Here’s the transcript from this week’s Live Q&A Chat. Be careful out there, but don’t panic.
Q. Hey Cody, I agree with your overall take here but I think the concern for many is that it feels like covid 19 wont ebb and get solved or get over a hump for at least a few months, Do you think we are less than a few months away from some sort of longer term bottoming? i.e. as opposed to a more shorter term bottom which seems close(r)?
A. I’m not trying to game the market’s swings here. I’m keeping lots of short and put hedges and cash on the sheets to protect at least somewhat in the event of more market mini-crashes here. On the other hand, many of my favorite Revolutionary stocks that we had been trimming at much higher prices are being sold at a sharp and sudden mark down price of 15-30% off. I’m shopping in those names a little bit here. And beyond that, I am doing more day-to-day trading than I’ve done in years, but that’s also a function of how I’ll end up trimming some of the names I’m buying today if they again rally 10-20% off these crash-ish level lows like they have done several times in the last couple weeks too.
Q. Cody: Please clarify for me: You are saying 70% chance for a recession But on other hand you say you are becoming more bullish. It’s difficult for me to understand.
A. If the coronavirus subsides in the next few weeks, the recession would be very brief and would probably be stimulative for the US economy over the next couple years.
Q. The fear seems to be getting more and more intense with the news seeming to get worse by the day and that it’s still likely to get worse before it gets better. Is it too late to hedge or is that succumbing to the panic?
A. I preached hedging/caution/defense throughout late January and all of February when the markets were at their all-time highs and the world seemed to be not concerned with Coronavirus impacts. Now, I do think it’s good to continue to hedge and remain somewhat cautious, but I’m doing a little nibbling of most of our favorite names here today with the markets mini-crashing again.
Q. Is it too late to hedge here or is that succumbing to the panic?
A. See earlier answer to almost identical question. Thank you. Be careful hedging or not hedging!
Q. Top couple stocks you’ve been adding yesterday & today?
A. Not a couple. I just nibbled most of our longs and rolled down some of the index put hedges I’ve had.
Q. Cody: What have been your favorite nibbles today and over the last couple of days?
A. Same answer to the like-minded simultaneously asked questions.
Q. So far during this sell off I have not been too nervous and been playing it cool. Did raise some cash and have been scaling in the best names with small 1-2k purchases. Should the fact that I have not been too emotional during this downturn scare us all? That tells me we have a ways to go still…
A. Yea, maybe. But don’t be too sure you’re a contrarian indicator every time.
Q. What names would you rate “9” (nine+) today?
A. My own businesses that I run. The hedge fund, TradingWithCody.com, etc. Not sure I’d rate any publicly-traded stock a 9+ at this exact moment in time.
Q. Gundlach says Gold is the way to play with interest rates. Thoughts on gold here?
A. Same thoughts as usual about gold….it’s going to trade at $5,000-10,000 at some point in my lifetime. I made GLD a pretty-decent sized position in the hedge fund back when it was 30% lower than today’s quotes last year. And I trimmed that GLD recently. Wouldn’t want to chase gold here, but I would want to own it.
Q. Thank you for pushing hedges and reminding us. Slightly positive in my Cody account due to the hedges.
A. Good to hear! Take a little of them off while you can and/roll some of your puts down a little bit.
Q. How does the collapse in yields affect your thinking?
A. The drop in yields is largely a function of all that global money around the world seeking out US-based assets, a phenomenon which I’ve written about extensively over the last few years. I don’t think it’s very helpful as a indicator of the market direction or US-economic activity per se though.
Q. How long do you think this Coronavirus scare will play out? Do you still think there will be a V shaped recovery?
A. The Coronavirus scare will increase if this turns into a deadly worldwide pandemic with numbers continuing to grow exponentially over the next few weeks and months (or years?). The US economy would likely still have a V-like recovery if it’s measured in weeks. If we’re looking at million people in the US with this thing in June, the US economy could really be in trouble obviously.
Q. Does the low interest rates and banks melting down concern you on our stocks.
A. I don’t think the low interest rates or the banks melting down is the cause of the current market mini-crash cycle we’re dealing with. But neither do I blow those data points off. I’d rather buy the big banks today than sell them though.
Q. I hope all is well. Should we be buying more put options on the huge rallies? I have not purchased that much and it seems like it might be late to buy puts at this time.
A. Please see previous answers to this question. Yes, puts seem like a good idea, but not too much too aggressively right now.
Q. I’m down right now and my mind is screaming sell. Worrisome thread of reddit. I’m worried about 2008 all over again.
A. It’s usually the worst time to sell when you’re doing it because you’re worried. That said, if you’re that worried and freaking out, it’s probably a good idea to trim a little and raise some cash so you can sleep at night and look at the markets with a fresher take tomorrow. No easy answer to this one, of course.
Q. FYI, Ray Kurzweil shared a letter here from a fan outlining some of the things you talk about – what’s happenin’ and what’s headed our way. https://www.kurzweilai.net/mailbox-the-most-significant-upcoming-events-in-history Last line of the 1st group peaked my interest: “inventing a direct method to transfer thoughts from person-to-person / person-to-device / device-to-person” I dug up one successful example of this tested in 2016 and shared it in the chat room. It confirmed a multiple word communication across the ocean between two people. Transmitted electronically non-invasive brain to brain. Weird. Weirder is, that I have read nothing since. All we can do is stay tuned. Plenty of hardware-software advances, more-so on the physiological medical, less so on the mental-mind. Closest thing may be the efforts in translating animal speak.
A. Fascinating and thanks for sharing.
Q. Moderate to severe turbulence is forecast along our route of flight. The inflight meal service has been suspended. The Flight Attendants will be seated for the remainder of the flight. Keep your seat belts fastened and hold onto your drinks!
A. Indeed. But be opportunistic too.
Q. Can you send latest positions update as things have changed dramatically over last update. It will also give us the shopping list to buy when market drops to extreme levels.
A. Yes, I’m on it. Will try to get it out to you all this weekend.
Q. Is there any revolutionary travel related stock besides $Uber that you like? Perhaps Booking? Expedia?
A. Great timing on this question, as all the travel-related stocks on the planet are getting killed here. That said, I don’t get the competitive advantages of most travel-related stocks, included the companies like Booking and Expedia that have rolled up their endlessly growing competitive industries.
Q. Too bad AirBnB not public yet.
A. Yea, I’d rather own AirBnB than Expedia or Booking.
Q. Morning I want to buy SPCE but i am worried there will be a secondary offering soon? I thought they would do one before now with the price up so much, and today’s market weakness. Should I wait, or pull the trigger?
A. I don’t think it’s a good idea to try to game such things as a secondary offering. The stock might actually go up if they did a secondary to raise more cash. If you want to own a stock, it’s usually best to start buying it small and then give yourself to buy more over time.
Q. Cody: Obviously the DIS calls are not looking good for March, April, May…. Have you added or laying off for now? “no one” is going to Disneyland, Disneyworld or booking cruises. How much of a hit is Disney going to take on this? Disney+ solves for that?
A. I’m laying off the calls in DIS. The cruise and resort business is going to be hurt bad near-term. I still love the stock long-term and might nibble some more here of it. And maybe at some point I’ll nibble some more DIS calls, but remember that near-term calls like that are very risky and that I don’t use much capital on those.
Q. I have a two part question. Have you considered adding any airline/cruise stocks since those names have been dragged down the most by virus fears?
A. If I were an investor in those kinds of non-Revolutionary companies that have no relative competitive advantages over each other, I’d sure be buying some airlines right now. Cruiseships, probably not. I couldn’t imagine ever going on a cruise under any circumstance because I would not control my own destiny before the coronavirus — I sure can’t imagine how any one would ever choose to go a cruise as often and as casually as they have heretofore.
Q. Also, have you done any research on $VTIQ at all? Could this be worth a small speculative position similar to what we did with SPCE?
A. I just looked VTIQ up. I have no idea who runs this Special acquisition vehicle, but I don’t believe that Nikola corporation, the company they they just merged with to take it public, that’s trying to live off of Tesla’s name, has much chance of actually creating value over the long-term. https://finance.yahoo.com/news/nikola-corporation-global-leader-zero-110000194.html
Q. Hi Cody. ROKU at or under $100?
A. Yea, you know I just started nibbling it. Slowly but surely though.
Q. And at what price might MSFT become interesting?
A. I like MSFT here below $160.
Q. Sam Zell said on CNBC yesterday the drop in traditional oil & gas exploration is over done right now. I know they are not revolutionary stocks. What do you think about opportunistic buying in this space right now? Some of these oil cos might have better R&D for revolutionary technology? i..e such as the shale technology which is amazing US oil cos feat in the past years.
A. Fossil fuel companies cannot, by definition, be Revolutionary. Fossil fuel cannot change the world for the better. That said, XOM with a 7.2% dividend sure looks pretty good here.
Q. CSCO continues to languish. 5G earnings going to surprise?
A. I think Cisco is in a great position to benefit from the downfall of Cisco’s main global competitor, Huawei.
Q. Any chance to do more research on TTD? Big earnings beat. Stock up about 40. Now back to where it was a week ago.
A. Might as well move on from wanting me to like TTD. I’m not likely to change my mind on it. Would rather just own GOOG or FB.
Q. Any updated thoughts on $CGC (cost cuts, etc)?
A. I’d rather buy CGC for the long-term than most of the other cannabis stocks.
Q. As they were crashing years ago, you wrote about buying a mini-basket of crypto names, but lately it’s been “Bitcoin, Bitcoin, Bitcoin”. Have you turned into a Bitcoin maximalist or do you still see the basket-approach applying to crypto at some point in the future as you once did? It doesn’t seem too TWC-like (as you don’t usually buy one revolution sector name at a time, i.e. semis, 5G, social media, etc), so I’m curious.
A. I just think most of the other cryptos will fail if Bitcoin fails. In ten years, there will be some viable alternative cryptos, I suppose, but I don’t think any crypto outside of bitcoin seems like it has reasonable risk/reward with my money.
That’s a wrap, folks. Thank you!