September 5, 2008 4:28PM
By Cody Willard
Here’s what I was looking back at in the back of my own mind today:
1. Capital Destruction
2. Jedi Master Trade
3. Let Peyton Pay for It
1. People keep asking where the money from stocks, gold, oil, and what not keeps going. I think people are missing the point – when virtuous cycles of capital creation turn to vicious cycles of capital destruction…the market value of assets just disappears.
2. Straight from my jedi master, James Altucher — Buying the Dow every time the unemployment rate hits 6% and selling six months later had the following result: 42 occurrences since World War II, 33 successes (80%), with an average return of 6.57% during the six-month period
3. The Indianapolis Colts are using Peyton Manning to help calm angry taxpayers who are upset that they paid $600 million for the new Indie stadium while the Colts paid only $100 million. Ironically, or not, the Colts agreed to pay, yes, Peyton Manning himself $100 million in 2004. Tell me again why I’m being forced to pay his salary?
September 4, 2008 5:44PM
By Cody Willard
Heres what was crashing the stocks in my head today:
1. BRIC Sucks Too
2. I Was Wrong: Losing to Win
3. Buy Their Checking Account
1. Terex was one of those global infrastructure plays that were supposed to decouple from the U.S. downturn and grow right through it from demand in China, India and so on. Stay away from the cyclicals…the cycle is OVER!
2. I’d been calling for DJIA 12,000 before we see 11,000. We’re now a percent or two below where we were when I made that wrong call. Let me repeat – my near-term rally call was wrong. Best trade you’ll ever make is taking a loss. A trade is a trade is a trade.
3. In 2003, I loaded up on a basket of stocks trading not just below their book value…but below their cash balances. Apple (AAPL) was the biggest winner of that batch, but almost every single one of those stocks eventually got back above their cash balance and I made a lot of money for my partners and me. There aren’t nearly as many out there right now trading that cheaply, but we’re getting there, and that’s going to make me increasingly bullish as stocks get cheaper.
September 4, 2008 11:42AM
By Cody Willard
Here’s what was weighing on my mind’s market today:
1. China’s Crashed: So Buy
2. ChinAmericanomics
3. More Horrible News: So Buy?
1. Coke buys a Chinese juice company for billions. Perhaps a stronger dollar will result in more U.S. companies getting aggressive overseas rather than vice versa? China’s stock markets are at multiyear lows and showing nary a bounce, btw. Then again, when headlines at IBD read: “Chinese Stocks Are World’s Worst In 2008,” we’re due for a big bounce.
2. Nothing’s immune to the domestic economic downturn that’s crimping demand around the globe. Corning’s (GLW) inventory pains are being felt by all those TV vendors that buy Corning’s glass to make the TVs and monitors the globe’s been buying. China, down 40% vs. our markets’ being down 20%, is, as I keep saying, a high-beta version of our economy and its downturn is gonna be much uglier than our own.
3. Whether it’s GM (GM) reporting 20% sales declines or Lehman (LEH) being forced to dilute shareholders even more…stocks seem to be going up on bad news. See the theme in today’s Big 3? It might finally be time to start putting some money back to work, at least for a trade…Cody, don’t you start trading again!
August 29, 2008 1:28PM
By Cody Willard
I interrupt this vacation for a special public announcement. One of the most important Flip Its any American can do is to ignore the advice from financial planners and the oft-under-educated and ill-equipped advisors at your company that always try to convince you to invest in the stock of the same company you work for.
From idiotically foolish 401(k) and IRA plans that will match your investment if you’ll put your retirement savings into helping prop up your companies stock with that added, consistent demand. I’m not sure how many times I’ve told viewers on Happy Hour to ignore those idiots, but it’s enough that several people at Fox have come to ask me to explain more about it.
And why do I keep harping on this conventional wisdom of using those matching funds and other supposed company-sponsored supposed wealth-builders that everyone tells you is so important for your future well-being and days of retirement?
Worker Assets Shrink at Fannie and Freddie
New York Times, United States - 12 hours ago
The employees of Fannie Mae, and those of its counterpart Freddie Mac, are reeling from financial blows themselves as the mortgage finance companies lurch …
Hopefully some of those (now) poor employees at supposedly very safe companies that were even sponsored by your tax dollars heeded the advice and got the hell out of their company’s stock before it crashed 90% over the last few years.
In the last couple years of running my hedge fund, I owned a lot of News Corp the stock (NWS), and I often suggest it as a good buy to anybody who asks me for my opinion on it. Indeed, I wouldn’t work here if I didn’t believe in its future and its ability to grow.
But anybody wanna guess how much of my savings, investments, and retirement funds I have in News Corp, the parent of the company that I depend upon to write my checks and keep my present day life operating?
Let me repeat — DO NOT EVER INVEST YOUR RETIREMENT IN THE STOCK OF THE SAME COMPANY YOU GET YOUR INCOME FROM!
August 22, 2008 4:34PM
By Cody Willard
Here’s what I was dreaming of redeeming in my own head today:
1. Olympic Glory, Not Money
2. You’re the Socialist, Not Me!
3. Support Operation Backpack
1. I remember when it was wildly controversial that we’d allow professional athletes to compete in the Olympics. Remember when it was about the spirit of competition and not the money? (and don’t get me wrong, I LOVE money…but there’s a time and place for everything and I don’t think the Olympics were supposed to be “money’s” time and place.)
2. Your socialist Republicans and Democrats gave the shareholders of the auto companies $25 billion in easy loans, and now the car companies want double that. Free money for big, well-connected, well-funded corporations and their cronies. Why is it that people call me the socialist on CodyWillard.com when I am simply calling for an end to consumer-funded central subsidization of these giant corporations? Redistribution of wealth is socialist – the level playing field I’m calling for isn’t.
3. Homelessness must really suck, especially when you’re a kid. Help some of our closest neighbors here in NYC by taking a look and helping out with Operation Backpack. We’ll have Trading Spaces’ Rachel Weinstein out here in a bit to tell you more.
August 21, 2008 4:07PM
By Cody Willard
1. You guys have heard me talk about how semiconductor inventories are up and how when they’re moving up that’s not a time you want to own the stocks. You can see the spike in this chart here from The Telecom Connection Newsletter–
Don’t fight it – stay away from the semi’s.
2. Real headline today: Nobel Laureates Scholes, Stiglitz Predict Slowdown; Goldman Sees Recession. You been to the grocery store, the gas station or Wall Street itself lately? Did you look at that chart of spiking tech inventories I just showed? You realize when things are finally better and stocks are far off their bottoms, these same Nobel Laureates will be quoted telling you that they think things are finally going to be okay?
3. So I get this little Madden Foldout of my Rolling Stone magazine this morning. I can’t decide if it’s sheer genius or exactly what’s wrong with our country that they can figure out how to advertise the NFL, ERTS, Sprint, NBC, NFL.com, NFL Network, Coors Light, GMC, Madden 09, Pepsi, the NFL Players’ Association, Keith Urban and Gibson Les Paul all on one page!
August 21, 2008 2:38PM
By Cody Willard
Today’s sign that the investment banking and hedge fund worlds are in full secular decline — you think they’d be blasting people like me with emails like this a week before the event if biz were fine? I don’t:
Currently we have three remaining options on a first come/first served basis available until August 29th:
1. Cocktail Reception Sponsor ($20,000): Your organization is presented as the exclusive sponsor of the cocktail reception.
2. Meal Sponsor ($15,000): Your organization is presented as the exclusive sponsor of the breakfast, the lunch, or a coffee break.
3. Keynote Introduction Sponsor ($10,000): A senior executive from your organization introduces one of our keynote speakers (based on availability).
Each of these options include additional benefits: 1 attendee pass, signage on the website, at the venue, and in the event program; and the list of attendees’ contact details.
Given the audience of 130-150 investment professionals from endowments, foundations, and pension funds, we feel that this could be a good opportunity for you. See below for the list of keynote speakers and a sample of confirmed attendees. If would like to reserve one of the options above, please let know by August 29.
Woohoo, for only $20,000 I can have a banner in a hotel as 130 panicked Wall Streeters sip free Grey Goose and pretend they don’t care that it’s free. Wall Street has imploded before our eyes, and the cyclical decline ongoing in the economy isn’t gonna help. I do expect we’re headed to DJIA 12,000 before 11,000…but we’re headed to a ten-handle as the valuations in the market come down on lower earnings expectations and more economic malaise continues.
August 20, 2008 4:55PM
By Cody Willard
1. “Bizarre” Ain’t Good
2. Temporarily Vicious
3. Sentimental Rally Ahead
1. Condo Rice dismissively says the Russian reaction to our signed missile deal with Poland was “bizarre”. Uh, isn’t “bizarre” the worst case scenario when it comes to geopolitical actions?
2. There’s a new less-global economy and society that we’ve entered into as we enter this worsening recession. Trade was already going to be hurt by the economic downturn…the virtuous cycle of the last 25 years has indeed (as we’ve been telling you!) at least temporarily turned vicious.
3. Sentiment is decidedly negative out there right now. The market’s are oversold, they’ve been trashed and we keep hearing about the potential of more disaster. I expect we’ll see the DJIA back above 12,000 before we see it below 11,000. Though I do expect we’ll see the 10-handle sometime after that rally.
August 19, 2008 4:00PM
By Cody Willard
1. Trade-able Rally Cometh
2. Obama Energy Hypocrisy
3. McCain Energy Hypocrisy
1. I’ve been saying for weeks that the way to trade this market is…er, had been to short the rallies. Sentiment is awfully negative out there right now and that means shorting rallies isn’t such a good idea right now…watch for a big countertrend rally of 5-10% in the next few weeks.
2. Energy and gas companies get, by Obama’s camp’s own admission, at least $13 billion of federal government “giveaways” every year. So what does Obama’s camp propose? How about hundreds of billions of government “giveaways” to energy and gas companies as long as they’ll try to develop new technologies. Why do I always feel like I’m the only one seeing this obvious circular logic this way?
3. And McCain? He wants to keep giving away those 13 billion of your tax dollars and also a bunch more, newer and different incentives for the oil and energy companies. We haven’t had a free market for energy in this country or anywhere else on this planet for years…and I’m sick of supporting these companies with my wallet both at the pump, at the meter and with my tax dollars.
August 18, 2008 11:54AM
By Cody Willard
Here is the first of my Four No Brainer Trades for the end of the first decade of the 21st century.
1. Bet on higher rates.
We’ve gone from a glut of capital and liquidity to a shortage. What happens when supply dries up and demand continues? Prices rise.
The supply of capital has clearly dried up in this country, but people and companies still very much need short-term and long-term capital. So the price of capital will rise. That means higher rates. People and companies have been willing to lend money at almost no interest…that’s over.
Remember when a struggling GM could tap the money markets for tens of billions in very low-rate short-term financing a couple years ago? Capital is now so scarce that GM (as well as Ford, Chrysler, and so on) won’t even offer leases to their customers anymore. The repackaging of securitization of all these mortgages, leases, credit cards, etc are rippling around the globe and making people and companies realize that their assets weren’t worth as much as they thought they were since the risk on not being paid back is actually much more severe than they realized.
I’m often asked how a stronger or weaker dollar would affect this analysis for higher rates — the short answer is that it won’t. The globalization that we’ve just gone through has interconnected all of our central banks and our currencies to the point that we now, at least for the time being, have a de facto one world fiat currency. That means higher rates the world over — not just in the US. The glut of capital that just dried up and turned to shortage is a global phenomenon. Certainly the relative value of the dollar vs. the Euro and/or the Yen will impact how high rates in this country go — the magnitude of the move, not the move itself. Higher rates await the US and the world over the next couple years.
Come back tomorrow for part 2.
PS. The August edition of The Cody Report will be published Wednesday. Sign up now to receive to get my latest and greatest stock picks.
