Here’s the transcript from this week’s Live Q&A Chat. Be sure to hit reply to this email and let me know your answer to this question:
“Who’s more scared right now, the bulls or the bears?”
Q. In 2008 I was smart enough to sell stocks before the crash. However, instead of buying back, I was doom and gloom (was that way for many years) so I bought gold & paid off my house. The market is obviously due for a pullback but I actually believe we are in the very beginning of a technological revolution the world has never seen that will probably go on for the next 10 years & make a lot of people rich.. Should you, your readers and I be scared that I am actually this bullish long term?
A. Honestly, yes we should be a little bit scared that you’re looking for a never-before-seen ten year tech revolution when the world has just seen a ten year technological revolution unlike the world had ever seen. That said, I think you are probably correct that the next ten years could be even bigger for Tech Revolutions than the prior ten years which was bigger than the prior ten years which was bigger than the prior ten years which…. Over the next 10,000 Days, the world will probably see about 3 ten year cycles of tech revolutions unlike any before.
Q. Given the huge run up in stocks, I’m wondering if you can provide an updated latest positions list? I’ve been thinking for years now that the market is going to crash and if not for you I would’ve been sitting on my hands with cash instead of having realized nice gains in the market. That said, I am hugely fearful of a big sell-off at any time. Thanks.
A. Yes, I’ll start working on an updated Latest Positions run through. As I’d noted in the Trade Alert I sent out last night, I do think we’ll have a couple 5-15% pullbacks in the stock market this year, but I’m not quite expecting the next crash just yet.
Q. It seems that everyone is getting very bullish? Is it poll time; Who’s more scared right now?
A. I just posted this to my hedge fund traders Slack chat room: “Nobody in here scared? Cautious seems right to me. Quite a start to the year.” And of course I sent out a Trade Alert yesterday suggesting taking some profits, trimming a little almost across the board, selling a little TSLA. I’ll tweet a “Who’s more scared” poll and let you know if there’s anything helpful in the results.
Q. The stock market is up 40% over the past 12 and a half months, and a variety of sentiment indicators are screaming caution. For example, the short interest in the S&P 500 ETF is at a 2-year low. Also, @SentimenTrader notes that: On December 24 of 2018, 54% of their core indicators showed extreme pessimism. On December 27 of 2019, 55% of their core indicators showed extreme optimism. That’s the most in 15 years.
A. Yes, cautious sounds about right to me, as I’d mentioned earlier. I think chasing stocks here would be a big mistake, but I think selling out of stocks here would be a big mistake. Sitting tight and not trading is often the right move.
Q. I often ask this, but top 3-5 stocks if you had to feet-to-fire buy new positions today?
A. Feet to fire, my most highly-rated stocks at this moment would probably be: DIS, SPCE, SPOT, QCOM, CSCO. Not necessarily in that order.
Q. Do you ever buy protection utilizing VIX, and if so how?
A. I’ve occasionally bought some VIX call options over the years, but the fact that the premium on them is almost always too high to make it a good risk/reward trade. Most of the time, it’s probably better to just raise some cash and/or buy some puts on the indices rather than trying to game the VIX.
Q. Good morning! Please take a look at DDOG and TWLO Your thoughts?
A. Just last week I’d mentioned I’ve been studying DDOG but haven’t gotten my head around the business prospects yet. TWLO is just too expensive for me right now and I like names like WORK better.
Q. Just released last night: as of the end of December, TSLA short interest was still pretty high. More fuel left for a short squeeze?
A. We’re not in TSLA for a short squeeze, but yes, those shorts still have millions of shares they’ll eventually have to buy if Tesla keeps executing.
Q. At what price would you buy more TSLA or recommend we buy? I sold all of mine and made huge profits on it. I definitely sold too early up to about $450. Now, I want back in and am just being patient though this seems like a rocket!
A. I don’t know quite how to advise expect as usual: I always suggest starting with a partial position, maybe 1/5 to 1/3 as much as you want to own in any stock you’re looking to buy and then slowly scaling in, trying to take advantage of time and price fluctuations. I plan on owning TSLA for many years to come and I’ve been consistent from the start about that and still am. Trading is tough!
Q. TSLA more likely to see $650 or $450 by end of March? Just your wild guess?
A. My guess is neither. How about it stays in the $500s for a few weeks at least?
Q. $TSM is overbought going into ER on thursday. How do you recommend playing this? Are you in this stock for the longterm? What kind of ER do you expect feet to fire?
A. Yes, most all o our stocks I plan to own for the long-term and that certainly includes TSM, which has a monopoly in making chips for the world. Earnings report should be pretty good and guidance will be key as usual. Regardless, I’m holding my TSM which is up about 50% since we bought it last year.
Q. Cody – considering the first phase of the trade agreement is pretty much done, what are your thoughts on Baidu short term/long term?
A. I don’t think the trade agreement is as important to BIDU long-term as the fact that it was just so undervalued vs its balance sheet when we bought it. BIDU is not my favorite stock and is part of a basket along with JD to give us some exposure to China’s Middle Class Revolution.
Q. Beyond Meat? I wish I could say this is inexplicable… But I have been a vegetarian for 37 years and this is the best product I have ever encountered by light years. I know nothing about the financials other than the fact that it is up 45% over the last 3 days. Not to be a vulture but this also seems like a way to play climate change. I am very interested in your take, Big Guy. Rock on.
A. BYND seems like a good company with a very stretched valuation. It could take five years for BYND to really grow into its valuation but then again, the valuation could remain stretched that whole time. I’m not likely to own a fake meat company personally, as I don’t find it Revolutionary enough.
Q. Am considering a core position in Softbank on the premise that it is undervalued. Thoughts?
A. I like SFTBY for the same reason you’re considering buying it — it’s undervalued. We coulda shoulda bought the stock when it was at the lows a few months ago, which of course coincided with Softbank taking control of WeWork at a huge loss. Remember a few weeks ago when I wrote about how the best time to buy AMZN as when the stock was the butt of a joke on a Futurama cartoon episode from 2002? And Tesla was the butt of jokes when it was at $200 a few months ago and that it was a great indicator that we should be buying TSLA? Well, WeWork was certainly the butt of all financial jokes back at the time SFTBY was bottoming. The stock has already run nearly 30% off those lows and the “easy” part of the “SFTBY is cheap” trade might be over already. But it’s still pretty cheap. Longer-term, I’d rather bet on my own analysis and investments than those of Masayoshi Son (the dude who runs Softbank).
Q. Bought a little FB this morning. Hope I am not late to the party?
A. I loved FB and mentioned it repeatedly as a favorite stock to buy a few weeks ago when it was in the $90s. It’s still pretty cheap at 22x this year’s earnings estimates while growing 20%+ per year and I can think of worse ideas than nibbling some FB here.
Q. SNE was on your list. Now it is not. Should SNE be looked at again especially with PS5 coming out?
A. Yes, I was just studying SNE last night.
Q. Does TSLA render UBER obsolete at some point with robo taxis?
A. Why can’t UBER buy a fleet of Teslas and use their existing platform to dominate robotaxi business?
Q. What are your thoughts on the BTC halving coming up this year? Do you think BTC will react like previous halving years? Historically it has been positive.
A. Bitcoin, bitcoin, bitcoin. That’s about all my thoughts about halving or not halving or crypto in general.
Thanks all. That’s a wrap.