AI Mousetraps, Tech Wreck?, Bank Crash?, Bitcoin Trade Alerts, And Much More
Here’s the transcript from today’s live Q&A chat. Please take a look at the comments below about selling some BITO, adding hedges, and a couple of other minor trade alerts.
Q. What’s your take on the current market action today? Seems odd to be getting this flush of sorts today after good to mixed earnings yesterday? Plus, Atlanta GDP flashing 5+% estimate for Q3, Fed expected to pause in November – may be done altogether, consumer seems better off than believed to be, we finally have a new speaker in the House, I mean… got to be getting close to a bottom for next few months or… what’s your sense?
A. Markets don’t make sense every day. Markets get overbought and/or overvalued and then can go down for a long time even though the economy and/or earnings and/or the Fed outlook might be postive-ish. I’m definitely more of a buyer today than a seller but we do still have some of our semiconductor shorts and the SOXX puts on (we did sell the last of our SMH puts into today’s downdraft). There’s definitely some fear being priced into this market now, but that doesn’t mean it pops tomorrow.
Q. This market action is bad here. Could we be on the cusp of a 2008 credit event? Or another 25% from here left to go?
A. This market action makes me a bit more bullish not more bearish. We’re getting the chance to start buying some Texas Instruments (TXN) and to cover some shorts and to fade this market fade a bit. Certainly, there are risks in the economy and the banks have way too many Treasuries and sunk losses on those Treasuries but I’m not sure there’s a credit event about to take the economy down like the Great Financial Crisis did in 2008. There could be more downside in the broader markets but we’re definitely getting through part of the decline with the iShares Semiconductor ETF (SOXX) down 17% and the ARK Innovation ETF (ARKK) down 32% from their recent highs.
Q. How far can we fall in the Tech wreck?
A. You never know how far the markets can fall or when they will bottom. Give yourself some room. But like I’ve been saying all day in this chat, I’m more of a buyer than a seller today.
Q. If rates stay higher for longer and you believe that you will want to be more short than long when the Fed cuts rates, won’t our stocks not do well in a high-interest rate environment and also get hit harder in a market downturn?
A. Rates can stay higher for longer and companies that have a ton of cash and no debt and are growing and earning more cash will probably do pretty darn well in that environment. If/when the Fed starts cutting in a few months or years, it’ll probably be because the stock market has tanked and the Fed gets scared but as usual, the markets will probably keep falling during the first few cuts from the Fed. In a broad market selloff, most stocks will do poorly by definition. But we can keep finding the best companies that are Revolutionizing the world and over time they will do great as always. Gaming broader market moves and economic changes and Fed stances is usually a recipe for portfolio pain. We know the playbook, let’s keep to it!
Q. What’s your take on small caps? I am loaded up with cash in the 401K, when can I start dipping my toes into the iShares Russell 2000 ETF (IWM) in the retirement account again?
A. It’s hard to game a small-cap index of 2000 stocks like the IWM, but that said, the biggest problem with the Russell 2000/IWM is that the index went and put a bunch of crappy SPACs into it at the top back a couple of years ago, as I wrote about at the time. Now all that said, I sold a few more Russell 2000 puts today out of the hedge fund, locking in some profits on that hedge. With it at fresh 52-week lows today again, I think it’s getting oversold and isn’t as good a hedge as it was. I don’t think I’d invest in the IWM itself though, as I’d rather find a few great Revolutionary small caps and ride those instead of a small cap index full of thousands of stocks that I think are in trouble.
Q. I am lost and I am patient investor and would like to hear from Cody and Bryce what would be your core portfolio the NEXT 2-3 years. Not eager to hear about the next new mousetrap controlled by AI robots! Thanks for our collective effort to put our money to work.
A. The next new mousetrap controlled by AI robots (ie, the Tesla (TSLA) Optimus Robot) will probably be one of the greatest wealth creators in the history of the planet though. My core portfolio is the names in our Latest Positions. We’ll update each position after earnings season is over in three or four weeks and will send out the Latest Positions analysis and ratings then too.
Q. What are your top 5 picks and top 5 positions right now?
A. Top 5 picks right now in alphabetical order are: Amazon (AMZN), Google (GOOG), Intel (INTC), Cloudflare (NET), Tesla (TSLA), Taiwan Semiconductor Manufacturing Corporation (TSM), Texas Instruments (TXN), Uber (UBER). Haha, that’s more than 5. Top 5 largest positions in alphabetical order: Netflix (NFLX), Robinhood Markets (HOOD), Intel (INTC), Tesla (TSLA), Uber (UBER).
Q. Between Tesla (TSLA) and BYD Company ADR (BYD), which do you think would comes out as #1 in five years, in volume produced and then in market cap for electric vehicles (EV)?
A. I’d think Tesla will beat them in volume in 5 years. I also think that TSLA’s market cap will be about 5-10 times bigger than BYD just like it is right now. Tesla’s got much bigger potential trillion-dollar kickers like the Optimus robot and fully autonomous cars (I don’t think a China-based company will solve autonomy without copying a US-based solution to do so).
Q. Should you buy a little Google (GOOG) and Microsoft (MSFT)?
A. I bought some Google (GOOG) calls for the hedge fund today as noted in the Trade Alert sent out earlier. I’m not a big fan of Microsoft right now and have no position in MSFT.
Q. Nice call on Netflix (NFLX) earnings!
A. Rock on.
Q. Intel (INTC) has been in your top positions the last several weeks, but I thought you were cooling on the name. Warming back up to it?
A. I’d like to see how the earnings call goes tomorrow to be able to answer this question better.
Q. Are you a buyer of Rocket Lab (RKLB) at these levels? Less than $1 from all-time lows. No longer one of your biggest positions? Earnings outlook?
A. It’s not one of our largest positions right now as we’d trimmed down the Rocket Lab (RKLB) when it rallied to like $7 or 8 a few months ago, as I noted at the time, and it’s dropped a bunch since then. I’m not a buyer of it right now either. I still can’t hardly believe that Boeing or someone doesn’t come in and buy this company but trying to own a stock in hopes it gets acquired isn’t a full investment thesis. The company’s earnings outlook isn’t great right now as they had a recent blow-up on a launch and are now on pause on launches. They’ll report earnings on November 8 and Bryce and I will be updating our spreadsheet for Rocket Lab at that point and will know more after they give us some guidance on that call.
Q. I was wondering about the short seller driving NuScale Energy (SMR) down. I read his report. Your thoughts? Should we buy here?
A. There was no smoking gun in that NuScale Energy (SMR) short report but it wasn’t completely wrong either. The company is a small cap that won’t have working nuclear reactors for another few years and it’s a speculative stock until then. The problem for SMR now is that they will need to raise more cash at some point, as we’ve always known, but it gets more expensive/harder to do when the stock gets crushed like it is right now. I’m not buying any more right now but am not panicking out of it either.
Q. I believe a few weeks ago you guys were going to meet with DallasNews Corporation (DALN). Based on that meeting and their recent earnings/call is there any impact on your investment thesis for DALN?
A. We’re going to go meet them in the next few weeks. Haven’t bought or sold any DALN in a while.
Q. I am an old timer and getting older, how can I best navigate in this market environment and how to integrate this Revolutionary approach…yes in small tranches! What I need to be aware of is the timelines.
A. Easy does it is always my answer. Buy in small tranches over time. Find the most Revolutionary companies on the planet and scale into them while they are hated and/or undiscovered. Maybe re-read some of our premises and why we do Revolutionary Investing.
Q. Still think Advanced Micro Devices (AMD) and Seagate (STX) looking like a surprise miss from what you’ve seen so far this earnings season?
A. Not sure they’ll miss, but I do think they are better sells than buys right now. I did trim a few of my AMD puts and my STX puts today.
Q. Are you taking any profits or hedging on bitcoin (BTC) after this move? If so, what’s the best way to sell covered calls on BTC without an approved ETF? ProShares Bitcoin Strategy ETF (BITO), MicroStrategy Inc (MSTR), something else? Thanks.
A. I sold some BITO, taking about 20% off the table today and yesterday. I nibbled a few puts on the following bitcoin (BTC) related stocks today and/or yesterday in the hedge fund: CleanSpark Inc (CLSK), Marathon Digital Holdings Inc (MARA), MicroStrategy Inc (MSTR), Riot Platforms Inc (RIOT).
Q. On the MicroStrategy Inc (MSTR) puts, what expiration and strike price did you use?
A: It’s just a trade — bought some MSTR puts for next week, with strike prices around $460+.
I leave you all with a picture from the Rainmakers Golf Course in Alto NM from last weekend when I took my lovely wife to a nice dinner there.
