The Cody Willard Show is my once weekly 45-50 minute live show that you can find on Facebook, YouTube, Twitch TV, Periscope, Twitter and elsewhere. We also publish it each week in podcast form on iTunes, Soundcloud and Stitcher. Here’s the Markets, Stocks and Cryptos portion of the transcript.
Chris: Cody’s Mailbag here. Here’s a question, Cody. “Cody, always appreciate that you let us in to hear your family history with Amaris. Heartfelt prayers. Seems like your 10-baggers were mostly bottom fishing after a market crash and not from buying at all-time highs like today. Stepping in now, it seems like an opportunity for far lower gains that would vanish and turn into losses with the next big plunge.” Thoughts?
Cody: Okay, we need to separate the markets from individual stocks. He’s asking about, last week in the show I talked about, it’s not too late to find new 10-baggers. 10-baggers is another term for something you invest and that goes up 1,000%. Actually, I think that technically a 10-bagger is when it goes up 900%, but whatever. The point being that it’s a stock that goes up nine or 10 times what you paid for it, and we’ve got several of those in the Trading with Cody portfolio right now and I have lots of new subscribers who are asking me, “How do we get the next 10-bagger?” I told you guys last week it doesn’t work like that, which is exactly what this guy is underscoring. It’s not like I can just instantly go, “Well, here’s a bunch of stocks that I think are going to go up 10-fold from the price they’re at, at this particular moment,” especially when the markets have already gone up so much like they have.
But that being say, he’s wrong that all of my 10-baggers were bought. Not all of my 10-baggers were bought during the crash. In fact, very few of them. Apple in October 2002. It’s not where I bought it. That was where the bottom was. I bought Apple in March 2003 when the NASDAQ had already bounced quite a bit off of its crashed lows in 2002. Google, I bought in 2004 when they came public, whatever year it came public, the day it came public, and the markets were not in crash mode at that point either. Another one more recently, say Axogen. We bought that two years ago when the markets were near all-time highs. I think the Dow was actually at an all-time high. Another one, Nvidia. We bought that, what? Two and a half, two years ago, when the markets were already up a bunch and the some of the indices were at all-time highs.
So there are constantly revolutions, technology revolutions happening that I want to be invested in, but at the same time, it’s something that you can ignore the cycles around. I mean, without a doubt the next time the market crashes 50%, which it will happen in my lifetime, maybe the next two to three years, maybe the five to 15 years, but when that happens, that will probably be a great opportunity to find stocks that will be 10-baggers for you. It doesn’t mean that you can’t find some right now, though.
Chris: That’s right. Hello to Kevin, Jim, John. All have just joined in the chatroom. On to the next question. It’s a little bit long one. Bear with me. “Hey, Cody. Just looking at the overall growth of my portfolio and wanted to get your thoughts on my stock mutual fund to cash ratio. You’ve said you’re more cautious about this bubble blowing bull market.” I guess when it goes down a little abbreviated, BM. “Now than you’ve been in many years, and you’ve steered us to increase our cash positions over the last several months. I’m currently at 37% cash. I know you’ve said that everyone’s situation is different, but just curious if that number sits well with you in your current state of mind. Always appreciate your insights.”
Cody: I think if it switches, to address your thing there, it won’t be BM when the bubble blowing bull market ends. It will then be the crash-inducing bear market. CIBM. It doesn’t have quite the ring.
It’s a really difficult question to answer specifically because, as I always tell people, that 37% cash, is that conservative? Well, if you’re 85 years old, that would be recklessly aggressive, not conservative. If you’re 23 years old and making $225,000 a year, and you have the potential to make $5 million as an investment banker in the next 10 years, 37% cash is almost ridiculous to even think about because you would be making, hopefully, 100 times more than what’s in your stock account in the next five years.
Then the other point is, one of my best friends from childhood who makes a great living is much more risk-averse than me. He’s saved tons, I’m sure, and he’s a very conservative investor, and that’s okay. He’s just about my age. He doesn’t even have kids, not yet. He’s wired differently than me though, so I bet he’s got more than 37% cash. So it’s all relative in that sense.
Now that being said, the way I would phrase it is, if you had 10% cash three years ago, because I was much more aggressively bullish … seven years ago I was 0% short. I was very long, aggressively long, whereas now I’ve got a lot more cash than I did seven years ago, percentage wise, and frankly, quantitatively wise too, because I’ve invested well and saved and hustled and earned and et cetera. Anyway, you should have two or three times more amount of cash than you did two years ago and a lot of cash than you did seven years ago if you’re a Trading with Cody subscriber, which this guy I know was because I got that question in an email from him asking if I would address it on the show today. Chris.
Chris: Google beat on the top and the bottom line. Cody, thoughts?
Cody: Google, the anti-Facebook. Look, Google has been investing in all kinds of new ventures. Waymo, their driverless, is getting ready to hit the markets. It’ll be a multi-billion dollar revenue stream for them. YouTube, the number two most popular site on the entire planet. Google paid … was it like $1.4 billion I’m thinking in 2005, 2006 when they bought that? YouTube is probably worth 150 or 200, maybe $300 billion in its own right these days. Google, Apple, Amazon, Facebook, as I’ve been saying for seven years, six years … when did Facebook come public? 2012? Those are the four horsemen of tech, and Google for the last 90 days was the anti-Facebook, but both are probably stocks you want to hold onto for the next five, 10, 20, 30 years.
Cody: Well, look, I’ve owned Facebook since it was at $20 per share, and I wrote an article, several articles, and did some interviews on Wall Street Journal talking about why I was buying it, and explaining that at that point I was the, quote/unquote, “only idiot” who was buying Facebook. The fact is, when I looked back at that analysis recently, Facebook had 800 million users at that point in 2012. Every month, actually, 800 million people used the service. 800 million people, and that’s a huge, huge number. That kind of a community, kind of a group of people on one platform had never been accomplished before, so what I looked at was, look, if they could do six cents per day per user, they were going to be generating $20 billion in sales.
Well, they’re doing that now, and they’re doing much more than six cents per user, and they have 2.5 billion people using at least one of Facebook’s services every day, one of their apps every day.
WhatsApp, Instagram, Facebook, being the biggest drivers. Messenger. 2.5 billion people. A lot of the media is going to be talking about that today, and the mainstream media is right to focus on that because that is just astounding. That’s more than one-third one-third of the planet’s entire population, and Facebook just needs to monetize a few cents per day on 2.5 billion people.
Now that being said, look, I sure wouldn’t rush out and buy Facebook right now. I’ve been trimming some in the last year. Facebook was at $165, $170 per share last July, one year ago. I could see Facebook, like I told my Trading with Cody subscribers in a note that I sent out last night when this news hit, bouncing around near $150, $180. I could see it take a year to get back to say, $217 or whatever it was yesterday before this report.
The worst part is we should have bought some puts or some hedges on the triple Q’s. You know, I’ve been telling people, be cautions, and I’ve been nibbling some puts on occasion. Yesterday I even sent my nephew, Bryce, a text at like two minutes before the market closed just sort of teasing, because he had bought puts a few weeks ago when the markets were down quite a bit, and of course, I’ve been teasing him a little bit, and sent something like, “Those crazy markets, am I right?” Yesterday I sent him one two minutes before the market closed. “We should buy puts now.” Well, actually, I should have been serious. Anyway, that’s the take on Facebook.
The other thing I always tell people is that as far as the regulatory stuff goes, that’s actually for Facebook’s benefit. It keeps any competitors from being able to start. No startup social network is ever going to be able to compete with Facebook and Twitter and anyone else because it’s too expensive to meet all of the demands that the regulators in Europe and the United States are going to demand, so that’s it. I would stick with Facebook, but I wouldn’t buy it right now.
Chris: Well, one thing for sure that’s changed over the decades is divorce, and nowadays you got to worry about cryptocurrency during your divorce. Right, Cody?
Cody: Not me. I’m not getting divorced. My wife is an attorney, though, and she gets, like any attorney, just lists and blasts like you do. I get invitations to financial conferences all the time, so for the last two or three years I’ve been getting invitations, especially in the last year, to cryptocurrency conferences. My wife got an invitation the other day to a how to handle cryptocurrency in divorce, because it’s tangibly happening. I mean, people have millions of dollars or hundreds of thousands or tens of thousands of any amount of money in bitcoin. You have to address that. I just thought it was interesting that she had sent me that headline with a note that said, “Funny when your world and my world collide.” I thought that was indeed funny.
I think it’s indicative of two things. That we’re probably still in the bubble of cryptocurrencies and that we still have more crash to go, but the flip side is it underscores that in 10 or 20 years that cryptocurrency law will be a thing.
Chris: Oh, I’m sorry, Cody. I know you think that I monitor the audio of the show and you, but actually I put these headphones in sometimes when I start hearing Democrat and Republican over and over and over. I put nice little albums like, here, this Engelbert Humperdinck. This is The Last Waltz. That’s a good one. Or, if we really get on a tangent, I got Aerobic Dancing, which is kind of fun. I could do that move. I’ll show you later.
Cody: I’m surprised you’re not doing the aerobic dancing exercise while we’re doing The Cody Willard Show.
Chris: With my leg up this high up the screen.
Cody: I can outdo your Engelbert Humperdinck record. If you even go to my Wikipedia page, I believe it says this. I’ve played backup guitar for Neil Sedaka.
Chris: Well, I want you to play backup guitar for Tom Jones and I want you to start collecting panties, and then you get back to me and then I’ll be impressed.
Cody: Then I’d end up having to fight over my cryptocurrencies in a divorce if I did something like that.
Chris: One more question from a trading With Cody subscriber: Can you update us on Verizon here after their quarterly report?
Cody: Verizon reported a fine quarter, but what was amazing is they are finally figuring out they’re not going to be a Hollywood content movie, TV series company. They are going to focus on being a network communications company and making 5G their everything, like bet the business on 5G, which is exactly why I own the stock, because that’s what I want them to do.
They’ve already got a head start investing much more time, energy, and focus on 5G than, say, by far their biggest competitor, AT&T, which is distracted with the CNN/Warner Bros, Time Warner merger, and the … what is it? T-Mobile and Sprint, or they don’t have access to capital, or their cash at all that Verizon has that it’s going to be required to be the leader in 5G. So if Verizon will be a 5G company, that stock is going to be worth a trillion dollars five or 10 years. It’s probably a $250 billion market cap. I don’t throw price targets on stocks. I think it’s a bad idea. I’ll talk about that another time, but that’s the first time I’ve talked about Verizon potentially becoming a trillion dollar company. I, seven years ago, talked about Apple becoming a trillion dollar company, and now it’s about to become one. I don’t know. The thing that I would tell you is stick with Verizon as long as they’re sticking with 5G.
Chris: It looks like we’re wrapped up all of our loose ends. We’ve answered all of our questions. We’ve informed. We’ve made the world a better place through this show today.
Cody: Chris, I just want to tell everybody peace, love, and happiness. I want to thank you for being here and being the man and making all this happen, and I want to thank everybody for tuning in.