Quite a rebound from this morning’s panicky lows where we were buying/nibbling/covering, but the week isn’t over yet, is it? Be careful out there. Here’s the transcript from this week’s Live Q&A Chat.
Q. Cody: what are the chances we slide into recession? How small companies will weather the slowdown from the virus? Is there enough capital to borrow for small cap around? Thank you as always!
A. Chances of a recession are probably 70%. The recession length might be just a quarter or two at most though. Many small businesses will be closed and/or turned over if that’s the case.
Q. Fire to feet, if there is a rebound, would it be a “V” or a “U” rebound?
A. Because so many companies are now facing supply chain disruption and because they won’t ever want to be exposed to that kind of disruption again, there will be a lot of major decisions that have been put off that are about to be made and that will include building new factories around the world (mostly not in China, but China will still grow factory business too) and that will also include double/triple ordering of inventories. So I’d expect a V with a capital V — unless Coronavirus really does turn out to stop all global travel forever.
Q. Trying to understand the playbook: If COVID 19 gets worse in the following weeks (what I unfortunately expect to), do you still see this is a good time to nibble in the markets? Seems the market is pure panic based at this moment and not in economy… how do you think the algos, smart money, etc would behave if this context does not change or gets worse? Why expect a market pullback (other than a small correction in the way down)? Thx!
A. I’m not sure we’re going to catch the bottom and I’m not sure the markets won’t crash outright if Coronavirus gets even worse. But I do think it’s a good time to put some money to work on the long side and to cover some of our short hedges when fear is so palpable and the markets are, as you say, is in pure panic mode.
Q. Considering how inflated the bubble-blowing bull market got in recent months – if Coronavirus is contained in the coming days/weeks- do you think that this event could be a much-needed reset that could lead to a resumption of a steadier, more reasonable bullish trend for years to come (rather than the prospect of an eventual collapse had we kept going & going like we were)? Or, do you see this as being too disruptive an event, leaving it up to very selective stock/sector picking?
A. My answer would be that it’s not mutually exclusive and that it’s probably a little bit of both — stock picking is always the best way to make money in the markets, but I do think the broader markets might end up being healthier because of this pullback/panic sell-off.
Q. Do you think this is bear market? Will market down 20-30% percent ( individual stocks will down 40-60% more) very soon ? What should we do now? Thanks.
A. Even if you assume the market is going down 20%, that means we’re already 3/4 of the way done with the sell-off. If it’s 30% from the hight, then we’re more than halfway done. I’m nibbling and covering part of my short hedges while the fear is high. Easy does it though.
Q. Feet-to-fire, if you had to put all money in 5 names today — which would be your favorites?
A. TSLA, TWTR, SEDG, TSM, AMZN, AMD, CSCO, SPLK, FB, UBER, etc. Most of my favorite names are on sale right now.
Q. Hi Cody, Do you still like DIS. I’m concerned people may stop going to the parks etc. It seems as if the parks are Disneys top revenue generator. May take a while for consumers to feel comfortable returning.
A. Yes, I still like DIS and the market sure seems to agree with you that Disney parks and Disney cruises might be in trouble for a while.
Q. Your view on AJRD after earnings? Still a good aerospace play?
A. Yes, it’s fine as one of the few pure-ish plays on The Space Revolution. Still holding a small position.
Q. You have warmed up to companies you didn’t like such as AMD and now ROKU. When will you warm up to TTD? I could be wrong but I thought they didn’t have much personal information like GOOG and FB.
A. Maybe, I’m always willing to change my mind. I’ll double down on my TTD homework.
Q. Cody can you share with us your thoughts on ROKU and why you feel now is a good time to buy?
A. The stock’s been decimated, people around the world and in the US will be streaming more than ever and ROKU is a pure-ish play on TV streaming. It’s a good company on sale. I am nibbling now to start building a full position over time.
Q. AAPL -21%, FB -16.5%, AMZN -16% AND GOOG -16% UBER -23%
A. Yup, we trimmed ’em higher. Time to nibble a little bit of each when the market’s in a panic sell cycle.
Q. Hey Cody, thanks for your short ideas a couple of weeks ago … did well on M, SIRI, VIPS, CVNA … etc. Top 5 short names today? I shorted XLE and other energy ETF’s. Any other ideas??
A. I’d rather buy than short right now, but I’m still short each of those names you just mentioned. GLUU is another favorite short as I can’t imagine it’s going to do well with its old fashioned mobile games. VIPS is a good paired short hedge for our small JD and BIDU longs.
Q. I sent an email about the size of limit orders assuming “trade alert” was for selling. But, I just logged in the chatroom. I now know that the alert was for buying. Thanks.
A. Thanks and welcome to Trading With Cody!
Q. Do you use Elliott Wave and Fibonacci much? These tools worked for me getting in and out AAPL, ROKU and others with broad time frames. Some experts technicians I follow are calling for market “wave 4” rebound to 3200 then “wave 5” drop down to about 2700. Any thoughts? Thx. I’m new to the chat room.
A. No, I don’t use Elliot Wave or Fibonacci much at all. I mostly stick to using my own analysis on the markets, the economy and trends and stock picks and valuations, etc. I love to buy the worst looking charts if I think there’s a great opportunity in the stock based on other factors. I don’t try to game the market’s short-term moves much, though I do sometimes get very cautious and/or very bullish if the set-up is something unique. Note that I’m getting quite bullish right now, but I’m still focused on stocks, not markets.
Q. DIS isn’t on your list of top ten stocks to buy right now? Do you still consider it a “9” rated stock? Disney+ launches in most of Europe and India in March. I’m thinking coronavirus May cause people in those locations to stay at home more, and subscribe to Disney+ in large numbers?
A. DIS is a Top 10 favorite stock here of mine. And yes, tens of millions of new subscribers from around the world are coming for Disney+ this year. But I’m not sure that’s going to be enough to offset the potential losses from Disney Cruises and Thempark businesses if this coronavirus issue gets even worse.
Q. It seems the first of the month which will be Monday there is almost always a strong upside because of so many automatic 401k purchases. At least that is my perception.
A. I’m not sure it’s possible to game that, but I don’t disagree that Monday could be up.
Q. Cody. Thoughts on GBTC as alternative to Bitcoin?
A. It’s okay, but I’d rather just own Bitcoin or bitcoin futures (symbol: BRR).
Q. Is it too late to take a position in some biotech stocks that are benefitting from the virus (eg., XBI, GILD, MRNA, INO, NVAX, NNVC) or are they already too inflated? Thanks for the great site, resources and insight!
A. Thanks for the kind words. I’m not one who chases short-term themes like trying to buy the right biotechs that might or might not actually benefit economically from the coronavirus. I’d rather buy some of our Revolutionary names while they’re down than to chase the hottest flavors of the day.
Q. SPCE — is it good buy now or will go down more?
A. I sent out a Trade Alert yesterday about how I was buying more SPCE. I’d trimmed some higher, nibbling some of that back yesterday and this morning on a limit order that got filled earlier. But to be clear, it certainly could go lower.
Q. Any thoughts on the online gambling? DEAC and PENN? PENN’s partnership with Barstool could be huge.
A. I’ll take a look at this sector. Thanks.
Q. I know no one likes the Sin stocks but any interest in MO with an 8% yield?
A. Gambling in the prior question. Selling addiction sticks in this question. Sin stocks indeed! I’ve more interest in online gambling stocks than MO.
Q. Hi @Cody, not sure if someone asked about Slack(WORK). It has been holding up pretty good. What are your thoughts on it and would you buy more? Thank you!
A. I like WORK here, one of my bigger positions. Might even benefit from coronavirus-induced online work collaboration growth.
Q. Hi Cody, any thoughts on BYND after earnings? Earnings looked pretty good yet the stock is tanking. Would you jump in at this point?
A. I’m not one who believes that fake meat is a Revolutionary trend that can change the world.
Q. Does MA or V pique your interest at these levels or too expensive at 17x sales? They both appear to be at strong support levels.
A. I’m not sure they’re both trading at 17x sales. But they are trading at 20-25x next year’s earnings estimates and I think that’s pretty compelling. Another 10-15% lower and they’d be screaming buys, IMHO.
Q. For cryptos, I followed up on Tezos last week so I’ll follow up on Chainlink this week… done any work on $LINK yet?
A. Bitcoin bitcoin bitcoin?
Q. Thoughts on Bitcoin. Could it be proving not to be “Digital Gold”, the way it’s fallen — not safe haven?
A. I wouldn’t read much into the last few days’ worth of action in any particular asset class as being something to extrapolate long-term.
Q. Jmo, but Bitcoin is far from a “safe haven” and I don’t view it as such. While it could be the “perfect money” SOMEDAY, when there’s true panic people will sell whatever they please. Again, jmo.
A. That’s interesting and helpful analysis this, thank you. I do think there is a safe haven aspect of Bitcoin, but it’s not the main reason to own it.
Q. “That’s interesting and helpful analysis this, thank you. I do think there is a safe haven aspect of Bitcoin, but it’s not the main reason to own it.” Agreed there is an aspect, but when I hear “safe haven” thrown around with Bitcoin, I feel people typically tie it closer to gold than it should be *at this point in time *. Also observing that with all of the panic in the air, even Gold is down a bit today
A. Good points and thank you.
Q. “A. Good points and thank you.” Sold a bit of Gold near the recent top ($100 from here) after your trade alert… so thank YOU.
This song’s been stuck in my head all week. Just discovered it on my Spotify Discover Weekly this week.