed when I used to write about the “halo effect” (here in 2005, for example) from the iPod when the iPod first rolled out by guys who said: Jobs was an idiot and could never turn Apple around or that MP3 players were too specialized to hit critical mass when phones have that ability anyway or that the iPod wasn’t a good product cuz it scratched too easily and so on. Guess what — the halo effect is still building. In Italy even.
The stock market and economy still likely have more downside to them as we unwind the credit bubble. But who cares? Find me some great stocks instead! I’ll mention another name or two on here in the next week or two (and you can also get some exclusive picks with more detailed fundamental analysis by signing up for The Cody Report newsletter).
June 24, 2008 11:28AM
By Cody Willard
GM (GM) is either going outright bankrupt or these stocks are screaming buys right now. The biggest problem for this company isn’t their lack of fuel-efficient vehicles or the exhausted consumer… the biggest problem is the same problem the financials have — nobody believes anything on the balance sheet.
GM and Ford finance hundreds of billions of dollars to enable their customers to buy their cars. And we all know that the ratings on any debt from any ratings agency is a sham of a joke and can’t be taken seriously. And so how many write downs on the balance sheet are these guys gonna have to take over the next year? Do they have the capital sufficient to cover those losses?
If they actually disclosed their balance sheet to you, would you consider the company solvent, much less invest-able? And yes, I’m still talking about GM here, though the line of questioning can be applied to any financial institution as I’ve noted often on Happy Hour and on these pages.
The big difference between GM and those investment banks is that GM actually sells a product, a real tangible product. And the good news there is that that product’s market typically works in a pretty obvious cycle. And if the company can just stay solvent on the balance sheet side of the equation, they’re probably going to see sales improve and cash flows return to the operations side of the business. I know — that sounds outrageous! GM, seeing things improve and even profitable…you’re thinking I can’t be serious. But as always, isn’t the time to buy a stock when nobody thinks you can be serious about buying that stock?
There’s blood in the streets of Detroit. I think putting a little bit speculative capital into some GM stock and bonds and/or long-dated calls would probably pay off a bit over the next few years. I’d hedge any long positions with some long-dated puts, and if you play the position sizes and strike prices right, you’d probably end up profiting from the positive gamma in the positions even if GM went to zero.
I’ll explain positive gamma again sometime soon, but if you search the Internet hard enough, you can find lots of posts I’ve written on the topic before. Stay tuned ;).
June 24, 2008 6:43AM
By Cody Willard
Being in charge of running security for much of lower New York state isn’t all glamour and rock n roll, not even for The City CattleDog himself, lemme tell ya’. I had to spend hours on Sunday, for example, patrolling the perimeter of the Hudson Hidden Valley site…I tracked, caught, took names, and released three squirrels, two birds, and chased one of the feline members of the Evil Order of the Sphinx a good 20 feet up a tree.
It’s hard work, lemme tell ya’, and in the midst of it all, Dogi Master Cody has me training with hovering droids called Frisbees that I snatch out of the air instead of batting down with a light saber. Not that I know how to use a light saber, but I did chew the cover right off of the remote control for the stereo in Cody’s padawan pad…
People don’t seem to take firehydrant security as serious as they should. I tried to tell Cody that I needed more time on the street in front of our house in Soho tonight, as I needed to secure the area by the fire hydrant for the sixth time today — hey, it’s a busy street and I am in charge of running security for much of lower New York state and how would it look if my own neighborhood was infiltrated not just by the 20 dump trucks that drive by every night in the name of protecting our environment but also by one of the doggy-body-snatching Storm Twoofers who can only be detected by lotium olfaction (that’s Dogi Latin…what you thought pigs were the only other species with Latin…come on, you didn’t really think that, did you? ) You really do need to think about those irehydrantsfay.
Ah the pressures of such being a cattledog with so much responsibility and “spot”light. A blog post about me, a stock picking dog on a blog about mutt news? “Internet Long Tail”, indeed, roorah!
Ooh, and here’s a breaking Lobo Business Alert, the Bureaucracy of the Convoluted Pyramid Worshipers passed a vote today through a bipartisan compromise by both the DemoCats and RePelicans and we are going to be passing legislation called the New Hope Alliance that won’t do anything for the millions of homeless dogs put to death each year, but will enable, according to their best estimates, a few rich dogs to stay in their padded doghouses for a few more months…
I heard Dogi Master Cody saying something like that on my new channel on YouTube — http://www.youtube.com/LoboDogTV.
PS. Did you see Joanna Krupa wish me a happy first birthday and blow me a kiss? Rokay, rokay, so being in charge of running security for much of lower New York state does have its glamor and rock n roll to it too.
June 23, 2008 4:40PM
By Cody Willard
1. C, GS, MS: Penny Stocks?
2. McCain’s $300 Million Battery Theft
3. Liars at Broadcom (and Apple) To Get Theirs
1. I used to wonder on this show all the time if the financials would eventually face the same fate the telecoms did after the tech bubble burst…Still wondering…
2. McCain says he wants to give $300 million in taxpayer money to anyone who creates a batter that leapfrogs current technology and $5000 to anybody who buys a car with no carbon emissions… I gotta tell you that a battery that saves people thousands of dollars a year on their gas bills is worth several orders of magnitude more than 300 million bucks.
3. Broadcom (BRCM) Co-Founder Henry Samueli pleaded guilty to lying to the SEC and therefore investors about option pay out packages for insiders and executives at Broadcom. People might thing that’s really bad news for former BroadCom CEO Henry Nicholas.. and it is… but it’s even worse news for those guys at Apple (AAPL) like Steve Jobs who still want to pretend that this backdating scam is already over. It’s Not.
PS. Click here to receive the latest edition of our monthly stock market newsletter, The Cody Report, and get exclusive access to this month’s four stock picks.
June 20, 2008 4:42PM
By Cody Willard
1. A Bubbling Cauldron of Noise
2. I’ll Illuminate the Illuminati Endlessly
3. Fight Poverty: Try My Big Tip Theory
1. In case you didn’t hear, today was quadruple witching. Traders and pundits love to talk about technical catalysts like options expirations as if their impact on the market could be gamed…I don’t even believe that you can measure such catalysts. Ignore the noise!
2. I will stop talking about how unfair these bail out packages are for the renters and savers and those who make minimum wage when the Republicans and Democrats stop taking from renters and savers and those who make minimum wage as they unsuccessfully try to prop up the real estate market for those rich land owners and bankers.
3. If you really wanna help poor people, tip big…If you’re rich enough to use the services of people in poverty, make sure you never let them give you any singles for change. Tipping big is a better help than say, fighting for welfare or higher minimum wage. Be accountable yourself for improving the lot of the poor.
June 20, 2008 9:58AM
By Cody Willard
I’ve been a bit of a Steve Ballmer apologist since I first turned bullish on Softee back in May of 2006. I mean, I’ve called the guy out for the Zune disaster from the start and what not…but I figure anybody who’s built the most powerful and valuable company on the planet probably knows what the hell he’s doing at the end of the day.
But then today I see the quote from Mr. Ballmer in the FT, and I think I now have to officially join the chorus calling for Ballmer to step down from the reigns. The quote:
“We don’t have to dominate, but we’d better have a darn good chunk of the search market over time, and we’re working away at it.”
Uh, Mr. Ballmer, that’s not exactly the “Only the Paranoid” survive kind of attitude that Intel and Microsoft (MSFT) were truly built upon.
As Hal Varian details in that great business tech book, Information Rules, that’s one of the books I use to teach Revolutionomics at Seton Hall, you often do have to dominate if you want to survive at all in technology.
Stick with MSFT the stock regardless…but let’s get someone who actually wants to win in place at the top of Microsoft please.
PS. Click here to receive the latest edition of our monthly stock market newsletter, The Cody Report, and get exclusive access to this month’s four stock picks.
June 19, 2008 11:10PM
By Cody Willard
1. The Red Cross Is Broke.
2. Contrary to the Contrarian…
3. i Is for Illuminati.
1. I mentioned yesterday that the floods in the midwest would cost taxpayers tens of billions of dollars in losses and rebuilding efforts. Turns out, the floods have already depleted the entire national Red Cross disaster relief fund and the agency is now taking out loans to pay for the services its providing in the Midwest right now. Hey, if you wanna help, visit RedCross.org.
2. I’m a pretty vocal commodity bear…and I’ve been a pretty vocal bear on the financials since they finished their recent post-bear sterns bail out rally. I’m wondering if maybe the contrarian trade is to stay long the commodities and short the financials.
3. So Goldman, which has seemingly orchestrated much of all the behind the scenes movements of the Fed and the bail outs they’re sending to Wall Street, reports billions in earnings and says they’ve got some plans to take over some of the struggling SIVs. Call me paranoid if you want, but I gotta call out the manipulative iBank conspiracy that’s seemingly more powerful than ever. I though the “I” in iBank stood for investment…not Illuminati
June 18, 2008 11:24AM
By Cody Willard
An’ though the rules of the road have been lodged
It’s only people’s games that you got to dodge
And it’s alright, Ma, I can make it. — Bob Dylan
Last night at the delicious restaurant in NoLiTa, Peasant, I munched on six different dishes — Octopus, mozzarella, prosciutto, roasted suckling pig, and stuffed Cornish hen. I’d last been to Peasant with James Altucher and the bartender, from Boston, had recognized me as her brother’s roommate from Blinn College in Brenham Texas in 1992, and she saw me there again last night and sent over a couple complimentary deserts to finish off the meal.
I’d had a morning workout and was going to ride my bike with Lobo again before the night was over…but even as good as the food on the table was, I just couldn’t eat it all. There was too much. That beautiful rosemary on those rosemary mashed potatoes…I should nibble on that more. But I couldn’t. It was too much good stuff for me to handle. The breadpudding and white chocolate ice cream? Those four bites I forced down sure were savory!
Which takes me to today’s market/economic topic in this post here (no, it’s not a post about food). Is RBS (RBS) on crack, or is a stock market crash a reasonable possibility? True story — I actually used the word, “Crash”, as in, “I think this market could crash another 15% this summer or later this year” as I nibbled on that crispy pork skin.
This economy is sorta like that table last night. We’ve produced a lot of wonderful things to consume — houses, cars, refrigerators, iPhones, search engines, networks…and did I mention houses, cars, refrigerators, iPhones, search engines, networks…and that’s exactly the point — we’ve produced more of much of this stuff than can be consumed.
The consumer is full. As housing prices continue to collapse, the consumer’s losing more of his appetite. And housing’s still collapsing, btw. And I contend that NYC’s market is the next real estate market to push away from the table and collapse to sleep off these excesses.
And, no, I don’t agree with this line of logic from Barron’s:
Signs of Softness Appear
In Manhattan Real Estate
Signs of cracks in Manhattan’s property market could mean the rest of the country is on the road to recovery, since New York tends to feel the effects of a slowing economy later than the nation does. One segment still in the stratosphere: luxury condos and co-ops in exclusive buildings.
The logic here seems to be that the good times are just around the corner when NYC finally gets hit. I think a collapse in NYC’s real estate market would probably cause yet more economic pain in the near term and take values of real estate around the country down even lower for the near term.
We remain near all time highs in the stock market in year six of what had been a steady economic boom. I continue to contend that caution is king to trading and investing right now.
In fact, I’d almost welcome a crash, so that we can finally wring out those weak handed scaredy cats in the markets and get on the road to recovery.
Don’t you just wish Ben and the Democrats and the Republicans hadn’t colluded to waste all those hundreds of billions of dollars they put into the banking system to supposedly prevent all the bad things that have happened and continue to happen anyway? We might actually be onto the sleep over part of the process instead of still trying to get away from the table.
Coffee, tea or a night cap anyone?
PS. Click here to receive the latest edition of our monthly stock market newsletter, The Cody Report, and get exclusive access to this month’s four stock picks.
June 17, 2008 1:59PM
By Cody Willard
Mike Jerrick
Andrew Martin, Good Deed Foundation
Scott Rothbort, Lakeview Asset Management
Guy Johnson, Johnson Capital CEO
Michael Eckhardt, American Council on Renewable Energy
Peter Duprey, Acciona CEO
Father Johnathan Morris
June 17, 2008 11:41AM
By Cody Willard
Emotion is the enemy to the trader. As a stock picker, you’ve got to set aside personal judgments about a company if you want to maximize your performance. Clearly, the way to generate the highest returns is to focus on generating the highest returns…not by focusing on whether you agree with everything the company does with its business.
So it was a few weeks ago, when I wrote about how I thought Altria (MO) looks like a great investment and intermediate-term trade here around $20 or so. The dividend is safer here than certainly it is at any bank — I mean, ANY bank, even Goldman (GS), even Citi (C)…those dividends there aren’t nearly as safe as they are at Altria…where millions of people each month around the world are raising themselves out of the immediate threat of death from starvation and poverty and violence and instead choosing a slower means of death from nicotine addiction. It’s a horrible business. But it is a good investment here.
So too, must we overlook the evils of the industry that Pfizer operates in, as we see this stock now — at long last — looking like a pretty safe long-term investment here. I’m sure not okay with the idea that we use public funds to research and create new drugs that private companies like Pfizer then lock up the rights to and then start paying doctors to prescribe the drug and start brainwashing the masses into believing that whatever actual ailment the drug treats is probably in need of treatment in their life. And then the industry convinces the government to pay for the treatment/prescription/whatever.
So taxpayers create the drug and taxpayers buy the drug while Pfizer and its shareholders get to keep all the profits from the drug.
As a US citizen and member of the media, the corrupted business model of the prescription drug industry makes me sick (pun intended, yeah). As an investor/trader, with Pfizer down more than 60% from its highs and now with a yield of 7% (that again is much safer than any financials stock’s yield), I think there’s a great opportunity to make some good money.
Here’s another way of thinking about Altria and Pfizer and their outsized yields right now — Treasuries pay less than half the yield on these two stocks…
Heck, I’d almost doubt the US government’s ability to pay that money back before I’d doubt Altria and Pfizer cutting dividends in the next three or five years.
Pfizer’s (PFE) a buy below $18.
PS. PS. Click here to receive the latest edition of our monthly stock market newsletter, The Cody Report, and get exclusive access to this month’s four stock picks.
