Here’s the transcript from this week’s Livestream Q&A Chat. You can watch a replay of this Livestream Q&A Chat on Facebook.
Cody: Alright, welcome everybody to another episode of Cody Underground, Trading With Cody live Q & A. I’ve got all the answers. Let’s get rich quick, right now everybody. Buy cryptos! Just kidding, just kidding. No get rich quick schemes. They don’t work, they don’t work.
Let’s roll up our sleeves, so to speak. Do some hard work. Analyze stocks, bonds, economies, cryptos.
Cryptos are crashing. That’s what I wrote about for Trading With Cody subscribers this morning. I find it interesting that so many of my subscribers are very interested in cryptocurrencies and so is the general public. And yet, I get in discussions with any cryptocurrency person, there’s nobody who’s in cryptos already who’s bearish. Except for me — I’ve been cryptocurrencies, I’ve been in bitcoin for five years, but I’m bearish and I’ve been selling a lot, most of my bitcoins. Most people who own bitcoin for long time or have been buying it recently or in any cryptos at all, they are more bullish on cryptos right now than ever. Everybody right now is telling me that they’re about to go up a bunch. Everybody’s telling me that “the general public is not yet in cryptocurrencies”. Or that “the big money is not yet in cryptocurrencies”. But everybody, the general public Joe Person who is asking me about cryptos probably is already in it a little bit.
And I think that’s my point. That short term, I don’t like cryptos. Long term, I do. I do think block chain and cryptocurrencies have a huge future creating trillions of dollars of economies. I always come back to, if you’re in Venezuela or Iraq, you have spent your life being screwed by hyperinflation and a constantly devalued currency. That’s true in most any developing economy — and we’re talking about more than half the world’s population, four or five billion people on this planet who have spent their entire lives trying to fight fiat currency hyperinflation, devaluation, and governments screwing them out of every dollar of potential value they might have earned.
And all of those billions of people want and need a non-fiat currency. A fiat currency is fake. Fiat means it’s just backed by words. Goodwill. And in the United States we have the strongest relative fiat currency of all the fiat currencies — in large part because we are the petro dollar. So if you want to buy oil from Saudi Arabia or most any other country you have to buy dollars, you have to convert your currency to dollars and then give those dollars to Saudi Arabia or whatever country is selling you that oil. In large parat because of that we have not had hyperinflation since World War II. Certainly it’s not because the Federal Reserve and the Republican Democrat regime haven’t tried to steal every dollar of value through fiat currency tricks and/or bailouts and/or tax policies.
But the dollar relative to all the other fiat currencies around the world has maintained its value.
Meanwhile, cryptocurrencies provide an currency avenue that’s not gold or some physical asset, but that is at least truly not fiat. You know how much total float there are of, for example, say bitcoin. You know how many there will be. And for you to be able to store value of your earnings and savings and investments in a currency that is not devalued through float trickery and fiat games, there is demand for that.
Billions of people want that. But at this time and place, 90% plus of the cryptocurrencies that you can see on coinmarketcap.com, the top 100 largest market cap cryptocurrencies — I’ll bet 90% plus go to zero in the next two years. Many of them are frauds. Many of them are just dumb. Many of them are great ideas that are too early. Many of them just don’t have the backing that they’ll need. And many of them will not hit critical mass. And many of them will be beaten by either bitcoin or some other cryptocurrency that has already established some critical mass.
And just as likely, there could be a new cryptocurrency that’s not even available yet, that hasn’t even been created yet, that ends up dominating. The dot-coms were going public and raising billions of dollars in 98, 99, 2000. Google didn’t come public until 2004. So, I would expect sometime in the next five to ten years there is a Google of cryptocurrencies that comes public.
And I have been buying just recently, a new cryptocurrency that I have been calling potentially “The Amazon of cryptocurrencies”. Amazon bottomed a year before the dot-com bubble finished blowing itself up. So, maybe one or two cryptocurrencies out there right now might be bottling out of hundreds. And maybe a few of them will survive and be worth a lot more.
But, I think bitcoin will see $1,000 before it see $100,000. I’d even be surprised if bitcoin’s sees $1,000 before it sees $10,000 again. But I do expect, that bitcoin, if it were to become the defacto standard cryptocurrency of the world (which is somewhat likely), would be worth much more than $10,000 each. Whatever cryptocurrencies do sort of truly hit critical mass and become widely accepted around the world and widely held around the world be worth trillions, maybe 2 or 3 of them could hit that kind of value.
Market cap of bitcoin right now is probably about $100,000,000,000. But, more crash is coming first I do believe. Right now, especially in cryptos, greed rules. You should be fearful when greed rules.
Facebook follower question: Cody, people need a stable currency whose value is steady and not driven to huge bubble highs and correspondingly huge crashes in nearly purely speculative market, in a nearly purely speculative market.
Cody: This is from a friend and well respected colleague of mine who’s maybe 20 years older than me and love gold I think. Not cryptos. And I’m sorry to pop your bubble Hudson, we’re going to have to agree to disagree here.
Let me be clear, I agree with you. The world needs a stable currency whose value’s not driven to huge bubble highs and correspondingly huge crashes. You can’t control it though. There are going to be bubbles and crashes in currencies like there are in stocks. Like there is in gold. Has been in the past and there will be again. Bubbles and crashes and manias happen. Let’s just be realistic.
That doesn’t mean that cryptocurrencies have failed. That just because they’ve bubbled and now we’re crashing. Just like it didn’t mean that the dot-com internet revolution failed just because trillions of dollars were raised and then lost in that bubble and crash. You now have Amazon and Apple and Google and Facebook, worth more than $2 trillion alone. Just four companies. Same will happen for cryptocurrencies Hudson. You’re looking at a snapshot in time. Five years from now there will be more stable cryptocurrency markets.
Facebook friend follow up: The US dollar’s backed by the full faith and credit of the US government.” As he says. “Which now is the guns and bombs of the military industrial complex. If petro dollars go away then the US dollar’s toilet paper. That’s why the US military executes Saudi Arabian foreign policy.
Cody: Let’s temper that a little bit. But I think there’s some very valid points and arguments being made there.
Facebook friend follow-up: If you want to make money on cryptos, you want to have quick access to price info I’ve never been able to figure out how to do this. I see cryptos as too too volatile, thus too risky…..
Cody: Hudson, you’re losing track of what we’re discussing here. I’m not telling people to make money on cryptos. I am pointing out the fact that there is a huge demand for non-fiat currencies. There is a trillion dollar opportunity for a currency to develop that allows people around the world to store value. But it will have to be widely accepted. It will have to hit critical mass. It will have to go through bubbles and manias to get to that point. Has nothing to do with momentum. Has nothing to do with gambling or speculating per se. It’s an economic phenomenon that needs to happen.
“You want to have quick access to price info.” Correct. And you will. 2018? No. In 2028, whatever the widely accepted cryptocurrency slash currencies of the world are, you will have whatever it is you’re asking. Quick access to price info. Be able to get in and out really quick too. And not have to wait hours to see if a trade went through. And if the market is honest. Not that Wall Street is a solution to any of that by any means. Greed, Hudson.
“I’ve never been able to figure out how to do this. I see cryptos as too volatile, thus too risky.” Well you’re looking at it in 2018 at a snapshot. It is going to revolutionize currencies. It is going to revolutionize economies. It’s going to help poor people not get screwed by their governments.
Facebook friend question: How can Americans help the bubbles. How can Americans keep the bubbles from crashing their portfolios?
Cody: Be careful. You don’t have to buy cryptocurrencies ever. You didn’t have to buy dot-com stocks. You don’t have to be buying stocks right now. Cash, cash, cash.
I offered a Trading With Cody lifetime subscription recently and had quite a few people take me up on it and I took every dollar that I made off of that and put it in savings right now. I still own stocks and I might buy some more. I’ve got money in stock account. But I’ve raised cash in that stock account in the last year or two. And in the last month or two. And that is really the only way to avoid bubbles and crashes.
And even then you are always, no matter if you’re using US dollars or bitcoins or gold, whatever you are storing your wealth in, you are whim to market bubbles, crashes, and manias. Can’t avoid it. But you can be careful. And you can be fearful when others are greedy. Like right now in cryptocurrencies. People are greedy right now. Be fearful.
Subscriber question: Cody you recently mentioned you might nibble some more of the cryptocurrency that you just recently bought at XYZ level. It has dropped below XYZ level. Are you going to buy more or wait little bit?
I might nibble a little more, probably this week. Yeah. I’ll buy a little into the crash. But again I’m going to buy maybe 10% as much of that cryptocurrency as I eventually will want to own. Just, and I’m, if it crashes another 50% I’m okay with that. I’ll do another tranche at that level. And if it crashes 9% I’ll probably do it there too.
But I’ll also be paying attention to whether the cryptocurrency that I’m talking about, that I’ve been investing in recently, is catching critical mass. That it is gaining wide acceptance. That it does have momentum. And I don’t mean the stock chart. I don’t mean the price chart. You can ignore price charts, volumes, Elliott charts, rigatoni islands, Gilligan islands. You can ignore all technical analysis, especially in cryptocurrencies. There’s, what are you going off of, your gut?
And beyond that, do you really think in the grand scheme of capitalism and trillions of dollars flowing around the globe and billions of people yearning for wealth and value and greed, that your special way of drawing lines on past price performance and volume is going to magically reward you long term? Create value and wealth in your life by drawing lines on things you can print out and draw lines on. No, I do not believe so. I don’t know anyone who long term makes money wholly dependent upon technical analysis. I think technical analysis is probably a waste of most people’s time and energy and brain cycles. That’s just me though.
What’s interesting is either YouTube or Facebook has me flipped. My parts on the right side on YouTube, left side on Facebook. Must be on my right side though, cause that’s the one that, my right had is finding the part. Blow your mind.
When I was on TV I would always talk about, I had to keep track of 3 or 4 different realities because there’s a reality of actually being on air and the things you say on air and having to remember that. Then there’s reality of like what you’re talking to your producer during the commercial break. And then there’s a normal reality that engaged with other people in general in society and then I guess there is sort of that internal reality of your own existence. Whoa blow your mind. I’m left and right at the same time on two different platforms.
Hey, but YouTube’s backwards. ydoC htiW gnidarT. Also known as Trading With Cody if it’s read the right direction.
Oooh, there’s now a question from a Trading With Cody subscriber that was just now posted on Facebook. So now we’ve got three platforms and I’m getting confused on my own reality.
Here’s a question. Hold on to your hats everybody.
Subscriber: Yeah I’m just curious, pull back on Solar Edge just because it’s gone down so much and it hit $55 about when you were saying you would probably buy more.
Cody: I wouldn’t shy away from buying Solar Edge at $55, but you’ve got to remember, I mean, I bought a bunch of this stock when it was at $14. And I think I even did a few nibbles even below $14 when it fell a little bit after we initially bought it. Now it ran all the way to $70. I trimmed a little bit. Anyway, for me personally, I’ve got other stocks I’ll probably buy before Solar Edge personally. But, yeah, I think it’s probably a decent trade, a good long term investment here at $55. I do think Solar Edge, the digital technology that they use versus analog that most existing solar panels use provides a lot more upside, potentially.
Subscriber: I know you don’t have a crystal ball, but do you see other states following too like California has, requiring solar panels on new houses.
Cody: Look, I own two solar stocks and I don’t think either one depends on more or less subsidies from Republican Democrat regimes and other developed economy regimes around the world in the EU and their laws forcing solar demand. Such subsidies and forced demand and other government protections around the world certainly boost near term results and provide welfare for shareholders like you and I. But the grand scheme of things, I would prefer there be no subsidies. I can’t imagine that a bunch more states could possibly follow in California’s footsteps. California is per capita very wealthy compared to say Arizona or New Mexico. And obviously forget per capita — just gross economy, California’s what like the 5th largest in the world or something.
So, no, I don’t expect that to be a trend among states and frankly I would hope and expect there’s pushback against requirements like that. I mean that’s just typical lobbying trying to get more welfare for a commercial industry that’s being greedy. And we’re benefiting because we own solar stocks as that happens. But come on, let’s let freedom reign, man, freedom.
Subscriber: Cody, SEDG. Nibble more at this level? Solar Edge.
Cody: Let’s actually make a point about that. That’s, it underscores 2 things. Number 1 that people aren’t scared at all right now. There is no fear. People want and are desperate for ideas to put their money to work in. And, so, I don’t know, I mean, I just, look I don’t think you gotta have to rush into Solar Edge or something. I think it’s a great investment. If you don’t own any, nibble a little bit. But there’s no rush, let’s just slow down.
Let’s see, I bet there’s more questions on Solar Edge before this call is over.
There it is. I scrolled up 2 hours ago…
Subscriber: Cody I just bought more Solar Edge. Or no, he says, “Hi I just bought more Solar Edge. Cody had a price of 55-60 for some nibble so, some nibbling I’ve done.”
Cody: Now there I think that makes some sense, right? And, here’s another question,
Subscriber: Cody, knowing what’s going on with Solar Edge, is it a good time to buy.
Cody: Look, Solar Edge, the point I’m trying to make is that Solar Edge went from 14 to 70 in a year after we bought it. Maybe 16 months or something. And I don’t think that 55 is suddenly a screaming great buy. From 50 to 70 is sort of the same valuation compared to 14. And trying to time it, I have no idea. And there’s always the potential that headline risk. That the Republican Democrat regime or some other government does something with solar subsidies that isn’t positive. That the market has been pricing in and then you get hit and that would truly be a great time to buy.
But, it’s not go from 14 to 70 in a heartbeat and it’s, I’m sure it’s estimates also went from like 50 cents to $3 annualized earnings power. And now it’s modeling another 30, 40% growth from there. I still think it’s a good buy or I’d sell all of it. But we don’t have to rush and everybody is freaking out that Solar Edge went from 70 to 55 in the last four or five days when it’s gone from 14 to 70 in the last 16 months. So you shouldn’t be surprised if there’s volatility. And if you don’t own any, maybe nibble a little bit.
Questions, comments, chatroom. Discussion in the chatroom about whether the subscribers prefer the chat. Every other week I do this live stream and the other weeks I do in the chatroom itself. And lots of them love just the chat in the chatroom. Some of you love the live stream. We can both. We can have our cake and eat it too. I’ll try to do more live streams. I’ll try to do both. I’m in the chatroom most days. Most weekdays if I’m not traveling.
Subscriber: Cody, what’s going on with…Solar Edge.
Cody: Bingo. Someone’s paying attention over there. I hope you are. The guy asking the question, was no. Saneil, “What’s going on with Solar Edge? Solar Edge is crashing.”
No it’s not. It’s gone from $14 to $70 and now it’s at $55. Or is it down more than that right now? Let’s see. $56. It’s down 9% today. If you go look at the trade alert I most recently sent out about Solar Edge it was trimming some in anticipation that it could pull back. And that’s what’s happening.
Subscriber: I guess Verizon with its large installed base creating and all that sort of thing, but what about the debt load, is that an issue for you?
Cody: So the short answer is, I’ve learned. No, the short answer is no I’m not terribly worried about Verizon’s debt load. The long answer is that I have learned over the years that with cable providers and telephone service providers, because it is such a capital intensive business and whether it’s 5G or fiber optics or coaxial cable to your home or launching of satellites, those businesses are inherently capital intensive. And especially in years past when it was so heavily, it’s not like they’re not regulated now.
The point is that it costs so much money to invest and build all of that stuff that yeah they end up borrowing money. And the flip side of that investment is that these are purely recurring revenue models. Apple depends on people needing to replace an iPhone. If they hold onto their iPhone for 10 years, Apple doesn’t get that recurring revenue. Of course they get it on services side of business, which is what we’re talking about. Services. Telecom, cable, services. You pay a monthly subscription rate of hundreds of dollars. The pure margins on that are very high because the costs are sunk up front in building the networks that those revenues are generated upon.
I don’t like debt. I don’t like, I like very clean balance sheets. I like companies with a lot of financial flexibility. But, that is another lesson that I have learned over the last 20 years that has, it’s not as important as it was early in my career. The major publicly traded companies in our economy, many of them should have gone bankrupt in 2008, for example, but they were bailed out. And that will happen again. I don’t think that Verizon, I don’t think the debt load at Verizon is in any time in the next 5 or 10 years going to some how crush shareholders. That Verizon wouldn’t be able to refinance it.
But, if there were a financial crisis like in 2008 and if the banks were not bailed out, which I do not believe they should have, then Verizon wouldn’t be able to refinance some of that debt as it’s coming due. And Verizon’s shareholders might lose everything at that point. And I would be fine with all of that. I’d obviously tried to sell my Verizon before it went to zero if something like that were to come down the pike, but those are…for something like that to happen, you’re talking about a major financial crisis and I think the least of our concern is going to be Verizon’s stock price at that moment.
Now, yes it will be a concern and yes I hope I’d sell before something like that would happen, but it’s somewhat inconceivable to me that in the next 3 to 5 years that Verizon is at risk of going bankrupt cause they can’t refinance their debt or something. But in general, I much prefer a company like Apple was when I bought it which had no debt and lots of cash. Or Google or Facebook, which…
Facebook fan question: Cody, do you foresee any of those services becoming public utilities and traded that way?
Cody: You’re talking about telecom or cable, no. I do not believe that would happen anytime soon under a Republican Democrat regime. Before those would become public services, I would, if the banks screw around and end up in another financial crisis and come around begging for another bail out of trillions of dollars, I think they could end up being, I think they could end up being…I think banks could end up being utility type entities.
Subscriber: Cody I’ve been following the advances in genetic bioengineering science for the past several years and are keen on this technology as a futuristic means for addressing diseases having a genetic predilection. Would appreciate your thoughts on CRSP, EDIT, SGMO, NTLA. Thanks and really appreciate your guidance.
Cody: As anybody who knows me or is a subscriber to Trading With Cody or has ever Googled me knows (if you type in “Cody Willard,” I think the first suggestion is “Cody Willard daughter”), I have a daughter with genetic disorder called Trisomy 13.
I researched quite a bit on some of this CRISPR stuff and the genetic bioengineering sciences and technologies that are out there and developing and some of the companies that are in it when she was born.
I don’t know what it is, but part of me struggles with trying to figure out how to invest in that. It’s not like it’s unethical or something. But, I just, my brain has not done well trying to wrap around that industry and figuring out how to invest in it and make money in it. And it might be because it’s so personal and so I, it’s an interesting question. I haven’t even thought this through until I just got your question and trying to answer it. But, I’ve chosen to stick with what I know. And focus on app revolution, robotics revolution, artificial intelligence, voice revolution, internet, communications, political, geopolitical revolution.
I don’t have a good answer for you. I think there is an, some of those stocks are already through the roof and that also makes me just upset because I didn’t buy them, right. I mean, darn it. I had the opportunity, I was researching them, I should have pulled the trigger. But beyond that, I do think there’s a future of genetic bioengineering and I think children who are diagnosed with Trisomy 13 twenty years from now will have many more options to try to address it through genetic engineering than we do in 2018. And to wrap this back to stocks, Trading With Cody, and everything, let’s think about that.
In 20 years I expect genetic engineering to almost alleviate, if not wholly alleviate, genetic diseases like Trisomy 13. Think about what will happen in cryptocurrencies that have trillions of dollars pouring into them. You have billions of dollars pouring into bioengineering. You have trillions of dollars and in the long term allowing cryptocurrency, cryptocurrencies allowing people to keep value and wealth, prosperity in their own pockets will enable more investment in bioengineering. And that is a virtuous vision for the world and I hope that’s the one that we live through because there’s also threat of really bad, sad crashes and economic desperation. It matters.
Your vote matters. That’s why I tell you don’t vote for Republicans or Democrats because they’re creating problems that I think will cause crises and desperation long term. And I think there’s plenty of time to make a change and create crazy prosperity and wealth in our future for the world and other worlds. Let’s just say for humankind. Because I don’t think we’ll all be living here on Earth in 20 years either.
Thanks. Love. Peace. Happiness. Fight the powers.