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The Cody Blog: Cody on Google in the Hollywood Reporter

Wednesday, February 01, 2006

Cody on Google in the Hollywood Reporter

Surging Q4 not enough for Google

by Paul Bond

..."Stepping back from the free-for-all pile-on with the stock down huge because the results weren't good enough, it was yet another amazing quarter of huge growth for this, the fastest-growing company in the history of the planet," said Cody Willard, a hedge fund manager specializing in technology investments. "I plan to hold my Google, which I've owned since the day it went public, regardless of what the stock does tomorrow." ...

Sigh.

posted by Cody Willard at 2/01/2006 08:45:00 AM

7 Comments:

Anonymous Anonymous said...

I am posting this comment very reluctantly because I know you will disagree with me. I find the recent hype about GOOG, AAPL and many momentum stocks absurd and downright irresponsible on part of ALLanalysts and people like Cramer. Telling people to buy GOOG, or any stock for that matter, right before the earnings report is more like gambling with the same odds found in Las Vegas. Cramer has reduced investments from a serious business to media circus and a joke on his TV show. The fact that every time he hypes a stock, it jumps up 5-7 points and he calculates his performance on his recommendations on the prior day's close is appalling. One has only to read the posts by readers on his blog to know that he is not teaching a damn thing to these completely clueless crowd. They are like those pigeons in a park waiting for him to throw them some bread crumbs. The end result is, every inexperienced person thinks the only way to make money is to buy mo mo stocks, which is so far from the truth. The best way to make huge amounts, and I do mean HUGE amounts of money, is to buy lower/ controlled risk stocks and take a meaningful position. For Cramer to recommend buying SLB after it makes a parabolic move is irresponsible. I remember when I started accumulating energy in early Dec, after the group showed clear signs of bottoming, all comments on RM and the media was about oil/ gas prices going down and no one was recommending buying the group even though the risk at that time was clearly controllable. It may seem like I am stating this after the fact, but the only reason I did not/ do not mention my market/ sector views to you anymore is because in the past you have been very sarcastic about it even though I have been accurate. But you can check with Helene Meisler or I can e-mail my old message to Helene sent in Dec about energy. Where was Cramer then? Furthermore, for Cramer to compare the 17% decline in GT with 10% of GOOG and justify GOOG is absurd. Money managers may get paid by % performance ,and majority will get paid even if they loose money for their clients, but if you are an ordinary investor who owned GOOG prior to earnings, based on several buy before earnings siren calls from analysts, you are sitting with a $42,000 loss on 1000 shares of GOOG vs. if one owned 1000 shares of GT they would have a $3,260 loss. This is REAL money for individuals; money which can pay bills. $3,000 can be easily made up by one prudent trade. It will be harder for an inexperienced investor to make up a $42,000 loss unless they get lucky with another mo mo name. Besides GOOG is not done going down IMHO. The bottom line is, investing is not a game and for everyone to trivialize it and turn it into a media circus for personal fame/ gain is irresponsible to put it mildly. For retail investors to blindly follow such hype and advice which they do not fully comprehend is downright stupid. As my idol Einstein said "Only two things are infinite, the universe and human stupidity, and I am not sure about the former." The only people who benefit from such hype and frenzy are experienced traders/ investors such as myself. Before you ask me where I was when GOOG was at 90 or 480, as you did in RM, I provide free advice to people I know and they all bought GOOG on the IPO and added at various times subsequently. They all sold at 450 when I told them that the hyperbole barometer was at extreme when I saw articles saying GOOG at 1000? comparing it with Berkshire. As good as the GOOG story is, experience has taught me when media frenzy is at extreme. Now that was DEJA VU! Btw, I provide free advice because I am confident that on any given day I can go in the market and take money out, hence I do not feel the need to charge others for advice. In all this hype about tech, metals, oil etc, everyone is missing the clear signal from the market that it is topping out here and IMHO you are going to see volatility jump to 17 range in the next couple of months. Only time will tell. The difference is I am experienced enough to see the signs if I am wrong and to reverse my positions- right now I don't see that happening but flexibility, patience and humility are qualities required for successful trading/ investing besides talent and a cool head.

Disclosure: Short GOOG (since 470), AAPL (84), QQQQ (43) and many other highfliers, long other stocks that no one is focused on.

Good luck with your trading.
MV

2/01/2006 12:48:00 PM  
Anonymous Anonymous said...

Dear Anon,
I once was one of those ¨pigeons in the park¨, and were it not for Realmoney the web site that Jim Cramer co founded,I beleive I would still be fumbling around in the markets.Several years ago I wrote a scathing email to Cody about using that ¨obnoxious,condescending ,loud Mr Cramer as a contrary indicator.¨The next day Cody published a brief little comment that he couldn't understand why so many Real money readers were so negative on Cramer considering that they probably would be no Real money web site were it not for him.To be honest I never watch CNBC,prefer to watch Bloomberg TV from my PC,I have seen a whole of 2 minutes of Mad Money and that was a video clip on the street.com.I never buy or sell anything recomended by Cramer because he can change his mind at any moment and I might not know about it,which is an excelent reason not to trade based purely on some elses ideas.But his web site made me grow up fast as a trader,learning from others experience and aproach instead of draw downs on my account.Point of all this ? Well Cramers'not all bad and it's up to indidual pigeons to take the good and leave the bad,appreciate the analytical methodology behind stock picking don't simply buy the stock,or for that matter don't buy it at all.

Oh and BTW I don't know how many¨pigeons¨ have 400 000 dollars to place on a single trade of Google.Just a thought as a former pigeon

2/01/2006 04:29:00 PM  
Anonymous Anonymous said...

Precisely my point about trading blindly vs. making informed decisions, especially when you are trading against pros with deep pockets like Cramer or myself who have more than 15-20 years working on Wall Street managing billions of dollars. The loss calculation and the point I am making is still valid whether you are talking about 100 shares of GOOG vs. 100 sharesof GT. Most people on his blog do not have the capital to play in any meaningful way with stocks like GOOG. My point is that people with limited capital can actually make more money by taking lower/calculated risk and betting on more shares and they can do this on their own. The market is not made of only a few mo mo stocks. I have demonstrated this to people I know countless times. It is actually pretty easy to make money in the market and I know people are incredulous when I make that statement until I demonstrate to them the safer and more prudent ways. I am glad you have learned to use your brain vs. following blindly, it is to your credit. As the famous Jesse Livermore said "don't take tips from anyone but learn from observation and experience". However, most of his readers do not take the trouble that you have taken, which is exactly why I feel it places a greater responsibility on the so called experts in the media light to offer more sensible advice vs. hype. More prudent investment approach vs. gambling prior to earnings reports. For the sake of all involved, I hope GOOG gets added to S&P 500 so that the craziness, hype and euphoria can return to the name and everyone is happy. As far as your comment about subscribing to RM, the only reason I do it is for Helene's column. Everything else to me is fluff and pure entertainment during my down time, which I do use occasionally as a contra indication. As a matter of fact, just today I told Helene to give me heads up if she plans to stop writing for RM because that is when I will stop my subscription in a heart beat! One last point I will make is that do not be fooled that just because someone appears on TV/ print that they are the best. Some of the brightest managers I have met and respect tremendously have better track record than Cramer's and have never appeared on TV. There are many others out there who are freely willing to share the so called secrets of investing withoutthe hype. It would be too easy to start a newsletter and ask for 1000's of dollars in fees, especially if one has performance that is about 100% better than Cramer's. Not everyone in our field is looking for fame and glory, some of us actually do care if the advice we give makes money for the people we talk to. Cramer may well have good intentions and I know for a fact that he is a very smart man, but his TV show is nothing but a media circus, period. His performance on Action Alert speaks for itself...abysmal. THis is my final post. Good luck in your trading DT.
MV

2/01/2006 05:27:00 PM  
Anonymous Anonymous said...

hmmm... so I could lose 41m and still have a position worth 400m or lose only 3m and have a position worth 15.5m. I'd rather lose the 41m and still have 400m. That all sounds stupid but that is the same logic anonymous was using! Point being: YOU HAVE TO USE PERCENTAGES. C'mon mr wall street experienced trader. you make a lot of good points but that comparison was just ridiculously poor and ilogical.

2/01/2006 09:24:00 PM  
Anonymous Anonymous said...

I don't think you got my point at all or perhaps I did not communicate it properly. My point, which btw, is made based on hundreds of people I talk to and help with their very limited capital and know most of their attraction to greed and quick profits but huge aversion and inablility to withstand losses, is that if you only have say $40k to invest and you gamble it all on GOOG, you are sitting on a loss of $3-4,000 which many people with limited capital do not like; forget $42,000 loss on 1000 shares, which is beyond most average working class Americans, heck they can buy a low end, no frills, BMW for that. But if you take that 40K and diversify it in several lower/ controlled risk stocks, then if you get a hit like say GT which is about say $1,560 position on 100 shares with a $316 or rounding 400 loss, it is far more managable for an average investor and easier to recoup than their betting the farm on one position of GOOG. Everyone thinks they have to hit home runs with mo mo stocks to get rich in the long run, and the media does nothing to negate that myth, but that does not make it true. Mo is wonderful while it is working for you but a bitch when you are caught leaning the wrong way. Hitting singles consistently will get you there far more safetly without jeopardizing your capital. Of course, there is no thrill in trading steady stocks but that is my point that investing is not a game/ gambling. If one likes to bang keys on a PC and get an adrenalin pump, buy a video game. Making money CONSISTENTLY and with HIGH success ratio requires work and is boring as hell, like any other job. I try to teach people to make money consistently and not rely on pure momentum. As they get better and richer, they are able to allocate a small percentage to higher risk stocks. I have heard a lot of horror stories since 2000 when people lost a lot of money playing mo mo stocks including stories from at least two people about how their loved ones committed suicide because they bet $100,000 or more on stocks like BRCD (which was the poster mo stock then) and lost their business and homes. If I have an investor with only 40K, I would rather have them get one hit by GT of $400 and have balance of their capital in 10 other positions with positive returns. It is irrelevant to me if you or the entire Wall Street disagrees with me. I know my performance speaks for itself and the people I have helped are happy; I was up 62% last year in all of my personal trading accounts, and I have several of them. Compare that to Cramer's measly what is it 7% or so return on Action Alert which btw he charges the readers for that. I believe in what Mark Twain said "It is better to deserve honors and not have them than to have them and not to deserve them". Enough of this topic. I have to go back to work....you know that very exciting business of sifting through thousands of charts every night to get an idea of the market/ sector/ stocks. Yeah very thrilling biz this trading/ investment stuff! Peace and happy trading to all.

2/01/2006 11:20:00 PM  
Anonymous Anonymous said...

62% in all your trading accounts? Hitting singles all the way? With all due respect, it is hard to believe you earned that return without taking on some serious risk. Sounds like a big bet on the energy sector that payed off. It is hard to believe you were properly diversified as you would advise others to be. In defense, of Cramer (whose show is a bit of a circus act), there is a lot to be said for accountability which he has with the Action Alerts portfolio. I subscribe to it as a source of ideas. I don't follow it exactly but use it as a resource. 7% return with the S&P up 3% and the Dow flat to down is NOT a bad performance. The biggest diservice you could do to the people you are advising is mock 7%. You are screwing up their expectations which WILL lead for them to reach for GOOG. As far as my man Cody goes, he writes a news letter called the Teleconomist. Expect him to talk tech and telecom. It's what he does. Serious conratulations on your +60% there is certainly nothing boring about that. I'd watch paint dry for 60% and be excited. Take care.

2/02/2006 08:31:00 AM  
Anonymous Anonymous said...

“sounds like..” “hard to believe” a whole lot of conclusions reached based on zero facts. Why not get the facts straight first then you can distort them all you want and accuse me of doing a disservice ;). For me to outline how I did it/ do it would take pages and hours to explain and I don’t think Cody wants this dragged on forever, heck I surely don’t, got better things to do. I posted my performance because it is impossible for me to post the 100+ performances of the people I help. Yeah, I spend HOURS of my time with each person and TEACH them how to trade/ invest vs. throwing them a fish everyday. When I do help them to structure their portfolios, it is based on each individual person’s economic means, psychological/ risk profile etc. None of the portfolios are identical. It may vary from my doctor, who btw, had better performance than mine albeit on a smaller capital base but selected some very sweet stocks that I missed, to the janitor of my building who had such limited capital that he could buy only two stocks. He came to me, after doing his homework as I asked him to, with a list of 10 and asked to help him pick two. His holdings last year: PZZA and DBRN, stocks he could relate to and follow easily, check out that performance. He was thrilled to bits and sold on his own at the end of last year saying he was happy with the money he made. I do agree with Cramer and give him kudos for accountability. If I were in such a public arena, I would do so too, managers have to. My clients have transparency but not overly so because my whole point is to encourage independent thinking. They come to me if they need advice and I keep them posted of my broad market/ sector calls, which frankly is a major contributor to my success and no, not all was from energy sector. I am not a gambling person, so I can only relay what one client said about my approach, which is not to play every hand but to wait for the right hand in poker and then make meaningful bets that can make more than a tiny contribution. Btw, as an ex-manager, getting 25% on $2.5 billion in a difficult market, which is not that easy, easily provides experience to get high returns on multiples of tens of millions. Heck, I don’t have $2.5 billion! So relatively my capital, in double digit millions, is chump change to me and not that hard to churn out good performance. It is all about knowing when to jump in, what to do, calculating/ controlling the risk and adjusting the share sizes. No biggie. As far as comparing returns with S&P and being happy with comparison with some benchmark, you are welcome to that. Cody knows my position about “relative to bench mark performance”. So if the S&P is down 25%, and Cramer is down 15% you would be happy losing only 15% of your capital Another of those BS concept force fed over years to investors by Wall Street and used to brain wash them to accept mediocre results. Glad you are okay with that. Also, I don’t think I said NEVER to buy GOOG. Read my first post and my positions. Finally, and I do MEAN it now, (you can come back and criticize me/ accuse me all you want I am done with this stupid topic) here is the comment on RM made by Marcin “Congrats to Rev….more impressive was his decision to book a bunch of profits yesterday! This trade alone was worth this year’s subscription price to RM”. Revs post appeared at 1:36 pm on 2/01/06. Check out my post on the market at 12:48 pm on 2/01/06 on the Cody blog. If you look closely at my short positions, my clients were forewarned oh about Jan 11, 12 time frame and they did not pay a dime!!!! I am totally okay with that! That is the best I can do in this very limited forum. I wish you all good luck.

2/02/2006 01:25:00 PM  

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