Here’s the transcript from this week’s Live Q&A chat where we talk the potential for a vaccine to help the world, whether airline and cruise stocks are in more trouble, anti-trust hearings and much more.
Q. Hi Cody, Is the market movement higher assuming a vaccine by end of year/early 2021? What’s your take on time frame to getting back to life/economy normal say in December 2019 pre-covid 19? To me it’s taken for granted that a vaccine will emerge so quickly and with such high efficacy like the measles shot. Your thoughts.
A. I’ve been optimistic and hopeful about a good vaccine for Covid since the lock down in March, still am. But I do think the hopes for the vaccine are now much more priced into the market and if there’s not a vaccine by the first quarter of 2021, I’m not sure the economy can bounce back to pre-Covid levels for another year or two.
Q. Just like a previous question you had, there’s a lot of talk about a vaccine and how it will help society get back to normal. My question is… will it really? Do you think people will run out and get a vaccine as soon as it’s developed? Or will the majority of people be waiting at least a year or two to see how/if it’s working, if there are serious reactions, etc? Personally, I can’t see myself or my family taking a brand new, just released vaccine. So I guess my question is does a vaccine really matter at all for the next couple of years?
A. If my doctor friends who I trust with my life and friendship tell me to get my family the vaccine when it comes out, I wouldn’t mind being one of the first to do it. My family’s life, with Amaris already breathing through a trachea tube, will be pretty much on lockdown until we can get our Covid-19 vaccine shots. A vaccine might not matter much to people who refuse to listen to doctors’ advice, but a vaccine would definitely be life changing for me and my family.
Q. Follow up to the vaccine question…. this comes from someone who had a family member have a reaction to a “common, safe” vaccine. When you know someone that was that 1 in 1,000,000 or whatever the chance is to have a reaction, I think you think twice about taking something that’s brand new and rushed through the process. I know you still have to look at the odds of something happening vs. not and evaluate, but just letting you know where I’m coming from…
A. I suggest you take a look at the concept of Risk/Benefit, it’s something we have to apply with every decision we make about where we go, who we see, how we get there — EVERTHING we do is based on risk/benefit for Amaris and our family. Peace and love.
Q. Just logged on to the chat room for the first time ever: Sorry I missed the rest of the session and if you already answered this I apologize: TSLA and possibly being listed on S&P 500. Should we be picking up even more at this high valuation to add to it?
A. Dr. Shores! What’s up. Dr. Shores is a doctor friend of mine whom I’m talking about trusting his advice. If Jshore tells me to get my family vaccinated, I jump. Jsho, your thoughts on the vaccine topic please?
Q. TSLA and possibly being listed on S&P 500. Should we be picking up even more at this high valuation to add to it?
A. Believe it or not, it’s usually a great time to sell a stock when it gets included in a new index and it’s usually a great time to buy a stock when it gets kicked out of an index. With TSLA being as volatile as it is and with TSLA up as much as it is and with TSLA sporting a 1/4 trillion dollar market cap, I wouldn’t bet on trying to game what it does if/when it does get included in the S&P 500.
Dr. Shores writes: I haven’t done a deep dive into this yet re: “the science”, but I think a vaccine is the most viable way of trying to reopen our country and the world. Some of the biggest scientific questions about this virus are: Does having recovered from infection and demonstrating antibodies, or having a vaccination to develop antibodies, actually protect against reinfection? And if so, for how long? Indefinitely? short term? This virus isn’t going away. Best case scenario is long term protection from both since this virus will keep circulating for years to come. However, we haven’t proven that either offer significant short term or long term protection. We will know more in 6 months. Science is slow. Positive data point from Europe though: Opening schools did not seem to cause a sudden spike in cases (kids are not little adults). Best advice: wash your hands, don’t touch your face, avoid crowds if possible, WEAR A MASK!!
A. Thank you so much for the commentary and analysis and advice, good doctor.
Q. If you do hear about a vaccine being recommended by one of your friend physicians please do share that information here. Thank you.
A. Of course.
Q. Hi Cody, if the government is helping businesses and people out with stimulus packages and mortgage companies are helping home owners and we open up the economy, what is the catalyst for a market pull back? I was never good at economics.
A. We have to be careful not to confuse economic analysis with market analysis. They are related, but far from being the same thing. Markets can stagnate or go down during booming economic times. Markets can rally and create bubbles during bad economic times. The catalyst for the market going down can sometimes simply be that all the people who could have bought stocks have done so and/or the valuations get so ridiculous that gravity pulls the market down. No easy answers, shocking, I know.
Q. You mentioned in last night’s email that this bubble blowing market might be getting close to the “end”. What does that mean exactly? Is this the bubble to end all bubbles or will we just see a more prolonged downturn that we had in March? Fed will print to oblivion in any serious market correction as they will blame it on Corona. Unlike 1999 and 2007, I have a MUCH longer view of the market now. Don’t want to make same mistakes I made then like selling AMZN and AAPL.
A. I don’t know what it means yet. I’m still trying to get my head around whether it really is near the end of this Bubble-Blowing Bull Market and if it is, what it would mean. The world is changing but everything always stays sort of the same, as always.
Q. Cody – Curious to know if there were currently any ideas on your open-sourced spreadsheet that caused you to raise an eyebrow? Any themes that you might not have considered before? Or any symbols there that could form the basis for further research and/or discussion?
A. Haven’t looked yet since I sent it out last night. Please keep the contributions coming: https://docs.google.com/spreadsheets/d/1ZvXk8HDlskebt18TyXv-afLs3N9bLXC9IF0o2UZtEmU/edit#gid=0
Q. Cody, Just looking at the market and the stocks we own technically, for sure there are some stocks and sectors that are way extended. two questions 1) with the extended ones, they are so far above their 50 and 200 DMA’s that they can be hit pretty hard or go sideways for a pretty long time and still be and actually would be in better shape..just saying anything can happen but it doesn’t feel that we are super vulnerable right here. 2) even with many bubbled stocks there are still quite a few that seem reasonably priced/haven’t moved that much, csco, amd, tsm, qcom, cpb, even FB and Goog aren’t up crazy huge over the last few years. if you trim some of the winners down you could construct something that wouldn’t be crazy expensive. thoughts?
A. Sure, I’m not saying sell everything and go short. I’m not into technical analysis, but I don’t disagree with you. That said, I think we should be trimming our biggest winners and our only loser (DIS) and anything in between right now.
Q. This question might sound like an excuse for this expensive market but is it possible stock prices in general are being revalued due to zero interest rates? What was an expensive stock with 6% interest rates, might be cheap now?
A. Yes, but haven’t rates been at about 0% in the US for the last ten years?
Q. Cody, I do have some cash available, but I fear getting burned badly. I survived 2000 and 2008 thanks to you, and the folks at TheStreet.com. Do you find anything on the long side remotely attractive right now? Also, looking forward to your next portfolio update!
A. No, I’m not seeing much anything I want to buy right now as the margin of safety isn’t very large with valuations stretched like they are now.
Q. Q. Hi Cody, I understand you don’t think it is relevant to discuss percentages when talking about personal portfolios but can you give us an idea of how your hedge fund is positioned?
A. I’m not comfortable drilling down into any more details about my hedge fund’s positioning than I am about doing it personally either. It’d still be unhelpful to you. Let me put it this way, I’m more hedged and in cash in the hedge fund than I’ve been since I got it up and running eighteen months ago.
Q. Cody in 50% cash — sold half in late March. But have been riding your COVID picks back up. Feel a little paralyzed here. What to do with that cash and when?
A. Patience will probably be a virtue in this market. I was buying in late March, but I have been trimming down since then and I’ll be patient. No easy answers, as always. Investing is hard.
Q. Cody, there is something wrong with my brokerage account today. I’m showing some losses…
A. Hahahaha. Yea, that’s just about the prevailing attitude right now. Also, give it til the close, who knows! LOL
Q. Even with fed printing money –how big of a selloff are you expecting in nazz??
A. I do believe much of the Fed printing is already priced in. Bigger forces matter sometimes.
Q. Any new hedges to add? I’m thinking airlines, hotels, cruise lines. I added AAL as a hedge – it’s done well. I see pain ahead for many that are affected by Covid. I even think something like Uber is a potential short/hedge – not only are there far fewer cars in LA, but the prices are double what they were just in February. So, my short/hedge ideas: AAL, MAR, GM (has been working well), UBER (maybe?), NWCL, NKLA, and others along these lines etc.
A. I’d rather short LYFT as a hedge against out UBER than short UBER outright. Lots of traders are now playing in the airlines/hotel short thesis, so it might be a bit crowded. I don’t have any easy answers on the short side/hedge question, because the average investor can blow themselves right up by shorting the wrong stock at the wrong time. Spread your shorts and hedges out a bit, don’t be as concentrated in them as we are in our longs. Also, it’s expensive to borrow NKLA and most of the other highflying silly names right now too. Puts are too expensive on those names. Be careful.
Q. Is COVID-19 speeding up the process of a “cash less society”, if there is such a thing? Are there any pitfalls or is there anything we should know?
A. I don’t think cash will ever entirely disappear, but certainly I find I prefer to go to the stores where they have Apple Pay ready for me to check out with, so I don’t have to touch money or even the credit card reader much. Pitfalls would be that the governments around the world will have even more control and views into your life.
Q. Hi Cody – what do you think about the upcoming Anti-Trust hearings (happening towards the end of the month) as an impetus for the correction we’re all looking for. Do you see the potential for a significant drop in the big names that could end up pulling the indices down with it?
A. I don’t recall the markets or the stocks of AMZN, AAPL, GOOG, FB, etc ever getting meaningfully hit when the Republican Democrat Regime pretends that they suddenly care about enforcing anti-trust laws by holding scripted anti-trust hearings and endless grumbling about anti-trust violations. Here’s part of what I wrote about the Potemkin anti-trust actions from the Republican Democrat Regime back in 2017: “So, yeah, I expect there will be a lot of noise around Democrats going after Amazon and companies like it. I don’t think it will get anywhere with Amazon though. And I am going to tell you right now, I hope the stock gets hit for like 20 or 40 percent off worries the government is going to crack down on some sort of anti-trust thing. If there is one thing we know the Republicans and Democrats do not crack down on anti-trust. So they are going to let them do what they want to do. If the worry and fear gets built into the stock price, man I will take that opportunity to make Amazon my by far biggest position. If I could buy even more Amazon, which I’ve owned for years and at a much lower cost basis than today’s quotes — if I get the chance to buy more Amazon at $750 or 800 bucks in the next six months or year, I will do it. And Trading With Cody subscribers will be the first to know when I strike again. I don’t think I will get that opportunity though.” https://tradingwithcody.com/2017/07/30/peak-swipe-why-alexa-is-apples-greatest-threat-and-how-amazon-anti-trust-will-play-out/
Q. Cody – The CRSP call has been tremendous. It’s up over 100% since you recommended so thank you for this. What’s the playbook here? Trim a little?
A. Yes, absolutely, I’ve trimmed some CRSP. “Helluva run, incredible move, whoohoo, money’s easy!” I’d rather trim than buy when that’s the mantra out there in the market.
Q. Hi Cody. What do you think of DataDog? Their software helps prevents crashes (Robin Hood) and glitches (Spotify). Recent IPO in the last year.
A. Yes, I have read a couple recent reports and have done some analysis on DDOG and I like the company’s model and would like to buy the stock….when it has a reasonable valuation and provides me some margin of safety, but I don’t think this is the time.
Q. Cody, what do you think about SE, TDOC and Banks?
A. SE and TDOC are interesting, but the parabolic charts are terrifying. And I have no interest in trying to game the banks gaming the Federal Reserve welfare programs they get. I wish banks were still mostly in the business of banking instead of gaming and lobbying and begging and playing the government.
Q. Back in December you wrote that people at the Salt conference in Abu Dhabi were talking Zoom and you heard a lot of bullish cases for it. Obviously, everybody is using it now..but could you tell us anything you remember that stood out from those conversations on the long term bullish case for zoom? since that was pre-covid and unless somebody knew something curious to what may have stood out if anything that you may have remembered people saying. Thanks.
A. I’d forgotten about that and just found what I wrote at the time: “Well, it’s certainly been insightful and interesting to come to a finance conference in Abu Dhabi with 1300 attendees from all over the world, representing hedge funds, service providers, wealthy family offices, sheiks and others. I’ve learned a lot already, including how many people here are long Zoom (ZM) but I have yet to find anybody who owns WORK or even TSLA. I like owning stocks that others don’t yet, of course, but I am doing more homework on ZM too, after hearing so many bullish cases laid out for it. The conference actually officially starts today and I will have my ears and eyes open to learn and absorb as much as possible. Some of what I’m learning is contrarian in nature, as I try to pinpoint groupthink sinkholes.” They were bullish because Zoom was replacing Skype and Facetime as a de facto standard for video. And that’s happened, hasn’t it? That said, with the stock 300% since then, there’s a lot of future growth now priced into ZM. I’m still holding a core position in ZM, but obviously, it’s another one that I’ve trimmed down.
Q. I think I had asked a few days ago whether 4/17 was the most recent Latest Positions. Any idea when you can update that?
A. Yes, I’m planning on starting it this weekend and sending out a series of posts next week.
Q. What’s your take on the recent Twitter news of a subscription platform? Could that be a catalyst for what has been a generally lethargic stock?
A. I don’t get it and sort of hope they don’t create a subscription model. Let freedom reign and rain.
Q. You said that last weekend you would be analyzing Republic’s gallery of startups and have suggestions on a few of the stronger ones for us this week. What did you come up with? Thanks.
A. Yes, here’s what I’m thinking is the best asset on Republic to buy and will send out next week: https://republic.co/note You actually get a piece of every company that has or ever will raise money on Republic with the Republic Crypto Note.
Q. Cody, have you ever considered AXON as a revolutionary stock for police work. The non-lethal weapons, the body cams and cruiser cams, uploading evidence to the cloud for security (non-tampering) to protect officers, the public and the wrongly accused.
A. Yes, but I have a hard time investing in any, even non-lethal, weaponry.
Q. Good morning. One stock that always has me scratching my head, is Palo Alto Networks (PANW). ….Palo Alto has only moved 20% or so, in the last 5 years. Do you see them benefiting from the work at home shift?
A. Yes, I’d written this about them a couple weeks ago: It’s just that so many people have crowded into cyber security stocks that I’m leery of most of them at these valuations. I like SPLK and CSCO as cyber security plays though.
Q. Cody, No one is buying Cruise Line sticks right now. I really like to buy what no one else is. Do you recommend it?
A. I love the contrarian aspect of buying stocks….but I personally expect most Cruise lines are going bankrupt in the next two years.
Q. I know the Sin Stocks are not well liked ever but especially now. But people still drink and smoke. MO pays a strong dividend. In a time when we should have money in cash earning nothing, is MO a consideration?
A. Haven’t looked at MO lately, but I can think of many worse ideas to put your money in right now.
Q. Just finished looking at the Republic recommendation you alluded to. I think the question was more directed to what specific companies on Republic do you see as the best opportunities. The link you posted seems more like an invitation to invest in the underlying platform, or am I reading it incorrectly?
A. The Note gets you equity in all the companies that raise money on Republic, not in Republic itself. From their site: ‘Republic Note is a new kind of asset that shares profits when startups and private equities that raise with Republic get acquired or go public. 1-16% Carried interest from 1% to 16% 2% 2% securities commission Republic earns from successful exits When startups and private equities that raise with Republic later sell or go public, Republic earns cash based on pre-determined carried interest rates or commissions. Dividends Republic Note receives dividends We pay out a share of profits from successful exits that we receive to Republic Note holders proportional to how many tokens you own. Profits You share in the profits Republic Note will be a tradeable and dynamic profit-sharing token.” It’s RISKY tho, to be clear. This is a start up, crowdfunding place and it’s not Goldman Sachs (yet?).
And that’s a wrap. Thanks all.
