I had two main takeaways from the panel I hosted at the CFA Austin annual dinner where the topic was The US and China: When Two Global Economies Collide:
- Nobody on the panel seemed to be very concerned about COVID-19 and the potential longer-term market/economic ramifications that might come from it. Which makes me more concerned about those potential ramifications, of course — since it’s pretty clear that most of the market is not pricing in much concern yet. I’m not saying I think the coronavirus epidemic is going to unravel the Chinese economy and markets long-term, but it is certainly a bigger risk today than it was two months ago even as most asset prices and stocks have rallied in the meantime.
- Four out of four of the panelists laughed when I said that I trust bitcoin more than any currency from a Chinese Communist Government. They still think bitcoin is a joke and I’m pretty sure most of them haven’t done much work on it yet. I’m not saying bitcoin is the end-all be all, but as I explain below there are at least two extremely good reasons to stick with bitcoin [1) Everybody who lives in a country that’s not the US is always subjected to devaluation of their country’s fiat currency at some point and these people continue to use bitcoin as a means of avoiding their nation’s currency issues. Billions of people in Iraq, Venezuela, Mexico and even in China and so on all trust bitcoin more than their own country’s currency. I do too. 2). There’s been hundreds of billions of dollars invested to make bitcoin easier, safer, distributed, exchanged, traded, etc. That’s still going on and there’s no other crypto that has anywhere that kind of critical mass.] The last time people laughed at my analysis, it was when I presented TSLA as a long idea at a hedge fund conference in Vail and subsequently, Tesla went up 300% in six months. I’m not saying Bitcoin’s about to make that kind of a move anytime soon. But I’d suggest any serious economist and/or geopolitical analyst not totally dismiss bitcoin and crypto and blockchain.
Here’s the transcript for this week’s Live Q&A Chat from this morning. Stay cautious out there, but stick with the good Revolutionary names we own.
Q. Cody – Gold is breaking out huge last few days…is this another big up leg coming in precious metals?
A. I don’t have much of a feel for what gold will do near-term here. GLD has been a nice winner for us over the last year since we added it as a “hedge.” I put “hedge” in quotes there because both GLD and our generally long stocks positions have gone up at the same time. As for other precious metals, I’m not as bullish on them as I am on gold.
Q. What do you think could be a general trading range for gold in 2020 (barring a swan of very dark color)?
A. Barring dark big birds, $1500 to $1700. If an unlit stately heavy-bodied aquatic bird with very long neck happens along, $2000 could be possible.
Q. Cody, Fire to the feet, next 5% move for the market is up or down?
A. The markets are down 2-3% from their highs a couple days ago but those were all-time highs. Hmm. I’ll go with, the path of least resistance for the stock markets right now is probably lower, so there you go. I guess. US stock markets might muddle instead of rally/drop with much magnitude though. China and other nation’s markets are likely to see at least 5% drops before 5% pops in the near-term. Feet to fire, of course!
Q. Can you provide strike and month specifics for a new round of ETFs?
A. I’d probably look out one month and nibble puts 3-5% out of the money. Remember that these are hedges and aren’t outright directional bets that the markets are about to tank. Though they might!
Q. Last I saw your buy-sell range for Bitcoin was 7-10k. With $BTC now near 10k, again, are you more inclined to sell or hold here?
A. I’m bullish on Bitcoin long-term and I’m going to increase my buy-sell range for Bitcoin to $9,000 or so being the level I’d want to buy more and maybe $15,000 being the level I’d want to trim a little.
Q. Following up on Bitcoin, do you think the upcoming halving event in May will serve as a catalyst for the short to medium term?
A. Not really, as I don’t think it matters compared to the long-term thesis of why I want to own Bitcoin: 1) Everybody who lives in a country that’s not the US is always subjected to devaluation of their country’s fiat currency at some point and these people continue to use bitcoin as a means of avoiding their nation’s currencies issues. Billions of people in Iraq, Venezuela, Mexico and even in China and so on all trust bitcoin more than their own country’s currency. I do too. 2). There’s been hundreds of billions of dollars invested to make bitcoin easier, safer, distributed, exchanged, traded, etc. That’s still going on and there’s no other crypto that has anywhere that kind of critical mass.
Q. SPCE gains are through the roof. AND My SPCE has gotten to be too big relative to the rest of the portfolio. AND That SPCE is insane. ETC.
A. Trim, trim, trim. If you’re asking the question, the answer is yes, trim some more. I like SPCE for the long-term as a play on The Space Revolution, that’s why we bought it at $10 when its ticker was still IPOA. On the other hand, I just don’t think it should be the largest position in anybody’s portfolio.
Q. Cody….any more cheap SPCE type plays that can run up on speculation of this coming Space Revolution ? looks like not too many out there thats why SPCE is getting pumped into stratosphere. thnx much.
A. Go back and read these two articles that I wrote back in September, which basically explained and predicted much of what’s going on (How to Invest in The Space Revolution or: Here Comes the Space Stock Bubble and The Space Revolution will be the largest industry in the history of the planet). I’ve done a ton of working researching both the publicly-traded as well as the privately-held companies in the Space Revolution and have made the bets as outlined in those articles. I am starting to see some fake micro cap penny stock shell companies change their names to Space-related crap and they will likely get hyped at some point and then will all go exactly back to exactly $0 exactly as every fake micro cap penny stock that changes their names and symbols to whatever industry is most hyped at that moment do EVERY TIME. They are fake for crying out loud. So anyway, we might short some of those at some point, I guess. And as new, real Space Revolution companies start coming public at multi-billion dollar market valuations in the next one to five years, I’ll be all over each of them for us. The count down on all of this is on, just like I’d originally outlined six months ago, right before any of this started happening.
Q. Cody, variation on a theme, I only bought a little SPCE, as you had initially suggested to us. added a bit at 11 and 17.5, have sold half of my shares, and its now 1.5- 2% of my port. Is there a price you would add back some?
A. I might look to buy back a little SPCE at like $25 or $20. Not in any rush.
Q. Cody: et al: Straight from the mouth of ‘The Singularity Is Near’, stepping up as a stock picker on Cody’s coat tails? This is great, both to support what we know and maybe a name or two to look into. Not bad Ray, we’ re already riding most of these. Again, the law of accelerating returns.
A. That’s an interesting article and yes, one that sounds a lot like something I’ve written repeatedly in the past few years. Thanks for sharing.
Q. What are your thoughts on Enphase (ENPH) as another long-term solar play?
A. I’d rather sell ENPH than buy it. SEDG is my favorite solar play.
Q. Cody, your opinion on SEDG earning. Do you still like it up here at these levels?
A. Well, SEDG hit $143 after its impressive earnings report which, at that point, made us up a full 1,000% on our original purchase price on SEDG of $13 just 4.5 years ago. That’s an 81% annualized gain and while I don’t know if we should expect this stock to go up an other 1000% in the next 4.5 years, I think SEDG is still the best play on The Solar Revolution, which is the best long-term solution for energy for our planet (and other planets and space stations and etc).
Q. Cody – thoughts on @OKTA?
A. I like it, can’t get comfy with the valuation.
Q. Have you done anymore work on Tezos? I know you had an initial negative take on staking (which is part of how $XTZ operates), however it can now be done securely through cold storage – Ledger Nano / Ledger Live as an example, just fyi.
A. Uhm, maybe bitcoin bitcoin bitcoin? No, haven’t done more work on Tezos, but I will.
Q. GPlease give your thoughts on NVTA I know these type stocks aren’t in your wheel house but?
A. I just asked my biotech hedge fund friend what he thinks of it. If he likes it, I’ll dig in.
Q. Also, any interest in TWLO?
A Like OKTA, great company, can’t get comfy with valuation.
Q. With the very high premiums on SPCE options does a bullish spread on SPCE leaps make any sense?
A. I’m much more confident in my approach than doing things that I’d have to google to make sure I know what you mean by a bullish spread on SPCE leaps.
Q. In your opinion, what’s the best way to short the Chinese Yuan? Thanks.
A. I’ll let you know how if/when I decide there’s a good way to do it.
Stay cool, stay vigilant, stay Revolutionary. I’ll have more analysis on the markets and the economies next week.
