Q. In last night’s note about The Space Revolution, you said “…there are so many names and Revolutions that I lost patience for. The Robotics Revolution. The Bitcoin Revolution. The Social Media Revolution.” Can you expand a bit on your loss of patience? For instance, the TWC portfolio is still riding social media names like Facebook, Twitter, etc, also while most would argue we’re still in the early innings of the Bitcoin Revolution. Or maybe I’m just reading it wrong, heh.
A. Yes, I caught and held onto many stocks that have gone up 10-100x what we paid for them from the Revolutions we’ve invested in. But I also know that there are names like NFLX or VMW that I bought at one point and then sold too early.
Q. What stock(s) could be the shorts of the decade? Any that you could see crashing hard?
A. I spent an hour on the phone with one of the smartest short only hedge fund managers you’ll ever meet. We talked about favorite short ideas, of course, in between a long discussion about The Space Revolution and other topics too. Anyway, we both mentioned AVGO to each other. I also think, after playing with Apple Arcade and seeing how nice it is to play a mobile game that’s not trying to get me spend 99 cents to $49.99 to upgrade features and unlock loot boxes, etc, that GLUU, which depends on those nickel and dime in game purchases, is still headed lower. I think YETI could be toppish here, with lots of competition coming and potential inventory problems. VHC, APHA, OSTK, FIZZ are some others I think are in trouble. But shorting stocks is a very hard game, even for those who do it professionally like my smart hedgie fund. If you short at all, do it carefully and probably with a small amount of capital. Or consider nibbling a few puts that are 10-20% out of the money, dated out 3-9 months.
Q. You had mentioned a while back that if the Fed starts cutting rates, this would be bearish for stocks and you would reconsider many of your positions. Does this still hold true for you? We’ve now had several rate cuts with more expected this year.
A. We always have to look at each situation as its own unique set up, but using history as our guide. The fact that so much of the developed world is stuck in negative interest rate territory for government debt means that there are trillions of dollars trying to get into the US. That fact alone is unique to this time and it plays a large part in my deciding not to go short even as the Fed has started cutting.
Q. Do candidates like Sanders and Warren pose a threat to the market with their extreme socialist views?
A. I tend to think that Trump’s welfare for farmers, his targeted welfare tricks for real estate developers in “Opportunity Zones,” his very complex tax cut that includes trillions more dollars in welfare for giant corporations who wrote the tax cut law and so on…well, a Republican Democrat calling another Republican Democrat a “socialist” seems silly to me in that context. They’re all socialists. I’m not any more scared of Warren or Sanders or any other candidate who gets through the Republican Democrat vetting system than I am of the current batch of Republican Democrat socialists in power.
Q. I guess it’s just me, but I don’t see what’s so special about this Slack company. Companies will be using this technology instead of traditional emails ? Do they do anything other than being an Instant messenger/group text chat? Seems that Microsoft and Salesforce already have their own version of this technology and do much more than just this. I see tons of lawsuits against Work after it’s IPO and stock slide. I also saw the CFO Allen Shim has been dumping the stock like crazy!
A. Yes, companies and people will be using Slack instead of email. Yes, it does much more than IM and group chats. Yes, MSFT and CRM are trying to copy Slack. Yes, there’s always buzzards trying to get theirs when a stock declines. Yes, the CFO is selling some stock — can’t blame him for taking some net worth off the table. I’m a believer in Slack and its stock WORK. All that said, there’s obviously risk here in the early stages of this company.
Another sub: Cody, I’ll just comment my agreement with you that Slack is taking over many email functions in the business world and performing them better than ever. New customers at my company are provided their own Slack channel for faster and broader support from the organization. All our our company win details, competitive information, collaborative cross-functional pushes all have their own channel, etc. It’s an important part of our business now within just a couple of years. A. Thank you, good feedback.
Another sub: For me personally I’ve been using slack professionally for the last 5 years. I find it to be an indispensable tool for team collaboration and productivity. Anyone can make a messaging app and other co’s are no doubt trying to emulate Slack but I still believe they are easily the leader in the space. The thing I like most about Slack is their integrations with 3rd party platforms, whether it’s Jira, Github, Trello, or Gsuite, Slack integrates seamlessly with just about every other tool we use.
Q. A while back, you indicated that you were precluded by law/regs from buying Bitcoin “outright” for your 10,000-Day Fund, and were pursuing an alternate technique to put some bitcoin representation into the fund portfolio. What is that alternative way . . . how does its.leverage/volatility/ease of purchase compare to the “real thing” . . . and would you recommend it as an alternative for us TWC subs? Thanks!
A. “I am able to buy BRR futures, which are bitcoin futures from the Chicago Board Options Exchange. And that’s what I’ve started doing recently, building a small exposure to bitcoin in the hedge fund using the BRR futures and buying the longest-dated futures they offer…”
Q. Cody – Thanks for working to get us into SpaceX. Also in your email you mention IPOA, Richard Branson space outfit. It appears the stock has moved in 1 dollar range for past 12 months. Do you expect volatility to start increasing as we get into 2020/21 timeframe ? Prolly cheaper the better to get us here early on.
A. Yes, that’s what I was talking about in The Space Revolution investing playbook I sent out last night.
Q. Why no love for LMT? Is it a personal decision because of the industry they are in (war) or do you not like the numbers?
A. War.
Q. You indicated a couple of times that you’d give us your current thoughts on Republic and some, if any, of their clients/companies that look good to you right now. You also just pointed them as a good (potential) source for getting in pre-IPO on Space Revolution companies. So . . . whaddya say? Any selections? Thanks.
A. I’ll be visiting Republic next week when I’m in NYC. I’ll have an update and probably a pick to get started with on their site after that.
Q. A while back you picked up some Google options for November December 2019. How do you like the set up now? Hold? Add? Trim?
A. Wow, a lot of flashbacks in today’s questions, huh? Anyway, I’m holding them steady and/or thinking of trimming a little bit of them here around breakeven.
Q. Cody BIDU seems like a broken stock as well time to get out?
A. Feels broken, doesn’t it? Sometimes, if the fundamental picture is intact, it’s best to buy when a stock feels broken. I don’t know how much confidence I have in BIDU’s fundamentals though. I’m sitting tight on it for now, unhappily at the moment.
Q. With all the recent talk about quantum supremacy, do you believe quantum computing will ever be a major threat to Bitcoin (and other cryptocurrencies)?
A. I would expect bitcoin and others to adapt, but yes, quantum computing is a threat to bitcoin and any/all encryption heretofore used by our societies.
Q. I remember a while back you were lamenting about how much privacy was a concern for you but, despite this, you would continue investing in big tech. Well it looks like Quantum computing has just or will soon eradicate any resemblance of privacy we believed we had, what are your feelings now? Military, email, crypto, firewalls, HD’s and much more all theoretically crackable in seconds. Lots of power by either really bad foreign governments or not as bad American tech companies.
A. I would think that quantum computing could actually help people get their privacy back — if used in the right way, of course. Holding my breath….not!
Q. With Bitcoin close to the bottom end of its recent (summer) range, is there an area below to where you’d say “I really like it as a buy here”. Say, 8500? 7600?
A. I like the below $8000 level as a potential place to get a bit more aggressive.
Q. 25,000 “major” retail stores are set to accept Bitcoin next year in France (with funds being automatically converted into euros at the moment of sale). How many years do you think the US is away from major retail adoption?
A. It depends on whether quantum computing kills bitcoin first! Haha. Maybe 2-3 years before it’s mainstream in the US, if at all.
Q. CODY when do you think CRON and or CGC become compelling enough to take a shot ?
A. Here’s probably not a terrible place to start a small tranche or two.
Q. Thoughts on Uber? Near $30 . Also: Q. Where do you think, SQ will stop. It is getting killed.
A. I have no idea where these will stop at this point. I still believe in both, but am much bigger in SQ than in UBER.
Q. What is your opinion regarding FB’s current lawsuit where they themselves claim that they are a publisher (not platform)? Does this not appear to open themselves up to lawsuits of defamation. As people’s posts, can now get FB in trouble since they are held to different standards. Seems in order to avoid liability for censorship they just opened up something much more significant!
A. Facebook seems to have mastered the game of capturing their regulators and using regulations to squash competition a long time ago. I have lots of concerns about FB, but losing to the government isn’t at the top of the list.
Q. Trim today something?
A. Yes, if you’re worried.
Q. Good morning, Cody. I’ve been toying with the idea of buying a Tesla. My husband is concerned because of the effects of extreme cold on the battery. He has read that all electric vehicles lose up to 40 % of their mileage in the winter. We travel 240 miles to go up to Northern Wisconsin and that could present a problem. What do you think? Also, where did you post the specs of the Tesla that you bought?
A. I don’t think you’ll have many issues with the Tesla in the extreme cold. It’s the #1 selling car in some of the coldest countries in the world, say, like Norway, which I bet can battle Northern Wisconsin for cold weather titles. Tesla Model S Customer Stories – Winter Driving in Norway. I have the Model 3 with standard wheels, Full-Self-Driving option, all wheel drive. Best purchase I’ve made in years — well, up there with my annual membership at the golf course 3 minutes from my office a few months ago too. And if you buy a new Tesla, be sure to use my referral code to get hooked up with free Supercharger miles and other benefits.
Q. Q. At what point will TSLA be out of the wood, turn corner, wind at its back for sustainable rally? You mentioned before that it will either go to zero, or go to infinity (my words). When will the “go to zero” risk be off the table?
A. Maybe in the next six to nine months, if the company can get on track to sell a 200-300k Model 3s in China in and another 500,000 or more in the rest of the world in 2020. Tesla’s still got risks — obviously!
Q. TSLA selling off today on what?
A. Some of the information in the court documents released in the suit against Tesla for buying Solar City were none-too-flattering for Tesla. I suppose that’s it. Also, the stock bounces 2-3% intraday almost every day and sometimes will make a 10-20% move on no real news.
That’s a wrap folks.
