Here’s the transcript from Friday’s Live Q&A Chat.
Q. Like you, I believe that we should be trimming the portfolio. Protect and participate when opportunities arise. But this market is uncanny, what should we be trimming? At some point, the gains will have to cool. What say you Cody?
A. It’s amazing how steady this market has climbed off the lows in March. I’m still happy to trim a little bit of most of the positions in the portfolio as they’ve rallied.
Q. Hi Cody, when you trim your positions, can you give us the percentage of the position that you trimmed? That would be very helpful.
A. If I trim something meaningfully on an individual basis, I try to mention the percentage terms. But I’m not sure that’s all that helpful anyway, because trimming parts of your portfolio can be more of an art form than a science and I’m just trying to be a guide, not a mirror.
Q. What names are 8+ right now (if any)? Docusign and TSM were the only two on the last update. Curious what changed since then? And BTW I prefer live chats here vs. Zoom, but not complaining at all. Whatever is best for you and everyone else is fine. Thanks!
A. Not sure I have an 8+ right now. Market feels extended, valuations are stretched and I’m not liking the risk/reward set up for longs overall as much as usual right now.
Q. Can you give a comment on negative interest rates. What are the implications? What can we expect going forward?
A. Here’s me hosting a panel with Jeremy Siegel, Professor, Wharton School, University of Pennsylvania, William H. Eigen, Chief Investment Officer, J.P. Morgan Asset Management, and Michelle Seitz, Head of Investment Management, William Blair a couple years ago on this topic. I don’t remember what we said back then. These days, I don’t think negative interest rates are coming to this country, but it could happen and it wouldn’t be bullish for stocks. https://youtu.be/sXIr90O4TLo
Q. Powell is firmly against negative interest rates, I think it is safe to say.
A. I absolutely disagree with you. Powell is not firmly against anything but embarrassing himself near-term and/or making his banker bosses lose their asses. That’s all he cares about. I sure don’t think he gives an iota of care about negative interest rates overall. He might say he’s against negative interest rates, but at best he’s just trying to make the markets believe something his bosses want the markets to believe.
Q. Hi Cody – question for you – what do think about Elliot Wave Analysis for the purpose of identifying overall market psychology. Is it something you look at?
A. I don’t even have anything more than a vague understanding of what Elliot Wave Analysis even is. I certainly don’t think the average retail investor is going to be able to use any kind of trading system to outperform the markets over 10,000 days. I do think great stock picks and a steady hand can outperform over 10,00 days though.
Q. Didn’t take your SPOT recommendation when you first made it. Would you start a position here?
A. The answer to this question is always the same, no matter the stock. “I didn’t take your [ANY STOCK THAT GOES UP GOES HERE] recommendation when you first made it. Would you start a position here?” I always tell people to start with a small tranche if they want to own a name that’s no in their portfolio yet.
Q. What do you make of the “DVAX initiates a public offering of common stock” news?
A. I like when a company raises money when a stock is up, but this seemed a little desperate given how quickly they announced the offering after the stock popped after they announced vaccine trials with some of their partners earlier this week. It’s fine though, I’m holding it steady.
Q. Cody I see there is a short sale restriction on DVAX what your thoughts on that?
A. Nothing, really. TSLA had a short restriction on it near the bottom. That just means that a lot of people think the stock is going down. And I trust my analysis, not those people’s.
Q. Have you looked at Republic lately? Wondering if there might be some good innovations in our new normal.
A. Great idea, let’s all do that. Take a look at Republic.co/companies and see if there’s anything that sticks out again.
Q. How concerned are you about Chinese stocks like our JD and others like BABA, BIDU etc in terms of the saber-rattling going on in DC?
A. When all stocks in a particular sector are sold off 10-15% across the board because of headlines, it’s usually a good time to pick at your favorite names. That said, I do think the Chinese economy and Chinese stocks could underperform for a few years here. But I’ll hold my remaining JD, which we were buying last year in the $20s, steady, as they are delivering fundamentally.
Q. Morning I would like to add a little PINS? I thought we would be higher than were are on this one.
A. The stock’s up almost 50% since we bought just a few weeks ago no? That’s gotta be about a 250% annualized gain. I still like the PINS just fine, but trimmed it recently and would probably buy some more near $16 or so at some point maybe.
Q. Cody are you still in QCOM? Did not see it on the 4/13 update. Was a buy, I believe Feb 27, and don’t remember seeing a sell but I could have easily missed it.
A. Yes, I added more on Feb 27. I might have missed it in the Latest Positions last time. It’s got a great dividend and a leading technology in the 5G Revolution, so I’m sticking with it.
Q. Can you discuss the Stay at Home category — and specifically WORK and ZOOM — in these times when (a) “At home” is going to diminish as we “open up,” even if not all the way back to where it was, and (b) Google has jumped in big-time with an easy-entry and what seems like a good product. Would either of those two providers be targets for trimming (again) right now?
A. Yes, the WFH phenomenon will slow down. Yes, absolutely I’d suggest trimming any and all of the stocks you mentioned.
Q. @Cody Interesting you think the WFH phenomenon will slow, since it looks to be just getting started with some big tech names moving to a more permanent WFH plan. FB wants to have something like 40-50% of their workforce WFH in a couple years. Will companies see potential cost savings without office leases and expand WFH? FB looks like they will also reduce pay or offer lower salary for those living in a location with cheaper cost of living with WFH. Looks like they & others will benefit.
A. Sure, but the acceleration of growth that we just saw will fade.
Q. What do recommend for a Bitcoin position size (% of portfolio) and is now a good time to scale in?
A. Somewhere between 0.2% and 2% of their portfolio sounds about right for most people to have in bitcoin. And I’ve recently trimmed about 20-30% of my bitcoin near $10,000 and I’m holding off adding more for now, but I still think it’s a core holding and if you don’t own any, maybe start with a small tranche of about 1/5th as much as you want to own.
Q. Is LPSN a revolutionary company?
A. It looks interesting, “provides conversational commerce solutions. The company operates in two segments, Business and Consumer. The Business segment enables brands to leverage LiveEngage’s intelligence engine to connect with consumers through an integrated suite of mobile and online business messaging technologies. The Consumer segment facilitates online transactions between independent service providers and individual consumers seeking information and knowledge through mobile and online messaging.” But I’ve never heard of anybody using the company’s products, have you?
Q. Any thoughts on Teladoc as a long-term secular trend on remote health care?
A. Looks way overvalued here, but the idea isn’t bad. People do need to see their doctors in person most of the time though.
Q. I thought that LPSN were involved with the bond trading desks.
A. No idea.
Q. Thoughts on pure storage, PSTG?
A. The company came public at this price five years ago and has gone nowhere. Revenue growth of 10%ish isn’t enough to get the market to care. I’m not very keen on this name here, but neither does it seem terrible.
Q. news of SPCE sales from Vieco and stock is up. Is that relief of overhang gone? Thoughts on if it might lead to more upside?
A. Not really. I don’t know how I’d try to game that. You either bet on this company being a long-term Revolutionary Space play or you sell it, IMHO.
Q. Cody. So many stocks generally in software and security which are either helping people get on the internet, run their businesses on the internet, open a business….. seem to be just killing it at this point. We for sure have some exposure with SPLK, Docu, Work, ZM, plus AMZN, Goog now FB, but wall street seems to be betting on a lot of money going there.investment accelerated, I have held FTNT, ADBE, and NOW for a long time, just added SHOP..there are others. R U looking at anything there?
A. I’m always looking, but we have plenty of exposure to the winners in this sector for now, I do believe.
Q. Cody – Are you sticking with Cisco here? It’s had a nice rally over the last month or two. Hope you have a great holiday weekend.
A. I’d tell you if I was bailing on the CSCO. I think it can really benefit from the downfall of Huawei as a global competitor.
Q. Hey Cody – What are your thoughts on GBTC for some exposure to Bitcoin? Thanks for the DVAX call! AND Cody, also wanting to ask the same thing…..do you hate GBTC as a forum for bitcoin?
A. I don’t trust GBTC to be there for you if/when the need for bitcoin truly arises, so no. I’d stick with bitcoin (or bitcoin futures if you have to).
Q. Also on Bitcoin platforms/forums: what’s your opinion of the Cash app for transactions (including the security of their wallet)?
A. I’ve mentioned about 20 times this year that I think the Cash App is probably the best and safest way for most people to buy bitcoin these days.
Q. BTC makes up like 15% of my portfolio…yikes. But I’m probably like 10 yrs younger than everyone in this chat room.
A. To each their own, according their own analysis and risk-tolerance, upward mobility, earnings power, age, inheritance potential, etc.
Q. Sorry to bug again…GBTC, do you hate it as a vehicle? Its just much easier for me to invest through my retirement accounts. Doesn’t require new funds/new accounts…i think others may feel the same..thoughts?
A. I’m not sure how to answer it more clearly than I did already, honestly: “I don’t trust GBTC to be there for you if/when the need for bitcoin truly arises, so no. I’d stick with bitcoin (or bitcoin futures if you have to).”
Q. Basically, it sounds like Cody distrusts companies that may or may not hold the physical asset you are buying by proxy (like GLD with Gold). He likes to hold the actual physical asset itself, i.e., BTC rather than shares in a company that claims to own BTC. But if you like those types of companies, may I introduce you to RIOT? LOL, just a small blast from the past!
A. Haha, I forgot about the Riot Long Island Iced Block Chain Bitcoin. Be careful out there
Q. Hi Cody, at what price would you buy SPCE based on present market conditions where travel for leisure seems to be still six months away or at least until there is a vaccine out there. Thanks!
A. I don’t think SPCE long-term depends on vaccine. It depends on long-term Revolutionary Technology making the world smaller for logistics and travel.
Q. I started watching MDB at $30. Of course I never bought. Two questions. First, why do I keep looking at the stock because it just makes me sick. Two, how crazy would I have to be to buy here over $200?
A. I’d remove it from your screen and let your brain and emotions get a break from it. Yes, at this valuation, it’s pretty stretched in my opinion. It’s a great company though.
Q. Best guess.. When will NVDA be a trillion dollar company? I understand it has probably gotten ahead of itself but they are positioned very well for the future.
A. I’d feel better about NVDA the stock here if your question had been “IF” not “WHEN.” I don’t know that NVDA will ever be a trillion dollar company actually. TSM, yes, probably. NVDA, probably not.
Q. Any closer to considering some Cannabis companies? Banking reform has made it on the latest relief bill and some States may re-evaluate their stance on legalization as tax revenue may be in the spotlight moving forward.
A. Yes, I’d stick with CGC and GWPH. Maybe it’s time to nibble some.
Q. What is your opinion regarding Jumia. They are Africa’s main online retailer that last year ipo at 22 reached 40 and is now 5. They are burning cash but are valued under 400M with around 200M cash and 0 debt. They likely need a capital raise as their burn rate is 150M/year. Yet, customer signup increased 50% YoY, orders 28% and gross profit 21% per last E.R. Sales this Q struggled mainly due to the lockdown in Nigeria, Kenya and S.A. which have now been relaxed. (Logistics suck in Africa)
A. I have a tiny short position in this name. Looks like it’s doomed.
Q. What are the specifics of that Jumia put position — price when you purchased, price now, etc. ? Recommend getting in now? (When Cody says doomed, I begin to act . . . )
A. I had a few puts in the stock when it came public at much higher levels. It’s usually better idea to short any company that’s ever promising to be “The AMAZON/JPMORGAN/GOOGLE/LEADER/ETC of Africa” than to buy it. I wouldn’t short JMIA here though. It’s crashed and I’ve just let the few shares I’m short at this point sit as is. It’s a tiny position partly because it was small to begin with and a short position gets smaller as it gets more profitable, unlike a long position.
Q. I wanted to get your opinion on Teladoc. It seems everyone is extremely bullish from the Q1 growth, but I think their model isn’t great or anything revolutionary. I’m a vascular surgeon in the Cornell system, and we have transitioned to 70-90% telehealth during the pandemic. We’re using the American Well system mainly but can use Facetime, Zoom, or whatever you prefer. CMS has increased reimbursement for telemedicine and it is covered by insurance. I’m skeptical that there are that many people that want to pay TDOC’s fees when their existing physicians have transitioned to a similar system. Additionally the Teladoc physicians don’t have any physical locations where more complex or urgent issues can be evaluated.
A. See my answer from earlier, but you make some great points.
Q. More a suggestion than a question, but would it be possible under the “Latest Positions” heading of the TWC site to include a table of current Revolutionary stocks, along with the prices you’d be trimming at vs. prices you’d be buying more at?
A. I send out a table like that every few months. It’s due. I’ll do it soon.
Ok folk’s that’s a wrap. Thank you!
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