Here are the highlights from this week’s Live Q&A chat from TradingWithCody.com.
Q. The market and pundits pull you in so many conflicting directions. How do you prepare your mind for trading so you can think clearly? Do you meditate? Do you surround yourself with calming influences such as your home’s decor and where you live?
A. I used to run a hedge fund from a tiny cramped office in a high rise on the 40th floor in midtown Manhattan and I even spent more than a few nights in that space having never left the office after a horrible day or before a big event. I was focused probably 90-100 hours a week on trying gain an edge in performance for my hedge fund and I was starting some Internet companies plus teaching at Seton Hall once a week and all the while trying to raise more money for the hedge fund. At the same period, I lived in several different apartments and was in several tumultuous, and some might say destructive, relationships. For five years each and every single day that the market was open, I was in front of my computer. I puked five or six mornings first thing when I’d wake up. My parents were rightly worried about me and my health.
I now live on my dream ranch in a barn that I converted into a Soho-style loft apartment with a 360 degree view of nature and trees (although some of that is burned and recuperating after the recent forest fire that tore through here). Deer and elk wander through my backyard at any given time of any given day or the year. I garden now and eat three square meals a day and rarely am stressed enough to puke, although since I’ve started therapy a few weeks ago to deal with my 9/11 PTSD, I’ve been sick and sleepless a little bit. I guess my point is that even though I definitely still stress out and deal with the same emotions of greed and fear that you and everybody else in the markets do on a daily basis, the bar of what’s “stressful” for me is set very high given my past hectic careers, and working/writing/living here in New Mexico and managing my own money and not managing other people’s money or having to be made up and bubbly for a TV show every single day of the week.
Each person has their own levers that cause their own levels of stress to rise and I certainly still have mine. And I definitely worry about performing for my subscribers and making sure my own portfolio is kicking butt for the long-term, and that will never go away. I suggest doing yoga, basketball, tennis, gardening, hiking, music or anything else to get your mind off your money and the world at least a little bit every day.
Thanks for the perspective and suggestions! Glad to see you’re living a much better life now.
Q. Cody, the markets seemed to have stalled here or making abase or top at this S&P 1390-1410 level. What’s your gut say here: breakout or down?
A. You saw what I wrote earlier about how this range, around 1400 in the S&P 500 as you note, will be resistance unless/until it becomes support. That is, the market’s next 5% move will likely be self-fulfilling. A breakout with volume and gusto of just 1-2% from these current levels would likely pop us 5% and a reversal down another 1-2% from here would likely drop us 5% in a hurry. Feet to fire, I’d guess the next 5% move from here is higher, but I’ve been a net seller/hedger of my longs of late, because I’m not overly confident about that feet to fire guess.
Q. Cody, I’m nervous right now. September is a bad month, Europe is a big mess.
A. The time to sell is generally when you’re confident and the time to buy is usually when you’re worried.
Q. What do you think of a GS rec to buy spy 137 puts expiring after the Sept 12 German date?
A. I think any suggestion from GS that gets passed around the markets that blatantly wasn’t what it seems. In other words, Goldman’s got that message out there for the public and that means there’s a reason for them to do so and that reason isn’t because they want the general public to profit on the market’s next major move.
Q. Do you participate in any Angel Fund investing? As part of portfolio diversification, I’m joining one that invests in local enterprises, and wondered your opinion of such funds…
A. I like the idea of Angel Investing and I do some myself, but very judiciously and mostly I trade my expertise and time rather than outright money for a stake. As with all funds, most of it will depend on the competence/ethics of the manager.
I love the idea of doing a local-based Angel Fund and I might work off that idea in a few years to create something for my hometown here in Lincoln County, NM. I used to finished every single Happy Hour show on Fox with my saying, “Support your local business.”
Q: Hi Cody, I was hoping you could answer this question for tomorrow’s Q&A… What’s your opinion on the housing market now? I know you’ve been saying that local real estate is a good investment again, but with real estate rebounding this year (quite substantially in some areas), I was wondering if I could get your take on the overall housing market currently. Do you think there’s more room to run or you wouldn’t chase right now? Thanks!
A: If the real estate is trading at a discount of 50% or more from where it was “reasonably” valued at the peak in 2005-2007, then yes, I’d still generally think it’s worth looking into as a long-term investment. But, in areas where prices are back within 10-20% of their highs, I’d steer clear for now as I do think there will be another downturn in many areas that haven’t truly popped the real estate bubble from the last thirty years yet. Be very careful about clearing your titles too, as the banks and their fraud upon the courts via robosigning and other past illegal title transfers could definitely come back to haunt you some day.
Also, anybody interested in going in with me on buying a Frank Lloyd Wright house that’s up for sale right now?
And if you like this type of Q&A format, be sure to check out my new book, “Everything You Need to Know About Investing“ currently the #1 best-selling Investment Education book at Amazon.
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 Amazon. Follow Cody on Twitter at twitter.com/codywillard. Cody’s #1 best-selling Amazon book, “Everything You Need to Know About Investing,”, is available in digital and in paperback.