Here’s the transcript from this week’s Live Q&A Chat including discussion on what to look for in a down market, the trade war and Uber.
Q. Hi Cody, Thank you for providing awesome service. What are your views on trade war? Can it became full blown trade war? Do you think we are in last leg of trade war?
A. Thanks for the kind words. No, I don’t think we’re out of the woods. Remember how I’ve often explained that The Great Trade War of the 21st Century will be fraught with Fog-of-War casualties and crisis, just as every war is. That’s what’s happening now. As for it becoming a full-blown trade war — it already is! That’s been my point from the beginning, that the minute the President of the most powerful economy in the world declared that he might start a trade war, it was started. We are probably 2/3 of the way done with whatever gamesmanship and rule changes that the President’s corporate/banking cronies wanted.
Q. Cody, Risks are on my mind these days… in terms of black swan events negatively impacting markers, what’s the likelihood that China dumps Treasuries that help to push long rates higher? We are in this Goldilocks economy but playing with tariffs can be lucrative in the short term but come back to bite us longer term as tariffs do create tension between friends and foes…on the other hand it is an effective tool to create change if trading partners like China won’t take it upon themselves…
A. Yup, you said it. And a lot of those risks got temporarily more-than-priced-in yesterday afternoon. Then again, if real black swans fly in from these trade wars, then the markets will have to price more bad news/risks in. Then again, if the whole market is looking for a Trade War-induced Black Swan event to take down this market, then by definition, it’s not set up to be Black Swan event.
Q. Cody, In the fall your narrative was very focused on trade issues. Now, not so much. Can you articulate what has changed in your view?
A. I don’t think I was very focused on trade issues back in the fall either, actually.
Q. Ok follow up, so are you not concerned about trade? In some ways I think you are taking advantage of some things sold on the basis of trade (BA) but also buying stuff that is more domestic (WFC, VZ) and therefore not affected. And Uber, TSLA are also not straight in the cross hairs…overall, do you think this trade fear is overblown?
A. There’s no pattern to my buying based on “what will or won’t supposedly be affected by the trade war.” Yes, I think the trade war is mostly a way to distract the masses and play to the bases of the Republican Democrat Regime factions.
Q. Hey Cody. I did zero trimming when you recommended. Do you think I should stand pat now? Thanks.
A. If you’re asking, then you probably should go ahead and do some trimming. Lucky that the market is up this morning while you’re asking too!
Q. Cody, How is Amaris and family doing? I am back in stocks this year with little capital oh my Cryptos are green almost every day. I was talking to one of the crypto individual investors and he was talking about previous crypto moves and how Bitcoin went up first and all the alt coins like Eth, Ripple, Neo followed going up after Bitcoin reached 6-7k and he is betting on good alt coins shooting up more relative to Bitcoin from now? Your thoughts? Also in general when will you be bear on crypto again?
A. I think it’s best not to group all cryptos together and that over time, each will trade on its merits and perceived/accepted values. That’s probably what’s happening right now with Bitcoin. I guess you know that I was bullish/long Bitcoin at $100 a few years ago, and sold most of it/turned bearish at $20,000 a year and half ago, and that I turned bullish/started buying Bitcoin (Bitcoin futures) for the hedge fund around $3500 a few weeks ago. I’m not sure I’ll ever be bearish on Bitcoin and cryptos in general again. I’ll see how it all plays out in coming years.
Q. Hi Cody. Thanks to you I got into some Bitcoin a month back. One question is, how do you value Bitcoin or other altcoins? 2nd question is, I’ve been reading multiple articles saying that institutional investors are coming in and that demand could jump way up. I know you hate to forecast prices, but any rough ranges for next couple of years?
A. Nice trade! 1st question – I don’t try to value Bitcoin vs other altcoins. I just look at each on individually. 2nd – I’ve seen that commentary about how institutional investors are supposed to be coming in and that could ramp up demand — it’s been ongoing and it’ll be ongoing for years. 3rd – Bitcoin could trade between $1000 and $25,000 for the next couple years. Haha wide range, right? But that’s the best I’ve got for ya.
Q. Cody, Gene Munster has believed for quite some time that Amazon will buy Target. Have you guys discussed this? Thoughts?
A. We didn’t discuss it and I don’t think the regulators would let that happen. I think Amazon should buy Tesla to completely win the distribution wars, to take Alexa to the next level and to keep Apple/Google from buying Tesla. I don’t think Elon would ever sell to Amazon, but I do think Amazon should try to buy Tesla, not Target.
Q. Cody, the FANG stocks seem to have cooties, borrowing a 60’s term, should we stay away. AAPL down about $30 from highs. Also does the China stuff have an impact on MO? Thanks.
A. Much of the cooties are already priced in. That said, I have other names I like better right now than our old FB AMZN AAPL NVDA GOOG and am trying to make sure I have the hedge fund portfolio weighted accordingly.
Q. Cody: So which names exactly do you like better than FB AMZN AAPL NVDA GOOG?
A. BA, SQ, TSLA and others that you’ve seen me buying lately.
Q. Cody what is your most undervalued current position? And possibly most undervalued non-position you see. Thanks again!
A. Probably TSLA. Whether it turns out it’s actually cheap right now, though, depends wholly upon how it does in the future though, like any other stock.
Q. Hi Cody, what’s your take on NVDA and semis outlook in 2019, regardless of trade war? Thanks
A. Worried about it. I’m holding NVDA, as I have since it was at $30, steady for now, but I might sell some if this next quarter isn’t decent.
Q. Cody, what about UA? Stuck around 18-20. Are you still positive or should we think to sell after a nice run?
A. I’m torn, thus sitting tight.
Cody: Public Service Announcement: The US dudes go to China and say, “Stop subsidizing your industries!” But I mean, do you realize how many trillions the US pumps into corporate subsidies each year? Maybe do a little more research into our own tax code and so-called capitalist system? I hate subsidies.
Q. Cody for today’s chat what’s the thesis on WFC purchase?
A. The giant national banks (aka, Too Big To Fail) are Fed-controlling oligopolies and WFC is part of that. It’s also the most hated name in the industry, it’s likely going to find a new CEO that Wall Street will like and it’s paying us a 4% dividend in the meantime. I think WFC will be okay and that the asymmetric risk/reward at these levels is attractive.
Q. What is the driver for WFC?
A. My buddy William Frank Charlie, like me, is already driven by Tesla’s Autopilot whenever possible. Oh, you mean the driver for the WFC, the stock? See my prior answer in this chat.
Q. $BA, $UBER – to me these are somewhat contrarian bets. Would you say at this point you have a full tranche of each? 1/2? 1/3? What would it take for you to buy more?
A. I’m probably about 2/3 into each of them as I want to be.
Q. Bought UBER 100 shares yesterday. I am the proud owner up $75. Life is good.
A. SELL SELL SELL it all, great trade, take your profits while you can and look for the next one. Oh wait, that’s a different newsletter. Just kidding!!
Q. Cody – UBER CEO said in a leaked memo to employees – To stay calm, we will be next AMZN. Any assessment of such big statements?
A. I’m not sure there’s a bigger cliche than “we’re going to be the Amazon of [fill-in-blank].” https://www.google.com/search?q=”the+amazon+of” That said, I like how Elon Musk calls Jeff Bezos a copycat, and the line of thinking that goes along with that — Musk figures his companies are/will be bigger than Jeff Bezos’ companies.
Q. Cody – How big do you think UBER can become over 5-10 yrs?
A. UBER could be doing $100 billion in sales, up 9x from this year’s revenues, in 7 years if their plans work out.
Q. Gotta think BA is a good a lifelong hold as any other stock out there, no? Pretty much a duopoly. Now if there is another Max crash, all bets off.
A. You basically just explained in about 30 words what it takes most pundits hours to convey.
Q. BA seems like a problem now, since no trade agreement will actually hurt their numbers unlike most of the other positions. For example many of us hold NFLX, and MSFT are pretty good buys right now. Am I missing something?
A. I like NFLX better than MSFT but I don’t think either are screaming buys just now.
Q. Did you have any time to research the AI/AR software plays? I remember a few months ago you said you were working on some names.
A. Now, while the markets are down, is the time to find new names. Send me any AI/AR names you want me to look at to firstname.lastname@example.org.
Q. Check out CVRS. I wouldn’t expect you to buy the stock because of their numbers but check out the technology. Talk about revolutionary. https://www.cardiovascularbusiness.com/topics/coronary-intervention-surgery/going-distance-telestenting-new-path-pci.
A. Will do, thanks.