Analysis on Markets, Cryptos, Where I’d Buy More Of Each Stock, Etc
Here’s the lightly edited transcript from this week’s Live Q&A Zoom Chat. Here’s a link to watch the video replay.
Cody:
Welcome everyone to a Zoom version of the Trading With Cody weekly chat. We haven’t done this in several months. I am excited to get back together and have the different vibe and lengthier discussions that come along with being on Zoom rather than in the typed up chat room on TradingWithCody.com.
Cody:
All right, everybody, let’s rock and roll. I suppose you want me to do a quick intro over the markets and let’s just do it. Look, I’ve been saying since February, March, that it feels like we’re probably on the other side of the blow off top of the bubble blowing bull market. I’ve been also been saying that I don’t necessarily think that things crash from here, but that the upside gets to be harder and making money for the bulls, which for 18 months from the March loads of the pandemic through February, March, it pretty much… Where is that? Almost, I guess, a year then. It’s about a year for the bulls, it just, whatever you bought could have been… and actually the crappier the company, the worst, the fundamental story, the better the performance was there near the end.
Cody:
Which, is one of those things I kept talking about also that was making me so uncomfortable. It was not just the most speculative, but truly the crappiest stuff that was spiking the most and shorting was painful at best and ripping. I know lots of shorts that just were giving up at the end and just didn’t want to even be fighting any of it anymore.
Cody:
And then the masses of first time retail investors — from blue collar, hardworking people to just youthful kids in high school, young kids in college, everybody was either in meme stocks or crypto’s and feeling great about it. Most of them are still in meme stocks or crypto’s, but no longer feeling great about it, because the last three weeks has been unwinding a lot of that. A lot of the people, first timers who have had so much time on their hands don’t anymore. They’re not sitting around playing with their Robinhood accounts and it’s been painful anyway.
Cody:
So, the interest is probably waning on that end and I don’t think it will come back unless somehow these things miraculously spike back towards their recent all time highs. Which at this point, whether we’re talking about Bitcoin, AMC, GME, Plug, Blink, Coinbase, SRAC, most anything that’s its not truly a generating earnings. All of the speculative stuff that had this bubblicious fervor in it is unwell, it’s painful to own. I’ve shorted a lot of that stuff, as you guys know.
Cody:
I covered a little bit of it yesterday, just because it got panicky. I think, after 30%, 40%, 50% decline in some of those names over the last three weeks. The crappy of the solar stocks were down 15%, 20% yesterday at some point. Just, you cover some of that and take a little bit off the table. But the point being that, I still think that we’re on the other side of that blow off top. If that’s the case, then it’s, you sell the rallies, you don’t buy the dips, especially on your short stuff, on the crappy things that you’re betting against. You want to be patient also with the logs. There’s got to be a resolution well, somehow between the indices and this tremendous pullback sell off in that speculative crap and even the speculative good stuff that’s also been crushed.
Cody:
Clearly the rally has gotten narrower, FANG and banks and energy have been keeping the indices, including even the small cap index. Well, look, the biggest S&P 500, the NASDAQ and the Dow clearly are hitting these all time highs slowly but surely. But even those the last week have pulled back. Meanwhile, the small cap index is reflecting some of that crap punishing that is happening. The small cap index is pull back with maybe 5% to 7% from its recent ties, just five days ago, maybe. But even that sliding, that’s not much of a pull back really.
Cody:
But I think there’s potential for more downside to the broader indices. Number one, because valuations, even in the banks and the oil stocks and Apple and Google and FANG are not cheap. Number two, they probably got to just balance somehow, get some… Either that or these speculative stocks are probably going to get back up to their highs again. So that would be the other solution, which is always a possibility. I mean, the unexpected can happen. Meme stocks could rally back to new highs. I highly doubt it, but certainly that could happen. If that happens, the S&P 500 will be up another 5% or 7% from here.
Cody:
That’s the market situation. I’ve got some names I’m working on that I almost pulled the trigger on, but I’m just not quite there yet. The valuations again, I want to be comfortable with valuations. Benjamin Graham and Warren Buffet talk about the margin of safety and you only have that margin of safety, if you feel like you’re paying a good price for the good valuation for the asset. I just don’t feel that way about most things in the markets right at this moment.
Cody:
Let’s have some questions and answers.
Subscriber:
Cody, does the crypto’s just keep going down?
Cody:
Look, I’ve said for a while now, and I think that’s still where I’d be that, $30,000-ish is where I might get interested in buying some more Bitcoin. $25,000, I might look to start getting a little more aggressive about it. Ethereum, two grand, is where it started buying some. $1,800 maybe to below $1,800 or so, I might start getting aggressive.
Cody:
But I think those are the good assets. Those two, the top five. I’ve said this for years, that the top five, and then maybe a couple of five others of the crypto’s are where you want to be. But there’s a lot of crap in the crypto world right now. I don’t mean just Dogecoin and I don’t know if I even mean Dogecoin. Elon Musk himself can make Dogecoin legitimized. So, I wouldn’t necessarily put Doge in the same category as the 99% of the stuff I’m talking about, but let’s call it 90%.
Cody:
90% of the crypto’s that you can buy right now on Coinbase are crap. I think that has nowhere to go. I would never guess that I could time a rip your face rat, because there is no rip the shorts face off rallies in crypto because there’s no short’s in crypto. So yeah, especially I guess the broader crypto market fades Coinbase’s, what’s interesting is Coinbase has got… The reason I sold Coinbase is, I did more work on it and an advisor friend of mine talked to me about his vision view and point of it, is that look, on Robinhood, you pick figuratively, nothing, almost nothing for your trades, commissioners on crypto, on Robinhood.
Cody:
On Coinbase are paying 2% or 3%. So, those rates, that’s not going to last, that’s got to come down, but compounding that, the fact of the matter is that, since I think most of those crypto’s available on Coinbase, which has a whole lot more crypto’s that are available for trading than Robinhood, it’s that crappy stuff. It’s actually the, hey, I can buy even the worst crap on Coinbase and I can’t do that on Robinhood.
Cody:
The fact that there’s more options on Coinbase, probably is a bad thing too, for Coinbase. Most of that stuff is going to burn the people who are buying it. So, you’ve got fees coming down, you got a bunch of crap available on Coinbase. It’s going to hurt people. If I had to bet, Coinbase has more downside at this point than revolutionary upside, I worried.
Cody:
The upside to Coinbase, by the way, while I’m at it, as you guys know is, the institutional side of it. If they can become sort of the safe defacto institutional place to buy and trade and invest in crypto, that would be revolutionary long-term and Coinbase would be worth a lot, if they can pull that off. But the juxtaposition of that bullish and bearish picture keeps me out of it.
Cody:
Next question. Anybody?
Subscriber:
Back in March, you wrote about a Republic and mentioned some startups that were of interest to you. Have you got any now that you particularly like?
Cody:
I have not looked in the last month. Again, I feel like valuations and the availability of capital in the world for startups, there’s just so much money being thrown at things right now and it’s hard for me to find stuff I’m excited about at this moment. There’s sort of a frothiness to the private markets that trickles down to the crowdfunding side of things. But I’ll go look, because there’s always a possibility that something sitting there, like holy crap, look at that, we can get into that. Almost nothing valuation here and that is such a terrific idea and et cetera, et cetera. So, we’ll look.
Subscriber:
Do you see the possibility of a serious NASDAQ type crash towards the end of the year?
Cody:
Look, the NASDAQ is so dominated by the FANGs. The fact is that FANG fundamentals are great. Where look, the SPACs and the crappy companies that are promising that their technology will be great and they’ll have lots of sales in two to five years and then the fraud within that, it’s the stuff that’s really going to be troublesome.
Cody:
Number 2, the word “crash” is also too powerful. I think it’s going to be more of a grind lower if anything. But I do expect at some point, we have a top here and the top lasts for a year or two or three or something, and it’s a grind sideways and, or lower, and even the broader indices, that it’s just not easy anymore and that people lose interest. Then, we need that. I need that so that I can pick some stocks again.
Subscriber:
Yeah. Well, do you see any value in the Elliot Wave Theory?
Cody:
Not much.
Subscriber:
Okay.
Cody:
Look, the world is hard, the markets can be vicious. Have you ever watched the movie Pi?
Subscriber:
Oh, yeah. A long time ago.
Cody:
What’s his name? Darren Aronofsky, something like that. His first movie, did it on a $30,000 budget. It grossed 18 million bucks. I watched it in a theater in downtown, I don’t know, in the Greenwich Village, in New York when it came out 1996, I think when I first moved to New York and maybe ’97. In that movie, the premise is basically that this guy is a mathematical genius has figured out how to use the data from the markets to predict exactly what’s going to happen in the markets, but he needs a chip. He doesn’t have the money for this chip and so he ends up getting some investment bank on Wall Street to help him get the chip. He puts the chip in the thing and now he’s starting to do it and then he gets paranoid and it’s not just paranoia, if they’re actually after you and they’re actually after him.
Cody:
I lived at the time in Borough Park, Brooklyn, in a Hasidic neighborhood. Part of that plot, the whole thing is happening in this Hasidic neighborhood. I don’t know if they’re in Borough Park, they might be in Williamsburg. But the point is that, that movie, if anyone was ever actually going to figure out how to use past data, to predict the future in any meaningful way, they’d keep it to themselves.
Subscriber:
Yeah, that’s true.
Cody:
The value is worth trillions. If you and I are reading books or blogs or tweets about Elliott Wave Theory, or cup and handles or killing an island stuff, it’s worthless. The universe doesn’t reward drawing lines on past performance of random stock prices over time. It rewards hard work and originality and different thinking and maybe someday, maybe somewhere, maybe those guys who are the… Is it Paulsen or not Paulsen? Who’s the big quant guy, who’s worth $20 billion hedge fund guy? He was a mathematics genius. I can’t think of his name. He was in MIT, anyway, runs a hedge fund.
Cody:
Those guys were doing coding and they did it. So they did, they had it, they figured some thing out that worked for years. Maybe it stopped working by the way probably, and maybe it’ll work again, but whatever it was, they had something there that worked for a long time that sort of using that. But they obviously didn’t publish articles on TheStreet.com about it.
Subscriber:
No, that’s true. That makes sense. That’s logical. Somebody would have said that. So then, how do you deal with the fact that the Fed is pumping all this money and nobody is working? How do you deal with it?
Cody:
Yeah, no, I know what you’re asking. Look the Fed is not as powerful as people give it credit for, in my mind. In my mind, the Fed is a propaganda machine for the banks to keep getting whatever they need done, done. Whatever policies the banks want. The banks own the Fed and the Fed can chase the economy, they can chase where interest rates go, but they don’t really control it. They make everybody feel better by telling us that they’ve got control of something and blah, blah, blah, but it’s all relative to what’s happening in other trillion dollar economies around the world. If Europe didn’t have negative interest rates, the Fed wouldn’t be able to pretend that they’re keeping interest rates here low.
Cody:
The one thing that the Fed does impact, is some of the liquidity things, the trillions of dollars of bond buying and the trillions of dollars that the Fed has accumulated on their balance sheet. It’s real and it’s powerful. Clearly, there’s an impact of trillions of dollars flowing through the economy and corporate balance sheets that makes things more liquid. But you’re the same time like that now is debt.
Cody:
I’m listening to a podcast, the only podcast I listen to, is this revolution’s thing. Right now we’re in the French revolution and I’ve listened to the Russian revolution. I’ve listened to English revolution from the 1400s. I listened to the American revolution and right now we’re in France. The first three have some similarities to the United States in 2021. But what’s striking about France is all of the parallels out there in the policies and in the politics and even in the society, between France in 1789-ish, early in 1790s to the U.S. in the last couple, three years.
Cody:
I’ll write a whole article. It’ll be very long. I’ve got notes that I’ve been making as I’ve been listening to this thing, it’s not done yet. It’s only two thirds done with this French revolution podcast part. So when I’m finished with it, I’ll publish this thing. But the point being, that one of the things they were doing was they had this creative accounting at the end where the government, and the guys who were in control of the budget at the government were like, when they go to the banks or the other governments to borrow money, they may, “Look, here’s what our budget is and here’s what our debt is and nah, nah, nah, nah, nah.” They’d be like, “Yeah. What about all that other stuff? The wars and these things that you’re doing, the social programs that you just started?” The government would answer it by being like, “No, that’s off balance sheet. That’s one time stuff. That’s extraordinary costs. You just need to look at this stuff.”
Cody:
Look, in the grand scheme of things in the US right now, it’s not $20 trillion of debt. There’s $100 trillion something worth of debt in the system…on the government’s balance sheet somewhere. It’s nuts. It’s all nuts, it’s all crap. If you’re going to try to pretend that right now you could gamified certain parts of that gigantic machine and make stock results out of it or tying the market out of it or something, I get, it’s very questionable to me.
Cody:
That all being said, it does feel to me like, “Look, this is a little bit of a scary time.” Typically, I think it’s a 2% to 5% chance that the U.S. economy and its entire financial system is at risk of melting down like it did in 2008. Even then, the system somewhat saved itself, but eventually it doesn’t, it won’t. I don’t know that it’s this year, but maybe it’s a 10% chance instead of a 2% to 5% chance, which is a little scary.
Subscriber:
Last year you sent out a email, with where you would buy some of your stocks at a certain level. After you sent that out, the stock market took off, all of your positions took off and it became irrelevant what those positions were. Would it be worthwhile to make that effort again?
Cody:
Tell you what, why don’t we do it? Just go run through latest positions. How do I share screen? Go here from last time. Where I buy more of the latest positions that we had last time? Tesla. Below 600, I get interested, below 500, I’d be buying it. It’s still my biggest position, so I’m not exactly in any rush. Unity. No, we don’t own it. DIVAX, gone. Campbell’s, gone. Gold. I’ve been buying gold. I mentioned it in chat a month ago. I mean the hedge and not in that personal account.
Cody:
But speaking of which, mental note, by some gold, I need to buy some gold personally. I need to go buy some coins from the local dealer here. But I’ve been buying a little bit of GLD here and there for the hedge fund. It’s not a huge position or anything yet, but it’s medium-ish position at this point, smallest to medium. Smedium position right now. Do you see the transcript those very nice people at Rev.com and they type this up, how are they going to spell smedium? It’s a word I just made up. I’m going to have to try to find that and edit it.
Cody:
DBA is gone. Bitcoin, I mentioned earlier. Ethereum, I mentioned earlier. The other crypto’s, I mentioned earlier. Well, that was pretty easy.
Cody:
I sold those stocks out of the ones that we just mentioned that were gone, that was part of the great reset. That was about the top of the market when I started my great reset. I think that’s what was happening was, I was struggling to turn from bull to bear and the only way I could do it was to step back and reset my brain, take a week off and let it happen. But it’s not that I’m entirely bearish obviously right now, or even at that moment, but I’m clearly not as bullish about stuff as I was, which segues us into the next segment here.
Cody:
SpaceX, oh man. If I had a good way of buying more SpaceX, I would buy more of SpaceX, but even the instruments that I used to buy it two years ago are no longer really available, because there’s more demand for SpaceX in the world than there are availability of it. So, the guys who would broker private transactions now, charge an arm and a leg and a Smokin’ Joe Frazier boxing glove to get it. It’s ridiculous. By the way, that glove in the background behind me — I met Smokin’ Joe on my show and he signed me a glove, that says, Cody Smokin’ Joe. I just found it. My parents had it and I gave it to my parents to safely keep, and they found it and gave it back to me a couple of weeks ago. I was very excited. “Down goes, Frazier! Down goes, Frazier!”
Cody:
Is nobody laughing today? Is everybody on mute, I hope. I mean, I’m on fire here. This is as good as it gets for me.
Cody:
VACQ is Rocket Labs, not VACQ. Rocket Labs is other than SpaceX, my favorite space company. Well I mean, there’s Relativity Space also and it’s private that we own. But Rocket Labs is awesome. Valuation, isn’t terrific here at the 10 bucks that it’s trading at or 11 bucks, whatever, than it’s trading at and that the SPAC is coming public at six or eight. At eight bucks, I’d get start buying it pretty aggressively. If it got down to six, I’d make it a very big position.
Cody:
Facebook, oh, I loved it at 250, didn’t I. At 350 three months later, I less love it. 330 I would start buying, something below 300, I’d like it quite a bit. Apple, 130, I like it. Let’s call it 120, I’d get interested. At 100, I’d love it. Google, what’s its actual price right now? I Googled. Now, I lost the window that we were on. Trading With Cody. Bam. No.
Cody:
I mean the valuation is just high right now. I mean, the fundamentals are great. But look, 2,500, I’d get interested. 2,300 I’d be aggressive. Amazon 3,000, I’d get interested. 2,800, I’d get aggressive. Qualcomm 135, I’d get interested. 125, I’d get aggressive. Actually right now I might get a little interested at Nvidia if you don’t own any, the stocks come down almost 100 bucks or so probably in the last. Let’s do it this moment. I want to do it right here, so I don’t lose it.
Cody:
Yeah. That’s not 100 bucks. Is at 95 bucks from its high, a week ago. Bam. Nvidia is a little interesting here to me because of the Arm acquisition. I loved Nvidia at 34 years ago when we bought it, I’ve liked it ever since, but that Arm acquisition that they did or they’re in the process of doing, getting it from a SoftBank is game-changer for them, brings them from a chip maker to a chip licenser and everybody needs that design.
Cody:
Oh, man. Then that below 700 or even at 650, that’s really where you’d go nuts trying to buy more. TSM, I like it here and I’d buy more at 110. Monopoly on a five nanometer and seven nanometer manufacturing and that’s good. SolarEdge, I’d buy a little here. It’s come down a bunch too at 100 bucks, I think from 350 to 250. But I have some solar hedges on. Huh, I have “solar hedge” for my SolarEdge. Haha.
Cody:
I hope the only reason I can’t hear you all laugh at that word play is because you guys are on mute, because that’s golden word work right there. So I don’t terribly like SolarEdge unless you’ve got hedges or you don’t own any of it. At 200, I’d really like it. At 180 or so, I’d probably start getting a little aggressive about it. MP, I’d buy some here, it’s because I think it’s come down about in half from its highs. Then below 30, I’d probably start getting a little bit more aggressive. It’s got a little bit of Chamath taint on it now. Chamath Palihapitiya who was the golden boy, the next Warren Buffet six months ago, SPAC king. Now has… There’s almost like if he brought your company SPACed, there’s almost like a negative impact on your multiple right now. So there’s that. But long-term MP be exclusive-ish thing.
Cody:
I’m going to speed up. Just prices now and no analysis. Twitter, I’d buy more at 60, I’d get really excited at near 50. Snap, I’d buy more below 60, I’d get more excited at 50. Pinterest, I’d buy more at 60 and get more excited at 50. It was not a skip in the record. GD, no soccer here, I’d buy more at 60, I’d get really excited at 50. Jumia, I might start buying a little more here, It’s come down 70%, 60% from its RISA ties. If you don’t own any, I’d nibble a little, give yourself room. I’d be much more excited below 20, maybe at 18, 17.
Cody:
Zoom, we’re sold out of it. Docu, a ways from here. Docu, is a hold for now. 30%, I don’t know. Below 200, I might get interested, but 150-ish like a ways. Netflix 500, I’d buy more. 450, I’d get more really excited. Spotify, 220, I’d buy more. Below 200, I’d be really excited. Sony is gone. Roku 300-ish, I’d buy more, 250, I’d get excited. CRISPR is gone. Triple Q’s, I’m still short. SMH, I’m still short. IWM, I’m still short BLNK and EGHT. You guys are welcome for the those two.
Subscriber:
Back in early June, you had a trade alert for Uber, which I told for a long time and added that position. Has anything changed since your trade alert in June? Or what are you doing with Uber now?
Cody:
No, it’s about the same price where I bought it. Maybe it’s down a little bit. But Uber at 45, I could buy more, below 40, I’d be excited.
Subscriber:
Okay.
Subscriber:
Any security stocks like Crowd, or?
Cody:
Yeah. The two that I like are Crowd and Zs, Zscaler.
Subscriber:
Zscaler.
Cody:
Zscaler. Zoomscaler. Yeah, I do that. I nickname my stocks all the time, based usually off their symbol somehow. But like, VACQ you very much. I’ve made that joke before. Thank you for laughing, you just made my heart warm. Oh, thank you. My heart is warm, Tony finally.
Cody:
Look. CrowdStrike finally, look at that, in the last five days, it’s down about 6% the last five days. Those are the two I liked like, they’re best in breed. But the problem is just the valuations are outrageously [crosstalk 00:52:41].
Subscriber:
Yeah. They really don’t make any sense.
Cody:
Yeah. If I could have a crash, I’d do it. But if there’d be a panicky sell off, excuse me, Zscaler at 200 gets interesting, at 150, it’s a buy. URWD, just call it the same thing, 200 interesting, 150 a buy.
Subscriber:
Okay.
Subscriber:
SPCE, has been cut in half in the last three weeks. What are your thoughts about it now? Virgin Galactic.
Cody:
Oh, it’s the final frontier. These are the voyages of the Trading With Cody investor. Our life to our mission to maximize our returns while minimizing our risks to boldly go where no investor has gone before.
Cody:
From pure analysis, if I check my excitement about the space revolution and my emotion, that is about the space revolution and if I check my excitement about having Virgin Galactic, a multi-billion dollar publicly traded company based in rural New Mexico, those two things, I just want to own the stock for that. My emotions want me to. But if I check that and I just go look at Virgin Galactic’s business model, you got to make a lot of dreamy assumptions to hope that they figure out how to ship packages and people from here to China, because the $200,000, three minute joy ride, ain’t worth $7 billion.
Cody:
I love the space revolution, and I love that it’s in New Mexico and I might have to just buy a holder position, a toehold position just so I can deal with that emotion inside of me a little better. But I like Rocket Labs business model a lot better.
Cody:
Next question. If you asked a question already, you don’t get to ask another one just for the sake of all the people to get an opportunity here and, or for the sake of letting me get to the emails chat room. Chat room. Anybody up in-
Subscriber:
Your take on gold. Gold seems to be no man’s land.
Cody:
You just must’ve missed it. I’m buying more.
Subscriber:
Oh yeah. Okay. I just dialed late.
Cody:
Yeah. In my personal account, I don’t own the GLD, but I do own some gold personally. In the hedge fund, I’ve been buying some more GLD for the last month, as I had mentioned in a chat maybe a month ago. I made a note to myself to go buy some more gold coins personally.
Subscriber:
Do you see a rally till the end of the year?
Cody:
I don’t know. But, look, nobody wants gold anymore. The gold bugs are gone. We’re the only people in the world that wants to buy gold. Central banks and you and me, we’re the only people that are buying gold, I guess. I don’t know anybody who believes the gold… The way you phrased your question, says it all. It’s been left for dead asset. Meanwhile, the governments around the world are printing more money than they ever have in the history of the planet at a higher rate than they ever have at an accelerating rate, more than they ever had. We’re just all going to be, instantly mankind is giving up on the one thing store of value that has been consistent in its entirety around the world.
Cody:
Now, buy gold. Gold is it.
Subscriber:
But everyone thinks Bitcoin is going to [crosstalk 00:58:08].
Cody:
Listen to me. I’m finally excited about something. There you go. Gold. I like gold right now.
Subscriber:
Great.
Cody:
All right. I’m in-
Subscriber:
Who needs gold if you have Bitcoin. That’s what people say.
Cody:
Look, you guys know, I was talking about Bitcoin as a store of value eight years ago before anybody else, or just about anybody else. I believe that Bitcoin can store value. It’s proven itself to us. Hasn’t it? Great. That doesn’t mean that at this moment, it’s a better buy than gold. At this moment, I’d rather buy gold than Bitcoin, but I would want to own both and I do.
Subscriber:
A question for today’s chat. Cody, I found the startup that helps endeavoring companies get to space faster by providing the building blocks so that they don’t have to start from scratch. Any preliminary thoughts on this one?
Cody:
Novo.space. High performance, rad tolerant computers. Novo was bringing the pace of commercial innovation to space to put it. Simply we make Lego light computers for satellites. Customers can plug and play our products to make their own high-performance subsystems. It sounds fascinating and I absolutely love it. Yeah.
Cody:
What was the question or you just want me to give an opinion? Any thoughts? Yeah, it looks cool.
Subscriber:
Cody, regarding the SRAC and the SEC charges, what’s your recommendation for anyone holding onto a position? I know you previously gave a trade alert to sell SRAC. However, is there any reason to hold shares now? As a SPAC, can shares go below 10 or perhaps there was a reason to hold shares at the litigation from the SEC result into some sort of settlement to shareholders?
Cody:
I would get the hell out. Literally the company’s chairman and SPAC sponsor settled already with the SEC for fraud. They might not have admitted or denied wrongdoing, I think they said they didn’t admit any wrongdoing, but they settled the SEC for fraud, man. There was ever a red flag, that would be your red flag. So, please review SPACs, DNYQ and CFV. I’ve looked at them. We’re working on them presently. Yeah, I don’t know. Not sold on either one yet.
Subscriber:
Are you still keeping an eye on Unity? We held it for a short time. I think the metaverse will be huge and you seems to be the picks and shovels of the metaverse, et cetera. Roblox seems more of a company built on their own game ecosystem and therefore may be more risky. We’d like your thoughts on the above and your vision on metaverse please.
Cody:
Great question. Yes, you answered it, that’s why we bought Unity. Just, again, the valuations were uncomfortable for me and I just am trying to stay disciplined. I’d love Unity at 50 bucks, maybe even 70 bucks. But 100, 130, we just overpaid for it. Roblox, I think you’re right about that. That’s a great point in your question. The Roblox is more of a company built on their own ecosystem and again it’s probably more risky than Unity. Both of their companies are.
Subscriber:
Cody, you said in Zoom chat, you’d consider Tesla around 600. Are you still hedging your decision in Tesla? If so, what would cause you to cover your hedges?
Cody:
In my private account, Tesla is not hedged. In the hedge fund, I’ve got a few short calls that I put on, on occasion. I even have one that’s expiring today that I put on maybe six months ago when Tesla was at 900 something. I think I got 130 bucks for them and there’s obviously yet expiring at zero right now. So, that knock on wood was a nice trade. But the personal account, I don’t do that and I’ve lost occasionally. I’ve occasionally lost some money by hedging Tesla with some calls.
Cody:
But I pretty much keep a core position in the comment that I’ve got and when it really spikes, I’ll sort a couple of calls that are at, or slightly in the money or slightly out of the money, depending on what the premiums are. I’ll go out three to six months usually and then usually hold them until expiration and, or sell them the week of expiration or occasionally cover them when the risk reward scenario on that particular call option, that I’m short at 100 and now it’s at 22. I might cover it, something like that.
Cody:
But I don’t know that the average person at home should be messing with that. It’s not your day job, you probably have a real job that doesn’t require you sitting at a computer trying to maximize your risk reward scenario all day, every day on that.
Subscriber:
You finally got excited about something in video chat, gold, is this you’re pounding the table for purchase of gold?
Cody:
I don’t know if I’d go pounding the table, it was my jump up and down. No, it was my… what did I do? Let’s call it this, this was my, I’m more excited about gold than anything else body language moment.
Subscriber:
You have at times expressed concern about the GLD fund and whether it can deliver it to the assets it claims to have. How do you reconcile this with your current recommendation and purchase of GLD in your hedge fund?
Cody:
Great question. If I was buying GLD out of concern that the system was going to melt down, that would be a bigger risk, but I don’t think the risk is terribly big that the system melts down. I do think that the apathy towards gold in the world right now is bullish for gold and GLD would benefit from that. If you start melting down in crisis-ish, bank crisis’ start percolating, then I might get out of the GLD, because there could be risk.
Cody:
But the GLD risk is a systemic risk. I’m not too terribly concerned that the system itself is imploded. Unfortunately there is probably no other better way for my hedge fund itself to own gold because of custodial issues. It’s not like I could buy gold coins and put them in my basement or in my office here or something and then store the gold for money hedge fund investors. I am allowed to buy the GLD and the hedge fund, because there’s an accepted custodial paradigm for that.
Subscriber:
How’s your Helium miner doing?
Cody:
My Helium miner is out here in the middle of nowhere. It’s only getting paid for like verifying that it’s in the system. If we’re in somewhere that it was being used and, or verifying other hotspots, I think I’d be getting more Helium tokens. But I earned 0.4 Helium tokens last week, 0.34 the week before, 0.2 the week before, 0.44 a month ago. I think all in them I’ve earned about $33 worth of tokens on my one Helium miner that got delivered. I’ve got two other helium hotspots like this that are on back order. I ordered them months ago and they still haven’t been delivered, August, I think is when I’m going to get them.
Cody:
I’ve ordered some of the 5G hotspots, or I got on a waiting list for those a while ago. I think I sent out an email about that. I mentioned it in the Helium thing, the write up that I did. I’m going to send the other two at least one of them, probably both of the other two Helium token miners to my brother in Austin, Texas and see what the difference is on the mining.
Subscriber:
Cody, can you give your opinion about the scrutiny that Chinese tech is getting from their government many stocks, including DiDi are down? Any Chinese stocks of interest?
Cody:
I’m warming up to DiDi around 11 bucks here. I didn’t like it at 17, but it’s more interesting here. I like that it’s pretty much maligned everywhere. DiDi is maligned everywhere right now. A revolutionary company that’s just came public and is currently, already hated. It reminds me of Facebook at 25.
Cody:
Let’s get some work done on that this weekend.
Subscriber:
Small-cap ETF, you’re no longer bearish right… If you’re still 50% on the sidelines, what percentage should I add at these levels? I don’t like the setup right now. It feels like a trap in small-cap tech stocks.
Cody:
No, I did not say that. I said I’m a little bit less bearish on the small-caps. I wouldn’t buy the IWM at any price right now. That’s what his question is.
Cody:
Can you talk about mixed security shelf offerings and what it means when a company offer one’s up? Is that bad news for the company? Not necessarily. It just depends on the mood of the market. Three months ago, if you were a SPAC-ish or a space or very a speculative mean company stock, and you were a company and you announced a mixed securities shelf offering, which means a little bit of debt, a little bit of bond, or it could mean a little bit of a convertible debt or some actual stock and some debt or whatever, they’re raising money. If you did that six months ago, you’re stuck with a pop probably, because everything popped anyway every day.
Cody:
Right now if you announce that and if the company is a SPAC speculative space company and you announce that you’re doing a mixed securities shelf offering, your stock might crash, because all the SPAC speculative space stuff is crashing. So there’s more reflection on the marketplace than the announcement, I believe. I think you’re asking about Virgin Galactic specifically in that question.
Subscriber:
Cody, how do you short? Do you do it with options?
Cody:
In order to short, you need a margin account, but technically shorting is not done with options. To buy options, you need a margin account. It doesn’t mean you have to borrow money to do those things, but it’s part of the system. So you get a margin account and then you would be allowed to, without owning a stock, you can hit sell. I want to sell IWM or a small-cap Russell 2000 ETF, say you want to do that. You hit sell 100 shares of IWM. Bam. You are now short. You sold it. You had to borrow it in order to sell it obviously, because you can’t sell something that isn’t in your possession. Literally, your broker did it for you, but you have now borrowed IWM from someone, who’s probably also on a margin account and you’ve borrowed their IWM. They own IWM and your broker. Your brokers is like, “All right, I owe you.” He puts it in that guy’s account and takes those shares out, puts it in your account.
Cody:
Now you sold it from your account and eventually you have to buy it back or not. I mean, if the company, if it wasn’t an ETF, but if you sold a 1, 2, 3, for example, like I did years ago at $12 or something, and it went to zero, you didn’t even have to cover it, it just, you sold it and it went to zero, so you had a 100% gain on it. But typically like on an ETF, eventually you’re going to have to buy it back and it could be five years from now, it could be 20 years from now. You can be short that thing forever, but that’s all you’re doing. You’re selling something before you own it and then eventually you’re going to have to own it to give it back to the guy that you borrowed it from.
