Here’s the transcript to the wide, wide ranging discussion over video conference I had with the Trading With Cody community on Friday. I’ve organized the questions according to topic, starting with economy/markets (ie, corona-nomics), then strategy/trades and then specific stocks. Be sure to read the last few paragraphs where I finish us up on some positive, exciting analysis.
ECONOMY/MARKETS
Subscriber:
Is this crash fundamentally different than 2008? While many sectors of the economy are totally wiped out right now, others are fine. My business, for instance, does outdoor construction and we have not been shut down or even slowed. Seems like last time, almost all industries across the board were down. Things may change for businesses like mine if a recession sets in, but for now, we are good. Do you think, since the shutdown is not uniform, there will be a difference?
Cody:
Interesting concept. Interesting, because yeah, unlike other times, this wasn’t just a demand slowdown or something. The problem is that the slowdown and the unemployment and the recession, it’s going to be across the board. I mean, sure, there’s always some sectors, at least in recessions past such as strippers and booze that are typically in demand when the economy is in recession. So that’s always the case, right? I mean, prison populations go up in bad times, too. There’s always sectors of the economy that boom in bad times. But in the general, no, recession’s going to be painful probably across the board. If you were in New York, your outdoor construction company might not be doing stuff.
Subscriber:
Is there anything that would make you very bullish?
Cody:
If the markets crash another 20, 30% like they did, I would probably get bullish because the prices would be down so much again. Sure, if there’s a cure. How about that? If someone comes out with a cure, or if it’s clear that suddenly the disease is getting wiped out by natural causes somehow and summertime in the northern hemisphere’s saving us. But the problem is now in the southern hemisphere, it’s winter. So yea, I’m somewhat bullish long term anyway. You know that. I believe the ability of mankind and the United States to innovate upon itself in exponential growth ways and that will likely keep me somewhat bullish.
But no, there’s probably very little right now other than prices coming down a lot more that would really make me clearly bullish, just because the unknowns on the other side of this are too big for me to feel good about buying stocks at these valuations right now. But I’m still holding trimmed down versions of my long-term Revolution technology core positions. Maybe I’m talking out both sides of my mouth. I’m still bullish and owning a lot of revolution names, got some hedges on the sheets, and I’m raising cash from all sides. So no matter what happens, I’m going to be like, “Hey, I was so smart. I told you guys.” Haha.Next question.
Subscriber:
Just wondering, I know you’re critical of the government policy, but what would you have done if you were the government? Huge swaths of the economy are not making any money. I know in Denmark, that they guaranteed all of everybody’s income I think, I think they guaranteed 100% of people’s salaries or something. Maybe that would be more fair than what our government did with the $4 trillion bailout package. With so much of the economy down to zero, don’t you think they had to do something though, right? And isn’t confidence some part of it, too, right? Like half of it is, I don’t know, we can’t expect people to invest, but we can certainly hope that people will have some confidence that at some point, this isn’t going to be so bad. Until we solve it, until we solve the crisis of the medical/health situation then we’ve got to do something to kind of solve it.
Cody:
The problem is, like, I don’t believe in the tooth fairy. I don’t think a government can magically go, “Hey, now here’s money! Everything’s fine!” That money doesn’t really exist. It doesn’t exist. If we borrow money, we’re borrowing from the future. If we print money, we’re devaluing our currency. We’re devaluing the earnings that you and I bust our butts on every day to earn so banks can just take some money from the printer and write off their worthless assets. If you want to know what I would do, I would do what I always say I’m going to do. I’m going to basically just eliminate income tax. It’s not constitutional anyway. We had to pass a constitutional amendment in 1912 or 13 to allow income tax. I would shut down the Federal Reserve and the fiat currency, reserve currency that they fake with and they steal your value with. I would instill confidence by creating a market system that’s based on freedom and not cronyism and … What good does it do to borrow or print four or five trillion dollars, borrow it from our children or print it and devalue your earnings by 12% or whatever it is, you’re being devalued. How does that help?
Subscriber:
Just saying, it’s a huge amount of the people that are suffering are just workers that have nothing to do with it, who are not going to be able to pay their bills.
Cody:
So send people a check. If we’re going to borrow money, then like I said a month ago, look, if we’re going to borrow money, send money to everybody. We’re borrowing $18,000 per person in this stimulus package, four or five trillion dollars. It’s $18,000 per person in the United States. So write a check for $18,000 to everybody. Why are you only getting $1200 out of the $18,000 and now you’re going to have to have the tax bill for all $18,000?
Subscriber:
With massive deficits coming, do you think taxes will increase for corporations, i.e., days of being able to hide income abroad like Amazon, Apple, and Microsoft? Do you think they’re not going to be able to get away with paying almost no taxes?
Cody:
I’m laughing because if you guys have been paying attention to the Republican Democrat policies that have been put out in your entire lifetime and how they have never, not either side, not a Republican or a Democrat who’s ever been in power has ever raised taxes on corporations without providing them more loopholes and subsidies and industries to control anyway. So no, I don’t think giant corporation taxes are going up. However, your taxes, my taxes, the guy who works at the hot dog stand, the guy who washes dishes — our taxes are going to go up. The local restaurateur, his taxes are going to go up. Microsoft, Apple, GE, JP Morgan, methinks not. They might go up on paper. The politicans might be like, “We’re raising the corporate tax rate across the board by 10%. Look at the tax bill that we just passed that enabled this,” and it’ll be 60,000 pages of loopholes for those corporations, just none for you.
Subscriber:
Cody, Rob from Manhattan. I live in midtown Manhattan and it’s totally dead. Quick question, do you think if we do get the virus resolved, what do you think is going to be … do you think the market will go up a lot? The Fed’s cut rates to zero, infinite QE, or is there just too much job loss from small business? Or are earnings just going to be awful?
Cody:
Yeah, I mean look, this is what all of us are trying to figure out. Like I said in the piece I wrote Thursday night — on the one hand, everything that the permabears, the people who have been promising great depression and collapse of the United States economy for 10, 15, 20, 30 years or however long they’ve been promising it, this is going to catalyze a lot of what they expected. I do not think QE or stimulus or anything the government’s going to do is really going to help. It can just ease a little of the pain and make things a little liquid and allow some giant banks and corporations and hedge funds to bail themselves out and hand off crappy, worthless assets to the taxpayer on the Federal Reserve balance sheet. And it’s going to allow the government, the Republican Democrat regime government to borrow four, five, six, 10 trillion dollars more than they probably would have otherwise if this coronavirus crisis and the economic slam-down vacuum that has come along with it had not been here. The Federal Reserve’s going to just run the printer press, I mean the digital printing press. They’ll let’s just add some more ones and zeroes to these numbers and here you go, government, four trillion dollars.
Can they do it at zero percent interest rates? Can they do it at one percent interest rate, like Treasury is at? I don’t know. I don’t think so. Especially with every other developed country’s central bank around the world and every other developed country’s government around the world starting stimulus and printing press and the same thing and going to need to borrow and print trillions of dollars around the world, can the globe right now with a great vacuum of economic activity happening and no revenues are going to be generated by a lot of businesses in this country and around the world. Is there enough money to lend trillions, tens of trillions of dollars to governments? Is there enough money in fiat fakery that the governments can print tens of trillions of dollars also? We don’t know. It looks to me like I said in that article last night that I sent out that nobody really expects rates to run, and that seems to me to be a pretty clear outcome to most scenarios, bullish or bearish for the markets.
Going back to your question, I don’t know how this plays out. We don’t know. Nobody knows. We’ve got to get to the other side and see what the economy looks like and see what the rebound looks like and see how quickly people can be rehired. And then beyond the economic ramifications of all of it and whether we can get through it or not, the markets will discount this stuff at various times and it’ll be excited and ready to say it’s all going to be okay and then we’ll look at the market and be like, “Aw man, everything is going to be okay,” and then a week later or a day later, things are down 10, 15, 20% and there’s too many coronavirus cases and we’re locked down for another week or two, maybe another month or two, instead of it being Easter, now everybody’s like, “Well, it’s definitely going to be Easter, it could be … Father’s Day?
Cody:
Will Uber drivers find other jobs?
Cody:
Gosh, I hope so. I have friends who are Uber drivers. I have a friend who’s an Uber driver who is a Trading with Cody subscriber. Uber drivers are some of the most industrious, hardest working people that you’re going to meet in the world these days, and God bless them and I hope that yes, they’ll find another job. Afer all, they’re Uber drivers. They’re industrious. They’re busting their butts already, and eventually they’ll find another place to bust their butts again.
STATEGIES/TRADES
Subscriber:
We need to remain hedged?
Cody:
Yeah, man. Or just lots of cash. Hedging and cashing I think is key. The problem with hedging is, if the indexes run and your stocks don’t, you could still get killed. Cash is the only way to guarantee you’re not going to end up being demolished. So I’m covering shorts, reducing my hedges, but I’m also trimming my longs and-
Subscriber:
Getting more cash.
Cody:
… getting more cash on both sides of the equation.
Subscriber:
Cody, should we buy more SPY options or other options to hedge?
Cody:
SPY options have gotten really expensive, both calls and puts. Premiums are just through the roof. Everybody’s trying to bet on a spike, everybody’s trying to bet on a crash. When everybody’s betting on the same thing using the same instruments, you don’t bet on it. So I’d rather short SPY outright as a hedge than buy puts on it or calls. You could short some calls if you are brave, but if you’re going to short a call on SPY or even a put, whatever direction you want to bet, the premiums are good, so it’s probably a good time to do that, but if you’re going to do one SPY put and … or a call. Let’s say you short one SPY call and it rallies 10%, you’re going to be short 100 shares of SPY, so you need to make sure your account can handle that. You can’t go short 50 SPY puts if you’ve got $100,000 account. Just don’t short options is usually the answer, and right now, probably don’t use options very much, because they’re just too expensive.
Subscriber:
Cody, if we sell to raise cash or hedge, are we fighting the Fed? I heard that the Fed is buying ETFs now.
Cody:
I don’t care about the Fed. I don’t care if I’m fighting the Fed. In fact, if you go look historically over the last 30 years, it always made sense to fight the Fed. It never made sense to bet with the Fed. When the Fed is cutting rates, when the Fed is easing, when the Fed’s doing quantitative easing, when the Fed’s getting more liquid for the world, markets are crashing. The markets go down 50, 60, 70% when people are like, “Don’t fight the Fed.” I would always fight the Fed, at least in concept. So I don’t care if I’m fighting the Fed. It’s irrelevant to me. Granted, I pay attention what the Fed is doing, and I use that in my analysis. But I think it is okay to fight the Fed. It’s probably better to fight the Fed than not fight the Fed in principle as an investor — and as a citizen of the United States, as a citizen of this world, doing the right thing. We should fight central banks.
Subscriber:
Hey. Thanks for the deep thoughts. I’ve been cutting back on the hedges. I’m getting to the point, at least for my own portfolio, where I’m almost out of hedges. I’ve done well, very well, thank you, way back when, when things were going well, and I was carving money out at the top and it’s good. But now I’m getting close to if I cut back anymore, I’m not going to have any meaningful hedges. I’m talking about the ETFs.
Cody:
So trim some longs. Trim longs instead.
Subscriber:
I’m feeling a little naked if I do that. If I get down to those very few meaningful hedges, I don’t know whether I’m covered in that area of the world. But you think people should keep some hedges on, right?
Cody:
Right. So keep some hedges on and if you’re worried about not having enough hedges, it means you have too many longs. Because again, I’m not saying put more hedges on right now. I’m saying sell some longs, trim some longs, sell crappy positions, your smallest positions that you don’t have any confidence in, trim your favorites, 5, 10, 15, 20%, something — whatever’s going to make you sleep at night. Trim some longs. Don’t add more hedges. But make sure you’ve got some hedges on the sheets still. And I’m joking whenever I say something about being so smart. You guys know that, right? Yeah. Let’s keep humble. Let’s keep working hard.
SPECIFIC STOCKS
Subscriber:
Hi Cody. So my office now is all virtual because they’ve basically done this lockdown and we’re using Zoom a ton more and Slack more than normal. Where do you see those stocks going in the future?
Cody:
Well, as you know, I added Zoom after the coronavirus crisis started hitting and the lockdown and self-isolation started happening, and so look, I think Zoom is a good COMPANY anyway. It’s a revolutionary company. The reason I didn’t own it before all of this happened is that it is in some sense just sort of like Skype 2.0 or something. I have a hard time getting my head wrapped around the competitive advantages of being a video streaming platform, but Zoom has spent the money, built the technology, built the platform that other than these Google meetings, and there’s Cisco Webex and Go-To Meetings, there’s a few alternatives still, including Skype. But it looks pretty clear to me that Zoom has become the de facto standard, and the reason we bought it even though it was already starting to run, we bought at like $110 and it was already up from $90. Of course, now it’s at like $160 or something. Anyway, the idea being that because it’s sort of become a de facto standard for all of this and because, like you just said, every office, every university, every school, if they’re working at all, are doing it virtually. If it’s not a retail outlet or a grocery store, something where people have to interact face-to-face, attorneys, conferences, we’re going virtual, and so Zoom is a good play on that. The valuation’s insane though. It’s way too high. I trimmed some Zoom today, yesterday, I think even last week I trimmed a little. I’m trimming most everything in the portfolio, as you guys know, and I’m covering some shorts and just getting a little more defensive and getting some more cash on the sheet so I can have some flexibility depending on where these pitches in the markets come from. Zoom, probably a good long-term hold, partly because even the coronavirus crisis subsides, there’s going to be a lot more videoconferencing done. We’re all going to get more accustomed to this. We’re going to be doing a lot more interactions over these videoconferences. That said, I wish I didn’t have to look at my big old face this whole time. I’m going to back at least a little bit.
All right, and Slack… It’s pretty clear that everybody’s using Zoom, but it’s less clear if everybody’s using Slack. But the CEO of Slack yesterday was on Twitter talking about how he can’t believe the growth rate that they’re starting to see, the amount of customers that exist that are expanding and ramping up and spending and the new customers that are coming on board. And Slack as a collaboration platform is becoming the de facto standard. I don’t think Microsoft, teams, the Microsoft competitor to it is going to be able to compete long term, because I’m never going to get on Microsoft, and I don’t think most people will. I think the collaborative platform needs to be more agnostic to whatever the underlying technology is and Slack … Microsoft certainly has built their apps like their Slack competitor to be as platform-agnostic as they can be, but it’s still Microsoft. So I think Slack is a good company long term. Its valuation now that it’s gotten that close to 30 is also very high. These stocks can drop 30, 40, 50% and they’re still pretty fairly valued, so it’s not like we can go hey, this is a no brainer. Remember when I was like, Slack under $25 is probably my favorite, that it was almost nine plus, and you know I hardly ever give nine pluses. Well, it dropped all the way to $17 or whatever that last earnings call for just a minute. It’s rallied back now close to $30. The valuation’s not screaming great anymore, but yeah, I think it’s a core holding that I plan to own. So Slack I think is a clear long-term revolution holding. Both are really probably key stocks to own right now.
Subscriber:
Hey Cody, it’s Scott from Austin. Thoughts on Disney? I know it’s just been beaten up and we’re still holding, but thoughts moving forward?
Cody:
Scott, nobody got your last name, so can I just mention that I wrote about you a few weeks ago in one of my Trading With Cody posts?
Subscriber:
Yeah.
Cody:
This is the guy that I mentioned maybe a month or two again as I said he had made so much money on Tesla that he bought half of a new house. Well, he sold his Tesla at like 800, 900 bucks, he kept taking it off. Not all of it, kept about half, but this is what the idea is, right? And that was back when the markets were at all time highs and I was repeatedly saying look guys, sell 10, 20, 30% of your positions and raise cash, get defensive, put on hedges, and buy a house with some of the proceeds, buy a boat with some of the proceeds, or put it in the bank. That’s this guy.
So as for Disney, the valuation down here below $100 is pretty compelling long term. Short term, six months out though, Disney could bumble around here and not make money for a year or two. Their balance sheet is strong but not perfect, and I’m holding on to some Disney, but I have trimmed it down pretty good and taken some losses on it. What did we start buying around, $130? As you guys know, you’ve got to be disciplined. When I tell you I’m trimming across the board, I do it across the board, and I’ve been trimming Disney and I did trim Disney probably a little more aggressively than I did some of the other names. But I still believe in it and I own it and I think in five, 10 years Disney is still a core holding. Long term, it should be good, but I was disciplined. Did you guys hear me talk about that, when I say I’m going to trim something, I trim across the board.
Subscriber:
I have a question on Tesla. So with lockdown and people not commuting and all, it’s going to impact the demand and so on. So I want to thank you for getting us in this stock at much lower levels, but going from here, do you think we should hold on or what should we do?
Cody:
Long story short, yes, absolutely I’m holding onto most of my Tesla. I again trimmed some Tesla this week and last week just like I said I would. I trimmed across the board. Tesla … But long-term when I look at Tesla, my theory doesn’t change. It’s still by far the best car out there. Nobody else is close to competing with Tesla cars. Here’s a deep thought for you:There’s no way GM, Ford, Volkswagen, Toyota, any of those companies are going to invest in electric cars now. There’s no way they roll out a meaningful number of electric cars in the next two or three years. Everybody else’s smart, electric, over the air update car that they were all supposed to roll out, none of those are going to hit in the next two, three, five years. Ten percent of what they said they were going to roll out might come to market.
Meanwhile, Tesla’s cars are already so much better than any gas car out there, and it’s a good thing Tesla raised cash when they did… Do you guys remember how many times I kept saying “Tesla’s not out of the woods yet?” Well, they pretty much got out of the woods when they raised that last two billion dollars. They can get through the next six months or a year, even if demand tanks. They’ve got a better balance sheet and more access to capital than GM or Ford. Like I’ve been saying since I bought Tesla, I’d rather be short GM and Ford than short Tesla. I mean, I own the Tesla. I can’t fathom why people want want to own these car makers that are basically at best Nokia and BlackBerry to Tesla’s Apple.
Likewise, let’s just fantasize for a moment, what if Tesla actually gets this self-driving thing figured out? Boom, nobody wants to be in a car with anybody else. Well, one company on the planet could be providing you cars that don’t have drivers in it. The upside potential of Tesla if they pull that off is probably even bigger than it used to be, because again, nobody else is going to be investing in this and trying to catch up to them. The others are just trying to survive now. Tesla will be continuing to invest and innovate and do the things that Elon Musk does with his companies.
So yeah man, hold on to Tesla. Trim some, because it can go to $300, and if the coronavirus is still around in nine months and nobody’s buying cars, Tesla could go to zero. But risk/reward scenario on Tesla is very positive in my mind at these times.
Subscriber:
Hey, Cody, what do you think about Gilead Sciences? I think they have the antiviral drug and vaccine is about a year out. There are some other options like a malaria drug, but it’s been holding like a rock at $70. It’s not going down. It hasn’t gone up that much, but just wanted to know your thoughts on Gilead.
Cody:
It’s a great company. It’s funded by taxpayer largess as it profiteers by charging 90% gross margins on everything they sell to the government-controlled healthcare system. I don’t like that business model. Never have. If you’re dependent upon the government writing you 90% gross margin checks, I just don’t think that lasts long term. I’m not a biotech investor and I don’t pretend to be. If I’m going to find something in biotech like I think I’ve done a couple of times in the past, it’s going to be something that’s small, that’s created something entirely new that nobody really knows, that we can get an edge on. Everybody I know in biotech and even you and every retail investor who’s paying attention at all knows about Gilead, is digging into Gilead, has looked at it upside down, 10 ways to Sunday. I’ve got no edge on Gilead.
Subscriber:
Looking to initiate a position in Tesla. Is there a price you would add to? Obviously at 240, which we will probably never see again.
Cody:
Yeah, look, if you don’t own enough Tesla, I would nibble some. If you own too much, I would trim some. But Tesla at this price is long term probably going to work out. If the recession’s really bad, like I said earlier, Tesla can go to 240. It can go to zero. So yeah, risk/reward. Risk/reward analysis. That’s what we do.
Subscriber:
Thoughts on Virgin Galactic now?
Cody:
Oh, Virgin Galactic. Yeah, okay, so let’s hit on Virgin Galactic. Nothing’s changed except their access to capital. We six months ago would look at that and be like, look, there’s going to be so much money coming into the space revolution in the next three, four, five, 10 years that Virgin Galactic’s going to have their bucket out in front of some of that. They’re going to get some of it. They will be funding their business to the point where if they actually pull any of it off, it’s going to become a virtual self-funding profitable enterprise. I’m not sure we’re there anymore. Access to capital’s not going to be as easy as it was on the other side of this if things don’t get better quickly, and that’s what you’re betting on if you’re going to buy Virgin Galactic, that things are going to get better, they’ll continue to have access to capital, in a year or two, things will be fine. The stock, like I’ve said all along, could be a tenbagger if they figure out supersonic shipping, to send things from China to the U.S. in an hour on these subspace ships. I still own it, but like everything else, I trimmed it. You guys know I was trimming it $20 and $30 up to $40, and I’ve not bought much back. I did buy a little bit back at some point and I bought some back even the other day, like when it got below $10, I think. But I’ve trimmed that already. I’ve got a core position, and if you don’t own any or don’t feel like you own much, then maybe yeah, add a little. But know that there’s more risk in that one than there was, even with the stock having come down from $30 or $40, and of course, the stock’s up from $8, where we bought it, so whatever. No, nothing’s easy in investing, and frankly, nothing in life right now is easy. Next question.
Cody:
How about other plays on the space revolution. I see that Lockheed is getting deeper into it.
Cody:
I don’t care about these defense contractors, even Boeing. That was my favorite one if you’re going to do any of them, but look, if you’re going to go with the space revolution, let’s find some pure plays.
Subscriber:
I’m thinking 5G and therefore Qualcomm will be even more important going forward. Do you agree?
Cody:
No. I think satellite is going to really hurt 5G over the next five or 10 years. Qualcomm, still love. Qualcomm will be in whatever devices with use with satellites, too, but I don’t know that 5G … I’m not a believer in the 5G revolution anymore. I’ve not been for probably what, four, five, six months at this point. Still love Qualcomm, though. Valuation is good if nothing else.
Subscriber:
You mentioned satellite overtaking 5G. What do we own to take advantage of the coming satellite revolution? New subscriber.
Cody:
Thanks for joining. I own, in the hedge fund, some SpaceX. We own some Virgin Galactic. We had some AJRD, which supplies Boeing and some other space-related companies, but I sold it. Was that this week? Last week? Man, it all runs together. There’s not a lot of publicly traded space companies right now and maybe that’s for the best, because they would be smashed because they need access to capital and nobody knows if they’re really going to get it, so like Virgin Galactic, they’d all be down 50, 60, 70% from their highs from two months ago. There will be a lot more space companies coming public and here on Trading with Cody, we will be analyzing and keeping you in the loop.
Subscriber:
What do you think of Bud, Budweiser?
New Speaker:
I’ve got no edge there. It’s beer. Maybe if the stock was crashed and something. The good thing about Budweiser, just like, say, Campbell’s Soup, is that they have the huge distribution network and they can always just figure out new products, ie “content,” to distribute over their distribution network into bodegas and grocery stores, which is very incredibly valuable. But in the grand scheme of things are you going to get a tenbagger in Bud? I suppose maybe so. But it’s not my thing.
Subscriber:
Hi. I liked SoftBank before. I love it here.
Cody:
You know, I’ve done some work on SoftBank, and what’s the symbol again? SFTBY? I started looking at SoftBank when it hit 20, 19. The valuation looked interesting, but the problem is the debt and then you really dig into the company and I just have no … I don’t … I’m not a believer in Masayoshi Son or whatever his name is. He’s no Elon Musk. He’s no Steve Jobs. No Jeff Bezos.
Subscriber:
25% stake in Alibaba and he’s looking to trim and raise some cash and then he’d go buying.
Cody:
But he might just have to pay down his debt. I’m not sure he gets to go buying. Honestly, that’s the problem. WeWork might be a zero. How many things do they own that might be zeroes? WeWork probably is a zero, and he just spent another eight billion dollars bailing it out. I like the fact that you’re trying to find a stock that’s trashed and hated and probably, at least at a glance, undervalued. They’re technology, revolution investing guys, right? That’s what they do. But you just go read about the internal battles and the people throwing each other under buses and doing things in the press to make this competitor look bad and I’m like, I don’t want to fight that. I don’t want to be involved with that. There’s got to be a better way to invest. So no, sorry.
Subscriber:
Vitaliy recommended McKesson. They iterated earnings at 14.60 or so.
Cody:
I’ve got no edge on McKesson. Pharma distributor, so it’s going to be very low margins, 200 billion dollars in revenue, but what is their valuation? Probably 10 billion at most or … 22 billion. Damn. That’s expensive. But I suppose that could make sense, a valuation of one-tenth of sales for a distributor.
Subscriber:
Uber has gone a bit here, but with COVID, is it going to survive?
Cody:
We were buying that Uber at 15 last week, right? You’ve got a double. You’ve got three years’ worth of a move since that bottom. I’m trimming Uber like I did everything else this week, and I even trimmed a little more Uber today. That said, I still love it. I think it’s a long-term winner but yes, there’s more risk now. Can it even survive six, nine months with no revenues? We don’t know if there’s going to be much revenue for Uber. But Uber Eats and Uber distribution, Uber freight, they’re still going to have some value. Lyft is in bigger trouble than Uber.
Subscriber:
Hi Cody, I’m going cruise stocks, can it be shorted?
Cody:
Lots of people are shorting or buying the cruise lines, and you’re just betting that they get some bailout and it works or you’re betting that they’re going to zero. Frankly, yes, I think cruise lines are going to zero. But I don’t know that it’s a good trade.
Subscriber:
What about Workday?
Cody:
Again, employment’s going to be crushed, so how long’s it going to take for Workday to get back to the normal levels that they called normal before the corona crisis happened?
Subscriber:
Hi Cody, how about Marriott.
Cody:
I wrote about Marriott the other day when they warned or withdrew their guidance or whatever and the stock was down 20% on that day at the open,. But like Campbell’s Soup and Budweiser, this is a company that’s got a global distribution network (of hotel rooms in this case) and, the critical mass that Marriott has around the world is key. But the problem is that you’re betting that hotel visits will come back like they were before coronavirus crisis, and that’s probably a safe bet, but I don’t know it. Marriott, like most of those companies, got some balance sheet issues. I bet Marriott’s borrowed billions to buy back their stock in the last few years. Oops. Maybe they should’ve put that on the balance sheet.
Subscriber:
Your thoughts on Bitcoin, Ethereum, and is Coinbase a safe place to buy?
Cody:
Probably is the answer to your last question. I will not vouch for any wallet, crypto wallet. Square Cash App I think might be the easiest and best place to buy your bitcoin, and look, I own a little bit of Ethereum from a while ago, own a little bit of Stellar, whatever they call it these days, and I own more Bitcoin than anything in the crypto world and that’s by choice and by design. I think Bitcoin is by far the de facto standard. It’s hit critical mass. It’s the one that people will go to for safety if they’re going to go to any cryptocurrency and as you’ve seen me write lately, I think gold and Bitcoin might be the easiest, clearest winners when the entire world is printing and borrowing tens of trillions of dollars all at once in an economic crisis with no revenue and no tax revenue.
WRAP-UP
I’m exhausted, but I don’t want to leave with a negative thought. I am going to hit on oil for one last second, though. Oil is a big unknown here and it is worrisome. Here in New Mexico, or say, next door in Texas, the state itself is dependent upon oil and gas taxes, and there’s no revenue going to be generated for the state of New Mexico. I mean, their budget’s going to be down 20, 30% unless oil bounces back to $30 in like the next month or two, and that is unlikely with demand collapsed around the world like it is, even if OPEC and Russia get back to trying to raise prices. Now as we’ve discussed, the Federal Reserve can print unlimited, I guess, as long as it’s the cleanest shirt in the global laundry and that will help the US fund some of this, but on top of the huge jump in government spending, we need to realize that tax revenues for states, tax revenues for the country, are going to collapse along. And so these are the kinds of things that the permabears promise and worry and tell you to freak out about, and now they’re here and we need to be worried about them, because the market’s not pricing that in after the recent 15-20% rally off the panicky recent lows, I don’t think. On Monday, when everything was at four, five-year lows before so many stocks bounced 30, 50, 70% the worst case scenarios were probably more priced in, but this is again why cash is key to portfolios right now. Now, I didn’t get to my positive thoughts, so let’s wrap up with that. Let’s go to … It’s funny, I’m struggling to find a positive idea to hit on. I’m tired and coronavirus crisis has worn me out. It’s worn you guys out. It’s hard to see the other side right now isn’t it? I’m tired of being alone in my office. I want to go play golf. I took up golf a year and a half, two years ago, and was really enjoying it. I just want to exercise. We can’t go play basketball.Will we ever play basketball again? SOOOOO Believe it or not, this is actually the positive thought I’m wanting to end on.
Because when you’re worried that you can’t even see the other side of the collapse, when you can’t even figure out how the states are going to pay for themselves, when you’re exhausted, when you’re worn out, when you’re tired, when everybody is worn out, when you can’t watch cable news anymore because it’s just so daunting and you just sort of need a break — well, maybe things are as getting to be as bad as they could be. Certainly some of this crisis has been priced in with stocks dropping from their highs, even if they’ve come back and now some of the crisis might not be priced in, some of it has been. More importantly, like I remind you every time, we are living not just in the greatest country, but in the greatest time, the world has even seen.
For all of our problems, for the crises that we’ve got, for the government that we’ve got, for the government that China’s got — It’s still a wonderful and mostly safe world that most of us get to live in. It’s not Stalinism. It’s not Naziism, it’s not a lock down on ideas, just a lock down of physical gatherings in a world that’s mostly virtual these days anyway. We are at least having these discussions, we’re looking at each other, we’re doing videoconferences with the entire Trading with Cody community welcome and we can do this somehow. You guys look at me, I look at you right here in this moment, and we’re closer than ever before. We have more ability to interact than ever before. We have instant global communication. The second a new innovation happens, we all have access to it. We all see it. If it’s valuable, it gets distributed the globe over instantly.
It’s an amazing, incredible time and place to be alive. You never thought the world could be so quick. You never thought that we could innovate, change, grow, develop new technologies, new innovations, new services constantly, and that’s great. We can distribute information, we can distribute money, we can distribute everything instantly. Take advantage of it. I do. I strive to use the tools that this world has given me every day to educate myself, to learn, to figure out new places to make money, to invest, to create.
You can do this. I can do this. I don’t care how tired we are. I don’t care how daunting, how disgusted we are. I mean, we’re grossed out. We can’t even be in the same room. The electricians who come to work in my office, I had to leave. We’re in rural New Mexico. They don’t want to be in the same building with me, and neither do I. But we’ll get past this. We can use this to our advantage. We can grow, we can learn, be better on the other side. I don’t know if the economy will be better in six months, but you can be better positioned.
God bless. Amen. Love you, love each other, love mankind, and pray. Thank you all. Peace, love, and happiness.
