We start off this week’s chat transcript with some fun stuff: some college basketball dream memories, some advice on how to be the next Cody Willard (not sure you want to be though!) and then we get into the markets, bitcoin, economy, and individual stocks.
A. Marlow was my room-mate and Charles was next door in the duplex for a few months during my Lobo days and both were great dudes, though I eventually was probably closer to Charles than I was to Marlow. I beat them both playing one-on-one at the park many times (I probably lost more than I won though LOL). Each of them were great college basketball players in their own right but by the time of his last season, Charles was just awesome. The D, the reach he had, the quiet fortitude, etc…Marlow’s jump shot was better though, and he might have fit into today’s 3-point dominant pro schemes in ways that didn’t exist back when he graduated. Who’s asking? Great question!
Q. I’m Dave P, former scout for the Miami Heat. I saw you play at the UNM Pit in 1994. We drafted Charles Smith based on Pat Riley wanting a 6’6 stretch player.
A. That’s amazing. What a small world, what a circle life is. Thanks for being a part of Trading With Cody. Also, do you realize that I still own the Points-per-minute record for the UNM Lobos? I played a total of like 20 minutes in my Lobo career, but I scored like 40 points in those 20 minutes. My 43″ VJ never got displayed in a game though…otherwise I might have been the one you picked instead of Charles!
Q. Saw the NCAA game in 95 in Pittsburgh. Marlow was gone. Charles played well enough during the year to be a 1st round draft choice. You went to one of the premiere basketball schools in the nation. The Pitt was the place to play in the 70’s, 80’s and 90’s and still ranks among the best. Most people don’t realize that you are a D1 player that was on a Super Team.
A. I’m flattered and honestly I hadn’t thought of what you’re saying about the level of the team I was on. We were ranked #15 or higher in the nation at one point that season. Here’s a picture of something I have framed in my office from those days. Marlow is the one shooting at the bottom right. Charles is in the very back of the airport photo.
Q. You would have scored 20 ppg on a team like Niagara, Iona, Drexel here on the east coast. It’s a big jump in talent to major college basketball.
A. I was recruited by Harvard to play basketball while I was at Blinn College, which I feel safe in saying makes me unique in this world. LOL. Thanks for the kind words. I sometimes wish I would have done things differently in my basketball career, but then again, I can’t complain about the way my life has gone since I gave up chasing the sport when I moved to NYC to take on Wall Street in 1996. PS. This might be the most fun I’ve ever had in the Live Q&A Chat!
Q. Thanks for the stock choices. All are making money. I’m in for the long haul both in the market and on this site. You brought that Lobo work ethic to Wall Street = Win, Win, Win!!!
A. Speaking of which, I should get back to the Wall Street topics. Thanks again!
Q. I don’t know if this forum is ok for this question, feel free to skip, but I’m a 14 yr. old from a TWC family and was wondering what degree from what university(ies) is the most advantageous if I want to be Cody Willard when I grow up. I’m sure there are others with grandchildren or children that may be interested too.
A. Welcome to the chat and thanks for being here. I didn’t know there was such a thing as a Trading With Cody family, but I suppose given that most of my subscribers have been around for many years, that makes sense. I’m honored! I actually have some good advice for you here: It’s not nearly as important which college or what degree you get while there as it is what you do every day while you’re at college and after you get done with it. As noted in passing earlier, I went to play basketball for 1.5 years at a junior college in the middle of nowhere Texas and then I went to the UNM because my opportunity to play at Harvard fell through. I also had about five different majors before I took an economics class and immediately realized that was what I wanted to get my degree in. And then I came to NYC worked at Starbucks, got a job at Oppenheimer stapling and filing papers, and then worked my butt off almost every day for the next couple decades. Took chances. Had losses and heartbreaks and set backs and hunger over and over for years too. Nothing’s easy, but the good news is that you don’t really need to pressure yourself so much about following some specific college and career path if you “want to be Cody Willard” when you grow up. Because that’s literally exactly opposite of what it took me in my life to be Cody Willard when I grew up. Thank you so much for asking the question. I feel humbled trying to answer it.
Q. Is the market up because it believes that the Federal govt will continue stimulus packages? When does all this havoc get priced in? Yeah, I’m worried!
A. Yes, partly. The best way to explain why the market keeps going up right now despite the economic despair is: The Fed’s Printing Trillions + the Government’s Borrowing Extra Trillions + Everybody’s bearish.
Q. How does it make sense that the stock market is going up when everyone is bearish?
A. The market usually does whatever makes a fool of the most amount of people.
Q. I get the feeling that I should sell everything and sit on cash, Impending doom?
A. Everybody’s bearish. Stick with our best names, but be defensive with cash and hedges. That’s what I’m doing anyway.
Q. Has our current monetary policy trajectory not already been tried and failed? I mean what’s the difference between the US and Japan? They were an economic behemoth who lost manufacturing to S.E.A. Propped up their economy by flooding the market with capital, created and crashed bubble, nationalized failure instead of bankruptcy, kept low interest rates, now -, It lead to 20+ years of nothing. Why is the US different? Still no contrasting Austrian economic theory to balance here!
A. The US is not Japan. The US has technology and a somewhat free market system and a better system of capitalism and a better system of regulation and more natural resource and so on. Also, the US has the petro dollar which forces other countries around the world to pay for oil in dollars which requires them to buy dollars, not yen. These things make the US different and much more able to do these immoral and long-term destructive but short-term expansive monetary and fiscal policies. I’m not saying it’s good. But I’m comfortable in saying that the US is certainly not destined to the same outcome that Japan has experienced in the last few decades. It will be different and over time, it will be better in the US.
Q. Cody, What odds would you give for SP500 to reach record high by end of year?
A. 1 in 6.
Q. Cody, what’s your opinion about Warren Buffet not making moves right now and waiting to get past this “Typhoon”?
A. Seems sensible from a risk/reward standpoint, IMHO.
Q. Good morning, Cody. Following the playbook…but feeling light in hedges with various May ETF puts expiring. With a portfolio essentially of TWC stocks, what ETF hedges might you suggest — still primarily on the down side? And if so, puts or shorts? Thanks.
A. I’d suggest sticking mostly with cash, but maybe having a few hedges on. Puts are expensive as insurance right now, so if you can, it might be best to use outright shorts on some indices instead of puts. But again, for most retail investors, I’d focus on cash, not hedges.
Q. On the revolutionary note. Have you paid attention at all to ARK-invest. They take a different perspective on analysis and end up with many names in common. Their core belief is that most analysts are too narrowly focused to understand revolutionary stocks since technology and disruption cross multiple disciplines. For example it would be hard for a bank stock analyst to really understand Square.
A. Yes, I think ARK is doing some very interesting stuff and analysis.
Q. Cody, for the last month or more you have been telling us that you are trimming your longs but maintaining your “core positions.” Can you give any parameters for a “core position”? Is it some percentage of a full position or is it just whatever we feel comfortable with based on our own circumstances. I have trimmed all of my stocks down substantially but have some concern that I am not maintaining enough for my core positions. Can you provide any guidance in this regard?
A. It’s easy to feel like that while the markets are rallying. Unfortunately, there’s no easy to answer to this one. It’s a balancing act that each of us has to work on based on our own risk-tolerance, life demands, etc.
Q. Paul Tudor Jones Buys Bitcoin, Says He’s Reminded of Gold in 70s.
A. I’ve been saying this since bitcoin was at $100 in 2013. I sure respect Paul’s views on many things.
Q. I want to buy Bitcoin. Please give me your advise.
A. I think bitcoin is a long-term winner and I own some personally and I own some bitcoin futures in the hedge fund. I trimmed about 20% of my bitcoin futures yesterday though. That said, obviously I still like bitcoin for the long-term here, so maybe nibbling a first tranche here is the way to go and maybe it will crash instead of spike when bitcoin does the “halving” thingee it’s about to do.
Q. If this is a dumb question—I’ve asked it before and you haven’t seen fit to use it- a guess as to where bitcoin ends the year. Stay safe.
A. Maybe $12-15,000?
Q. Cody, are you still holding a little of the CVNA Short? Still a good lil’ hedge you say?
A. I’ve traded around the CVNA position here and there and it’s gotten to be very tiny at this point. It’s probably not the best short because it’s way of buying cars online is obviously more in demand now than ever.
Q. Any words about WORK?
A. It’s still a go-to Work-From-Home play. Growth curve here got steeper as people collaborate over Slack during Coronavirus Crisis times. The stock has run a bunch here and I’ve trimmed it down some, as you know.
Q. Cody I see PayPal as a checkout choice on almost every online retailer, will SQ ever compete in this online realm?
A. I just can’t stand Paypal, as an enterprise and consumer customer, so I’ve never warmed up to the stock, unfortunately. I think there are more long-term ways to win with Square than with Paypal, but Paypal has certainly been a long-time entrenched full de facto standard way of paying online.
Q. Any thoughts on AYX? Gotta think data is only going to get more important in the future. 1 billion in cash, 8 billion market cap.
A. Yes, I think this is an interesting company and compelling stock. Growing 30% per year steadily, providing software and data analytics to doctors and scientists. Trading at 10x next year’s revenue estimates, it’s not cheap, but it’s not wildly expensive given those metrics either. Good balance sheet makes me quite interested, but I haven’t pulled the trigger.
Q. Roku has had a great run over the last month or two. Earnings last night seemed pretty positive overall. Where do you see the stock heading over the next few months and the long term?
A. Over the next few months, I have no idea. Over the long-term, this stock could be worth 3-5x its current quote in a decade or less.
Q. Been seeing/hearing a lot of good things about LVGO as a healthcare/SAAS service play. Unfortunately I bought at 30 but didn’t feel comfortable enough so sold soon after. Oops. I have since built a position but at much higher cost average.
A. Looks a lot like the financials, valuation and fundmental set up of the aforementioned AYX. I think AYX’s business looks more interesting and a bit safer than LVGO though, at a glance anyway: “Livongo Health, Inc. provides an integrated suite of solutions for the healthcare industry in North America. Its solutions promote health behavior change based on real-time data capture supported by intuitive devices and insights driven by data science. The company offers a platform that provides cellular-connected devices, supplies, informed coaching, data science-enabled insights, and facilitates access to medications. Its products include Livongo for diabetes, Livongo for hypertension, Livongo for prediabetes and weight management, and Livongo for behavioral health by myStrength.”
Q. Thoughts on Skechers (SKX)? Strong growth before Covid, stand alone outlet stores.
A. Not much of a revolutionary company, but seems like your analysis sounds compelling.
Q. Hey Cody. At what price would you nibble more TSLA?
A. I don’t know. Depends on a lot of things. I might nibble some for the hedge fund near $600 or so I guess.
Q. Thoughts on DVAX after earnings?
A. Looks fine. See the note from last night please.
Q. Cody – VTIQ is running and merging with NKLA…this might have some legs for some speculation if you think the story is not full of substance. what do you think ? thnx
A. See my write up on it last week. I’m no fan.
Q. hey @Cody: do you see a setup happening for a possible short opportunity on some of these consumer goods companies now that the hoarding has slowed and many people have too much of this stuff now?
A. Yes, for traders maybe. But they are good companies and I like to focus on shorting crappy companies.
Q. any follow up on CRSP?
A. Steady as she goes on this long-term VC-like investment.
Q. Cody good morning. What are your thoughts on DKNG?
A. Trading at more than 20x next year’s revenue estimates, there’s a lot of optimism built into Draft Kings’ stock.
Q. Whats your favorite TWC name that pays a dividend?
A. Probably TSM.
Q. Do you think ZM will get bought?
A. No, it’s probably too expensive to justify another 50% premium or something to buy it.
Q. How’s the Slack beta going?
A. Haha. I know, I need to work on it!
That’s a wrap, all. Thank you!