Here’s the transcript from this week’s Live Q&A Chat.
Q. Cody, last week I had asked if any of the indexes would touch the March lows and you said you don’t believe so but we also get the 2002 bubble comparisons. Just looking for advice to navigate. Also where I’d buy more of our names would be great. Thanks.
A. Yea, we don’t necessarily have to crash 75% in the Nasdaq if/when this Bubble Blowing Market With Blow-Off Toppish Action pops. I doubt we will, really. We might just pull back 10-15% and drip lower for a year or two or something. No easy answers. Stay tuned for more strategy as we navigate ahead.
Q. Is the market ever going to consolidate again? Go lower? This is getting ridiculous.
A. No, stocks only go up. Didn’t you hear?
Q. But you are not suggesting that the market is going to fall 90% overnight because JDSU did.
A. Correct, I’m not saying stocks are going to crash across the board. But I am saying there are a lot of crappy stocks that are currently worth billions or tens of billions of dollars that will be down 90-99% from their current all-time highs sometime in the next year or two.
Q. TSLA at $2000, I know you are hedging it, but man, i’m having a hard time not locking in 10x gains (long term as well), i guess nothing wrong with that right?!? Great Call, Great Product, HUGE Winner for me.
A. I wouldn’t sell all the TSLA stock. But yea, we were making this stock our biggest position when it had fallen close to $200 a share last summer, so the stock is up 10x from that levels now and the gains from this pick have literally changed many lives for Trading With Cody subscribers. Nothing wrong with locking in some life-changing gains!
Q. Cody, Looking ahead, if Covid disappeared or is controlled effectively early or mid next year, what would the playbook be? Could the Covid stocks like ZM,, DVAX, DOCU, NFLX, ,ROKU still work then?
A. Yes, some of them will work fine even post-Covid. DVAX won’t work if they are not in one of the major Covid vaccines (assuming some day there are some).
Q. Cody, Obviously many understand your concerns about the market and the valuation vs. the obvious economic issues we are facing..but the action is still strong, many of the names are inversely correlated to the economy (at least somewhat) and it just doesn’t feel yet like a big pullback is imminent. You need to measure your words carefully for a diverse audience and for people who will get crazy aggressive here. but we all need to see how your feedback effects us, and for some who are naturally somewhat cautious (like myself who never had more than 5% in TSLA for one example) is it not possible to be too cautious here? we can all sell on the way down and in a bubble won’t we have a good chance of selling higher on the way down, than constantly trying to trim on the way up?
A. Did the guys who thought they could get out of JDSU without too much pain actually do it when the stock crashed 90% over six months and then another 90% over the next twelve months? Look, all I can do is tell you my analysis and what I’m doing. I don’t like the risk/reward overall of trying to sneak out a few extra pennies when we have had already had such success this year, the last five years, the last fifteen years, etc. I’m still net long, still not bearish overall. But I don’t like the overall risk/reward of entering very many new long-term Revolutionary investment ideas at this moment.
Q. one question about your JDSU/SDLI comment. I owned lots of both of those names, btw…One thing that as a rookie investor I did not calibrate is that yes obviously valuation was an issue. but with all those picks and shovels name there were 2 other big things. One, their client base were what turned out to be a joke (WCOM for e.g. but many other soon to be bankrupt telcos), and many of those hardware makers were also providing significant financing to goose revenues…any evidence of that here?
A. Great question. Yes, the “CLECs” had raised billions and then quickly got killed by the incumbents and the cablecos. Not to mention Lucent and Nortel were being fraudulent. I’m worried that some of companies, like maybe SQ for example, that rely on small businesses could be in for a customer collapse similar to what you’re talking about with JDSU/SDL in the year 2000-2002.
Q. I think last night’s article about 1999 is the best you’ve written. You communicated a specific viewpoint, without trying to hedge your position; the email contained good examples to support your analysis, and you included a few stocks that we can study and trade with the benefit of your vantage point. Thank you.
A.Thank you for the kind words!
Q. Is Slack’s alliance with Amazon a potential game changer for the stock? I would assume so but the stock has actually drifted lower since the announcement back in early June.
A. WORK has got to get a small fraction of their corporate customers to pay recurring revenues and then grow that customer base and monthly ARPU for years to come. That’s the plan with or without an Amazon partnership, but it’s certainly better to have the Amazon partnership.
Q. JDSU, WCOM, EXDS,, AVNX . .. Guilty as charged. I was very long and ended up with almost nothing, even coughing out my AMZN position then.
A. That’s a brutal story. About the same time, probably in 2003, I remember the Amazon bears explaining to me that Jeff Bezos had made a huge mistake borrowing billions to start building warehouses. In bear markets, we have to separate the opportunities from the losers.
Q. Cody, I read about the hedge fund that did 4000% in 1st Q. Comments how he did it?
A. It’s not all that it seems https://www.yahoo.com/news/4000-hedge-fund-return-mirage-022026655.html Fake news, sorry to say. And also, that kind of return always entails a lot of risk one way or another.
Q. I saw that hedge fund guy on TV. He has a very unique very highly leveraged short exposure, so that you can own say 2% of your port in his fund rather than buying puts and with just that one investment you can achieve significant hedging…so like if you were 98% long coming into Feb. 19, you stayed even or even ahead maybe with just 2-3% in this one hedge fund.
A. That doesn’t sound long-term safe.
Q. Cody – I am pretty heavy cash and worried about holding cash while the government is printing more and more of it. Am I doing the right thing sitting on it or should I have my money in something else?
A. Man, this is basically what I spend all day every day trying to help people do. Not sure how to answer this question other than to say please keep reading and be careful but not scared.
Q. A few years ago, we had a few successful bankruptcy plays. Do you see any upcoming similar set ups for bankruptcy trades?
A. Yes, eventually.
Q. Is GBTC is good way to invest in crypto?
A. It’s not terrible, but I would rather just own bitcoin itself.
Q. Is BRK.B of interest with their sizable stake in Apple?
A. I looked at BRK hard a month ago but it’s actually BECAUSE the company owns so much AAPL that I decided against buying some BRK. I already own AAPL forever and don’t need to pay BRK to own it for me.
Q. Any thoughts on how high you think AAPL can go this year? It’s already over 2 trillion in market cap but still seems to have quite a bit of momentum left. Not sure if that is hype on the split or what.
A. Feet-to-fire guess would be that we are close to the highest AAPL will go this year. But then again, as the market’s Blow-Off Toppish Action builds, who knows.
Q. Would rare earth processing in US require gov subsidy to be cost competitive?
A. Great question and it’s this kind of global macro-economic concept that I’m still trying to get my head wrapped around before jumping into investing in the rare earth industry.
Q. Hey man! Hope you and the family are doing well. Wonder if you have looked at Digital Turbine (APPS)? Thank you.
A. I haven’t looked at APPS in a long time, and I just started going down the rabbit hole. Because something about the CEO’s commentary in the earnings report transcript I just looked at made my spider senses go off. Something a bit fishy here maybe. I am going to spend some time studying this name because it might be a good short candidate.
Q. Cody – any thoughts on SPCE…launch of first flight delayed….new offering…is it headed back to single digits with no real news on horizon ?
A. No idea what it’s going to do near-term. I consider it a VC-type investment as I’ve said all along.
Q. Did you take part in recent new funding for SpaceX?
A. No, the terms I was offered from the dealer weren’t attractive enough and I have a nice position in it at a lower cost basis already.
Q. I got in on NVDA at 475 this am and out at 493. I believed it was going over 500 with the earnings report and upgrades by analysts. It it becoming more difficult to purchase stocks at this time as prices are increasing exponentially.
A. Yea, that kind of daytrading is hard to do and make big money over time. I still hold the NVDA in my personal account that we were buying at less than $30 a share four years ago. The stock looks quite overvalued to me at this time though and I am not buying more anytime soon.
Q. Q&A: Cody, did you end up buying CSCO after earnings? What is your playbook for the name? Thank you!
A. No, I didn’t buy any more CSCO yet. In fact, I’m cooling on the name after the guidance was so bad. I might end up selling this one. Doing some more homework first.
Q. Can you please provide your analysis for MU and WDC? Are they possible good investment opportunities or rather stay away companies? Thank you!
A. I am not a big fan of either one of these companies as they don’t have enough competitive advantage other than the fact the industries they are in are oligopolies. I’m a bit surprised their stocks aren’t up in parabolic manner like most tech stocks are right now. They’re either set to rally hard to catch up to the markets or maybe they are a “tell” for the other semi’s being overpriced right now. WDC does have a nice almost 6% dividend yield right now.