Are Money Markets Safe? FAANG (or is it MAAANN?), Gold, Real Estate, RKLB, UBER, and Much More
Here’s the transcript from today’s Q&A chat hosted live on YouTube. Big thanks to long-time subscriber @CabanaCrypto for taking the time to host this call! You can watch the full video using this link. And as always, make sure that you follow us on Twitter @TradingWithCody.
Cabana Crypto:
All right. All right. Good morning. Welcome back. It’s been a few months, maybe even more than that, since we’ve done a Trading With Cody chat with the man himself, Cody Willard, right over there. How are you doing, sir?
Cody Willard:
I’m doing great. Thanks for having me.
Cabana Crypto:
Outstanding. And we also have Bryce. Is this Bryce’s first public appearance, Trading with Cody wise, anyway?
Cody Willard:
I believe it is.
Bryce Smith:
It would be.
Cody Willard:
Bryce Smith, head analyst.
Cabana Crypto:
So you hear or read about everything that Bryce has been doing. So there you go, you have a face to put with the data.
Bryce Smith:
Glad to be here.
Cabana Crypto:
Yeah. Outstanding. And he also appears on the SKTLs weekly crypto call.
Bryce Smith:
That’s right.
Cabana Crypto:
And John.
John:
And John, I’m just a guy.
Cabana Crypto:
And John. But I bet you John has some questions.
Cody Willard:
Yeah, we invited any of the subs who read Trading With Cody in the emails to hop on and ask questions directly. We also have some emailed questions. The chat room on tradingwithcody.com is not working. The homepage is now working, somewhat. Okay. For the record, if you’ve read me for a long time, you know that I’m always frustrated with GoDaddy. I don’t feel like they are a good service provider and every once in a while, about once every five years something like this happens where their network goes down and all of their customers including Trading With Cody can’t access their website for a day or two. So we’re doing the chat live today.
Cabana Crypto:
There you go. I guess, why not start with John since he’s here.
Cody Willard:
Yeah, John.
Cabana Crypto:
What you got for us John?
John:
Hey, yeah, I had two questions. And Bryce welcome, I enjoy reading your thorough analysis as I know Cody with all these things has maybe not quite enough time to do that. Number one is, so some of my other investment newsletter services have been suggesting with the debt-ceiling crisis approaching, we’re going through that process now, actually taking money out of money market funds is going straight to cash. What are your thoughts on that?
Cody Willard:
I guess it’s a reference to the potential of money markets breaking the buck, is the term, and it’s what happened in the 2008 financial crisis. As I recall, I don’t think it happened for 70 years before that or something. It was an incredibly rare event. Long-time readers of Trading With Cody know that I’ve been writing about this stuff for 22 years and every time there’s a debt-limit potential crisis, I’ve told people don’t worry about it and it’ll be fine. And I still basically think that but one of the things that’s different… There’s a lot of stuff that’s different right now than at any time in the last 10 or 15 years, and that is the interest rates alone for the treasury have gone from… It used to cost the United States government 200 or 300 billion dollars a year to cover the interest payments on all their debt. Now we’re over a trillion dollars a year because interest rates have risen so much.
There’s going to be some pressure on the government. The United States government and even governments in any developed country, spent the last 20, 30 years, my entire professional career, basically with free money. They’ve been able to borrow money at anywhere from 2%, 1% to 0%. In Germany and Japan, for example, two years ago it was negative interest rates, which clearly indicated the system was broken. People should be rewarded for lending money to any entity including a government that controls the currency. It doesn’t matter, you’re still lending that government real money even if they can print endless fake money, fiat money.
It is a potential crisis. The Republican-Democrat regime has partisanized itself (maybe a new word)… They have partisanized themselves and their constituents to the point where they don’t do anything bipartisan except bomb people and children in the Middle East and start wars. And unfortunately they still do that both sides pretty much equally. Even AOC is like, “Yeah, send Ukraine lots of money to bomb people and fight wars and don’t worry about tracking the money.” And the Republicans are supposedly the pro-war party. Both parties have, in my lifetime spent trillions of dollars, wasted trillions of dollars around the globe on wars. And that stuff’s expensive. Comeuppance is a real thing and I’m worried a little bit about it this time. Another thing you’ve read… If you’ve been reading me, John, I don’t know how long you’ve been reading but I know Cabana’s been reading my stuff for 22 years or something.
John:
15 years now. Not always in the main newsletter, but for over 15 years.
Cody Willard:
Okay. So yeah, you’ve also been around a long time. Thank you so much for being a long-time subscriber, both of you. I’ve written a lot about how I don’t think the reserve currency of the United States is really in trouble. I don’t think the United States as the de-facto, cleanest shirt in the laundry is really in trouble. I don’t think that the United States debt crisis is really a crisis. But I have over the last two to three, four years started going, “It could be. It could be a problem.” I’ve gone from 1, maybe 3% chance of this stuff mattering to 10 or 20%. It’s just still not highly likely, but it’s probable enough, potentially enough that I’m concerned about some of this stuff. I think we’ll get through the debt crisis. I don’t think the money market… I don’t think that will be the crisis that will… History rhymes, it doesn’t repeat. I don’t think that we’ll see the money markets break the buck.
John:
I agree.
Cody Willard:
But for the record, as I wrote yesterday or last week when someone asked, “What is the safest place to be, debt crisis or not?” I put it, Look, it’s Bitcoin, gold and cash, not money markets.” I did not say money markets. But Bitcoin, gold and cash are probably something you do want to have exposure to right now. In the hedge fund we’ve got a little bit of exposure to gold and some Bitcoin. And then my personal account, I’ve owned Bitcoin for 20 something years and I’ve had a little bit of gold. The gold that didn’t get stolen by Amaris’ nurses’ son, 12 years ago, I still have it.
That’s the problem, I’ve had Bitcoin stolen, I’ve had gold stolen, I’ve had metal stolen. Nothing is safe. Your bank account’s not safe, if it’s over $250,000.
Cabana Crypto:
You should keep it all in a hard wallet, it’s safe.
Cody Willard:
Even then, I’ll lose my hard wallet. Come on. That’s the price.
Cabana Crypto:
That’s on you.
Cody Willard:
Even my sunglasses. “Bryce, have you seen a golf club?” Anyway, yeah, John, if I had to quantify it as a concern, money markets themselves, I’d say 5 or 10% chance that it’s a problem. But 5 to 10% isn’t nothing. You’re a little bit worried about it. I’d put it in cash and an FDIC-insured bank account as much as possible.
John:
I’m also a registered investment advisor in Virginia.
Cody Willard:
Well, thanks man, appreciate you being a subscriber.
John:
Yeah, it’s awesome.
Cody Willard:
What other question, Johnny?
John:
Just one other one, just a real quick, because I know you wrote up Rocket Lab just a couple of months ago, so I get some inside scoops from it from now and then. I have sent you a couple of emails on it, I don’t know if they’ve been helpful. I think you were saying buy more below four, which got below four for a little while, now it’s bouncing around. They just announced another new rocket they’re going to be producing here. I don’t know if you read about that yet.
Cody Willard:
Yes. You live look close to one of their facilities, is that correct?
John:
Yes. I can see all their launches from the Wallace.
Cody Willard:
Oh, how fun is that?
Cabana Crypto:
Wow.
John:
Yeah, and I’ve got property over on the seaside where you can really see it well.
Cody Willard:
And you sometimes make a special trip just to watch the launch?
John:
Yes.
Cody Willard:
Is it exciting?
John:
Of course.
Cody Willard:
It is?
John:
Let me show you how exciting it is.
Cody Willard:
Please.
John:
Here’s one. Here’s one.
Cabana Crypto:
Hold on.
Cody Willard:
Hold on, we’re going to get you pretty big.
John:
Yeah, there you go.
Bryce Smith:
Oh, wow.
John:
So that’s what we do. You go out to the beach and watch the launch.
Cody Willard:
Did you take that picture?
John:
Yeah.
Bryce Smith:
Wow. Very cool.
John:
Yeah, there are 250 people here in our local area. And then our local community college is actually creating an aerospace engineering program to tie in to help bring jobs here for Rocket Lab and it’s other programs.
Cabana Crypto:
I’m hours away and I can still see the launches, so it’s super cool. I mean, yours is way cooler but-
Cody Willard:
You don’t have photos like that Cabana.
Cabana Crypto:
We were walking out onto the horizon and see this thing go up into space.
John:
If you all are near DC or North Front Virginia Beach anytime, you’re welcome to come to Eastern Shore.
Cody Willard:
Let’s make it a point one time in the next six to nine months, let’s get out to that area for a visit. We need to go to DC and network and stuff anyway, we’ll have to swing by. We’ll try to time it so that it’s by a launch.
John:
We can get a tour out there. We can get a tour of their facilities. Very cool. If the CEO is here, he could possibly be available for people like you, not for me.
Cody Willard:
We’ve had some calls with the investor relations head over at Rocket Lab and I plan on talking to Peter Beck, the CEO at some point. Probably be best to do it in person when we do it, so I’ll try to make that happen.
John:
Okay, cool. Awesome. Well thank you-
Cody Willard:
And thanks for being here today.
John:
I appreciate you very much.
Cody Willard:
Appreciate you man. And let’s just hit on Rocket Lab real quick. We talked a little bit about it on SKTLs yesterday. Rocket Lab reported earnings Monday night, Tuesday night, whatever. Couple of days ago. They basically beat top line a little bit. I think they were expected what, 51.5 and they did like 52 something and… Is that right, Bryce?
Bryce Smith:
Yeah, like 54 ish. Yeah.
Cody Willard:
54. So yeah, they met by 5 or 10% … Somewhere less than 10% on the top line. The bottom line, they don’t have earnings yet, but the losses were not as big as Wall Street had modeled. The thing about Rocket Lab is that it is part of a very exclusive club. Again, long-time readers know that several times in the last year, I’ve had Chat GPT or Google Bard create a matrix of all the developed countries in the world that do not have the ability to send things to orbit, and it’s a much smaller list than the list of countries that can send things to orbit. Australia cannot, England cannot it. It’s amazing the amount of countries that need access to space that don’t have it. And Rocket Lab, at $2 billion market cap at these levels. It seems like it’d be free for Australia or the government of England to buy it and take it private. Can government take a company private? But they can’t make it public because it’s not… The stock. That is a deep thought.
Anyway, they should take it off the market and own it so that they have immediate access at any time to space. Same thing with Boeing. Boeing and the United Launch Alliance, which it’s part of with Lockheed Martin. These guys… Look, I don’t want to say bad things about people that I’ve talked to, I know Tory, the CEO’s last name is Tory, I think. Talked to him a couple of times. I don’t want to disparage the company, but my gosh, they’re not doing what they need to be doing. I mean, they’ve got rockets that blow up on the platform before they’re even trying to launch a month ago. They’ve got launches, it costs them several billion dollars to get things to space. They could buy Rocket Lab for cheaper than they could do two launches, and have a company that successfully launches every time. What, most every time. So yeah man, I’m still a fan of Rocket Lab, the company. I still own the stock. I bought more when it was below four and…
Cabana Crypto:
I may or may not have done the same.
Cody Willard:
Cabana, probably did the same. Bryce, did you buy more Rocket Lab below four?
Bryce Smith:
I have not yet.
Cody Willard:
You probably should.
Bryce Smith:
Yeah.
Cody Willard:
He paid up earlier for it, he’s mad.
I’m not happy, for the record. I’m not happy that I started buying that stock at like 8, 9, 10. Sold a little when it popped after the IPO and then rode it all the way down here and it’s never come back. But I think long-term Rocket Lab is going to be a winner. A big winner.
Cabana Crypto:
Maybe it’s already been asked. So this business with Rockwell Automation yesterday, it’s mixed signals because it’s like the US government is concerned about the Chinese getting data and then Rockwell’s kind of brushing it off. What’s the scoop on that? Do you have any more insight on that?
Cody Willard:
I don’t have a lot of insight per se on it, but I can talk about it, at least what was reported. Look, The Wall Street Journal reported that the United States government wants to know more about Rockwell’s China business and what they’re allowing China to have access to. And as we all know, or I assume we all know, that the Republican-Democrat regime starting with Trump and now Biden, they’re playing hardball with China and probably rightfully so. Again, if you’ve been reading me for 20-plus years, for 15 years I was writing about how I thought it was insane that Intel and Tesla and every other company on the planet would just go into China and build a bunch of facilities in a communist regime, where it can get nationalized at any time. And they haven’t nationalized that stuff. Tesla still owns their factories there, and is selling cars there, and making lots of money, as is Apple and Starbucks, and everything’s fine. That might be too big of a word. Not fine. Everything is relatively okay.
The tensions between the United States and China are rightfully escalating. China is a communist threat. And the United States is a, fortunately, the Republican-Democrat regime, is a violent, waring country. And our standing in the world has fallen since the end of World War II when we were truly revered as saviors of the free world to something less than that now. And China and the United States are at odds and probably will be for a long time.
Rockwell is operating in China. But look, the whole reason we own Rockwell is because of the on-shoring movement and bringing factories and manufacturing back to the United States. United States labor is too expensive to make traditional manufacturing of commoditized goods like clothing or iPhones. It is too expensive. But how do you make a factory these days in the United States? You use artificial intelligence and robots. And that’s what Rockwell is a leading company at doing. So I think Rockwell is a little bit expensive, but I think the growth rates that Wall Street expects for the next three to five years are low. But I think the company will be growing faster with or without China.
Cabana Crypto:
And we get paid to wait.
Cody Willard:
What’s the dividend on that stock?
It’s a 1.75% yield.
Cody Willard:
Yeah. It doesn’t cover one half of inflation right now, but it’s better than nothing.
Cabana Crypto:
And it could be a growth/value play for years to come.
Cody Willard:
All right. There you go. I posted a question there in the chat.
Cabana Crypto:
You did. I thought you touched on it, but we can look more into the Rocket Labs.
Cody Willard:
Oh. I just grabbed the first question on it. I think we totally handled that one.
Cabana Crypto:
But yeah, post them all in there and I’ll just queue them up.
Cody Willard:
I’ll mention this, Rocket Lab is supposed to do 15. They’ve targeted a total of 15 launches this year. And so far they’re only at five, we’re in May. So in order to get to 15 over the next six and a half months, they’re going to have to pick up their cadence a little bit. But I think they will. There’s more demand for launch than there is supply, because there’s Rocket Lab and SpaceX, and they are basically the only two companies right now doing launches. Blue Origin is on hiatus for about a year because they had something blow up last year. They’re trying to figure out why. And they’re having a hard time figuring it out apparently. And Astra is no longer launching. It’s very rare to find a company that successfully launches regularly. So Rocket Lab’s in a great position for that.
Cabana Crypto:
All right. I’m waiting on more questions. It seems like every day we got regional bank, I guess, distress and bad news, and then a couple of days, they’re up 7% each. Today I guess a lot of them are down. So I guess a two-parter, again, while we wait on this. Do these ever become interesting? I know they’re not revolutionary investments, but at what point do you make the decision be like, “Okay, this steep does seem like a little cheap for me.” And do you ever make that decision to step in on a non-revolutionary investment, or it’s just let it play out, it’s too difficult, there’s too much emotion kind of thing?
Cody Willard:
Not necessarily too much emotion. Let me repeat your question back because I was grabbing an email for you. You’re asking, do I ever invest in non-revolutionary things and why would I? Is that correct?
Cabana Crypto:
Yeah. And I think you do. I’ve seen you do some over the years, especially if the opportunity is so overwhelming. You’re just like, “Okay, I’m going to take a nibble.”
Cody Willard:
I have. Maybe you’re referring to buying Campbell’s at the exact bottom.
Cabana Crypto:
Not revolutionary.
Cody Willard:
But one of the things that you can do, and I did with Campbell’s, is you can make almost anything revolutionary. When Nike hit 90 bucks last year, I did a bunch of work on it and it was like, “Space and sports in space is going to be huge.” But gravity-less basketball. Are you kidding? How much fun would that be to watch? Gravity-less soccer? Can you imagine the ball just zooming around the walls, up the ceiling. It would be so much fun to watch gravity-less sports, sports without gravity. So I guess actually track and field would suck in space because that would not be fun. But any sport with a ball, could you imagine the golf, the par five in a gravity-less golf course.
Cabana Crypto:
Your drive is miles.
Cody Willard:
Literally. And then you hop in a little golf spaceship. Picture it’s almost like the Jetsons. Zooming through to the golf ball. So Campbell’s, they have a distribution network to get their food into every bodega and grocery store and dollar store on the planet. The distribution that Campbell’s owns is revolutionary. That’s also a little bit mafia-like, because that’s the problem with buying groceries. Have you ever noticed how is it that there’s just four brands of bread in every grocery store? Clearly there’s something mafia happening there, where the mob is not letting these other competitors have distribution rights. And they’ll break your legs if you try to get in the grocery store. I’m exaggerating a little bit, but they use the United States Republican-Democrat regime to protect themselves from competitors at that level. And for the record, isn’t the United States Republican-Democrat regime a little bit of a mafia itself? They extort us for money to protect us from it.
Cabana Crypto:
I think quite a few dead people would argue that, but they’re not around to do so.
Cody Willard:
I’m alive. I’m arguing it. For now, anyway. When I used to say this stuff on Fox business-
Cabana Crypto:
Oh, boy.
Cody Willard:
I was pretty sure I was being followed sometimes in New York when I was almost famous. And I would say things about the Republican-Democrat war machine, the socialist regime.
Cabana Crypto:
I don’t really doubt it. He had Tucker Carlson leave and his apps on his phone were proving he was tapped by the government. So you could be very well right. They were on to you, man.
Cody Willard:
He’s saying the stuff that the government wants to hear, at least on there. In his private text, he was not saying what they wanted to hear. But on air, he’s following the script. I didn’t follow the script on air. I’d get in the elevator, and… Who’s the guy who got fired for the Loofah? Bill… The night time. Bill O’Reilly.
Cabana Crypto:
Yeah.
Cody Willard:
Yeah. He’d get in the elevator and be like, “Cody, can you please quit saying Republic-Democrat socialist machine.” I’m like, “No, no, I will not, Bill.” And then he’d ignore me. He never talked to me except in the elevator. He’d say, “We’ll do it live.”
Cabana Crypto:
I don’t think I know what he’s referring to there. Bill looking up on you.
Cody Willard:
Yeah. Type in Bill O’Reilly, “We’ll do it live.”
Cabana Crypto:
Yeah.
Cabana Crypto:
Question. How do you see the market shaping up for the rest of the year in terms of valuation and risk levels? That kind of goes on my mind a little bit, because I’m seeing, it’s interesting that things have shifted because we have Dow being stagnant, weak. And tech is a safe haven. Oddly enough. You have Microsoft, Apple, even Google’s coming back a little bit now. Even with Amazon a little bit. Like these are the “safer ones” lately. How do you see the market shaping up for rest of the year?
Cody Willard:
Look, in my personal account, I’ve owned Apple since like 15 cents a share, split adjusted in March, 2003 when Steve Jobs came back and.. Cabana you probably read my article about that.
Cabana Crypto:
I’m pretty sure I did. I was in on the Google IPO. That’s how far we go back.
Cody Willard:
I bought Google the day it came public, not before it came public, but in the open market. I bought Facebook a month after it came public and it dropped from 35 to 20. I warned everybody don’t buy Facebook, because everyone I knew had access to it. And Mark Zuckerberg, smartly got every dime he could out of Wall Street to put on his balance sheet. But these things, the problem with tech right now is what you just said. It’s perceived as a safe haven. It’s not safe. The valuations are stretched across the board. Apple is more expensive on a price to earnings ration or any other metric that I’ve ever seen it at. When the company was growing 30 to 40% per year for 15 years after I first bought it, it traded at a 12 PE, 10 PE, 8 PE, maximum 15 PE. It’s now at 28 PE. And it’s not growing. This year it will shrink. Last year it was flat. It’s got it’s ecosystem. It’s got the install base. It’s got all the reasons. It’s been revolutionary. It’s a platform that’s unique and it’s got critical mass of developers and users. All the reasons I’ve owned it for 20 years still apply. But it is expensive and it is not a safe haven. Tech is not a safe haven. Not at these valuations.
So look, I think the banking crisis is probably not entirely over. I think there’s a major bank or two that’s got problems. Wells Fargo, Bank of America probably. I think-
Cabana Crypto:
Major? Because that’s not what you would hear on a financial network. Those are the safe havens according to what we hear. It’s like, “Oh well JP’s fine, Wells is fine. They’re too big to fail. Bank of America’s fine. It’s the regionals you got to worry about.” So you’re saying-
Cody Willard:
I’m not saying they’re about to fail or something, but I think Bank of America has a huge hole on their balance sheet, with loans they’ve made at very low levels of interest rate levels on commercial real estate around the country, that have now lost half their value or a third of their value. And they’re going to have to take write-downs. They own treasuries that they have real losses on, that they bought when interest rates were 1% and now interest rates are 5%. So there’s a big loss on those. There’s losses across the board in these financials. And look, I don’t think there’s anything safe right now. I know it feels like the market is relatively safe and that we’re at a spot where you can just ride it out and things. But I wouldn’t call myself bearish. I have not been calling myself bearish for the last month or two, but I have been talking about caution. And since the blow off top when I did turn outright bearish in November of 21, 18 months ago now, I was bearish for about six months or so after that, maybe even a full year.
But I haven’t been bullish since then. I’ve remained cautious. And it’s not like I think we’re going to crash or something, but I’ve been saying for 18 months that it’s going to be hard. It’s not easy. You don’t get to buy a random small cap stock and it goes up a 1,000% for no reason, which is what was happening during COVID and immediately after. Every stock you bought went up 500% or 1,000%. The worst fraudulent, stupid small cap penny stocks went up 10,000%. It was insane, the bubble we went through. That bubble is over. There is no free money out there sloshing around. You don’t have people in Europe desperate to get their money to somewhere that has a 3% to 5% yield in a stock. They can get 3% to 5% yield on treasuries, three-month treasuries paying 5% right now. That’s a very different demand scenario.
Cody Willard:
That’s a very different demand scenario for assets. Truly, when we talk about savers being punished at 0% interest rates by the Republican, Democrat Federal Reserve machine, it forces… The reason we say that is because if they don’t move their money into stocks or cryptos, they get left behind. But at a 5% interest rate, you’re not punishing savers. They’re being rewarded for lending you money and they will do that. There are millions of people who are like, “I’m not buying stocks at 18 PE. I’m not buying the S&P 500 at an 18 PE. I’m buying real treasuries from the United States government for 5% interest.” And that money’s going there instead of here.
I think the market has some hard times here. I think we’ll have to muddle along with various rotating sectors. Oil was all the rage at the end of last year. Energy was through the roof for two years in a row and everybody’s like, “Yeah, oil, energy.” As you know, last year, one of my predictions at the end of the year was that oil would trade down to a six handle. It did that.
Cabana Crypto:
We got it.
Cody Willard:
It went from 100 to 60 and it’s not going back to 100 next week. In a year or two, maybe. But oil, we’ll have these rotating things from staples are safe to tech is safe to energy is safe. None of it’s safe. It’s all hard. It’s all going to rotate. To defeat the fire, I’m going to say the market’s probably a slow grind lower for a year from here. You got to earn your money with stock picks, not just brought buying assets.
Cabana Crypto:
There you go. Well, things have picked up in the chat, so we might have to do more of a rapid fire.
Cody Willard:
All right, I’ll pick up the pace. Thank you for that.
Cabana Crypto:
As we’re a little bit more than halfway through. Question on Intel. Is Intel still on track to save America and become our domestic chip supplier?
Cody Willard:
Save America. Well phrased question. Very well phrased. That is hilarious. Let me paste one more question here as I answer it. It’s still on track. Yes, it is. They are building the fabs in the United States that will be making high tech chips that Apple, Tesla, and Nvidia and the rest of them will need. It is extremely risky. I’d say there’s a 20 to 30% chance that China does something with Taiwan, whether it’s an outright invasion or some sort of other political levers they’re pulling or something. But I think where Taiwan Semiconductor is, which is the company that makes all the most advanced chips for United States based companies that we all own and talked about here so far from Meta, Apple, Google, Tesla, they’re all using Taiwan Semiconductor, Nvidia, to make these chips. They need a domestic supplier. Now, Taiwan Semiconductor is also spending like $40 billion in Arizona to build fabs for these companies, to make these chips for these companies.
I think they’ll continue to do that. I think Intel’s going to catch them. I think Intel’s got the wherewithal and the money, access to the money, and the access to the ASML and other advanced lithographic equipment that’s required to make the most advanced chips. And the government of the United States is rightfully trying to help Intel. Look, I don’t think the government needs to write welfare checks and build the factories for Intel or anyone else. Intel should have to do it on its own. But the government is rightfully helping Intel become a major semiconductor supplier with access to the technology and basically telling ASML and others, “You have to sell your most advanced stuff to Intel before you sell it to Taiwan Semiconductor over the next two to three years.” And I think that’ll play out.
Cabana Crypto:
Well, you did say a word in there that caught my attention, but it has no relation to Intel. Advanced. So Advanced Micro, AMD, of course they are catching a nice up tick because AI is the key word. So if you want your stock to go up, talk AI, get an AI partnership. Microsoft and AMD are supposedly talking about something. Do you see something possibly for Intel? Because I think everybody’s going to be like, “Well, what’s Intel going to do regarding AI?”
Cody Willard:
Did you guys happen to see yesterday… Oh, Bryce got the emails out. Thank you, Bryce. Did you guys happen to see the Google presentation yesterday? And more importantly, did you see the remix of Pichai, the CEO, from Google’s commentary yesterday? If you could just go to Twitter and type in Google AI video, I’m sure it will come up. It was on my feed 20 times last night. It’s basically a remix of his presentation yesterday. And it goes like this, “Google, AI, AI, AI. We have AI. We have lots of AI. Google AI, AI, AI,” and the stock went up 5%. That is an indication of the bubble that we’re still dealing with. It’s not bullish that you can make your stock add $150 billion in market cap like they did yesterday at Google by saying the word AI 17 times in a presentation. In dot com bubble, if you had the word dot com, internet or communications… There you go. Yeah, it’s 15 seconds. Hit that.
AI, AI, AI. Generative AI. Generative AI. Generative AI. AI is AI. AI. AI, AI, AI, AI, AI, AI. Uses AI to bring AI. AI. AI. AI. AI.
Cabana Crypto:
All right. We have a lot to get through. Next one-
Cody Willard:
I’ll pick up the pace.
Cabana Crypto:
Let’s go. I’m reading that the Metaverse is-
Cody Willard:
Wait, I’m going to finish. Intel, yes. Intel has AI potential. They have lots of… Not rendering. There’s another word. Inference. Intel is benefiting from AI spend in the network and they might actually end up being a major player in AI three years from now.
Cabana Crypto:
Okay. Trading with Cody question. I’m reading if the Metaverse is dead with AI exploding and what appears to be Meta’s sudden shift to AI, there’s that word again, and deceleration from the metaverse, do you think that is too accurate or too early to tell?
Cody Willard:
I think it’s both. It is accurate that Metaverse is a bad thing. If Pichai yesterday came out and went, “Metaverse, metaverse, metaverse, regenerative metaverse, metaverse, metaverse,” the stock would’ve been down 8% instead of up 5% per se in AI. There is baggage with the metaverse right now. But look, the only way the Metaverse is going to work, and it will work, is when they got goggles that are like this. These are actually, by the way, Ray Ban. I can take pictures and listen to music with these things. You can record Bryce hit a slice on the golf course with these things.
Bryce Smith:
Which are partnered with Metaverse, right?
Cody Willard:
Correct. You have to download the Facebook App, which I didn’t have on my phone until I got these glasses.
Cabana Crypto:
Is that Bryce’s name on the course? Slice’n Bryce?
Cody Willard:
Oh wow. That is good, Cabana.
His problem is not Slice, it’s the other one. What’s it?
Bryce Smith:
The Hook.
Cody Willard:
The hook. But I’m going to go with Slice’n Bryce. Bryce the Slice. Anyway, look, when the Metaverse is this, it will work and Metaverse the company, Facebook, will be a leader in it because they’ve got the critical mass to get there. Apple will probably also be there by then. Google, Android, something will be in there too. So yeah, it’ll be big in five years, but you can’t walk around with those stupid Oculus goggle things on your face for very long.
Cabana Crypto:
Okay. Trading With Cody question. Where do you think residential real estate is headed over the next one to two years? And you kind of touched on Nasdaq, I guess. For the rest of your angle a little bit earlier, where do you think Gold and the Nasdaq are into year end and maybe a time period of five years out? I would think residential is more regional really because you got a place like Florida that you know is hot, but you have others, maybe big cities that are toning down.
Cody Willard:
The phrase on Wall Street that you’ve probably heard a million times, Cabana, that you’re referencing is, “All real estate is local,” but it’s not necessarily true as Ben Bernanke found out when he got slapped in the head 15 times in the 2008 financial crisis as all real estate went down together at the same time. I think we’re probably closer to that right now, the latter, that the entire real estate sector bubbled up wildly. You had the artificial interest rates being too low driving up demand and prices. You had Airbnb models that were random, hardworking, blue collar people bought four or five homes in their area and put them on Airbnb or VRBO. There’s been a bubble in real estate across the country and you got the macro factor of higher interest rates working on every locality. There is no 2% interest rate in Florida. It’s still you’re borrowing money at 8 to 10% now and valuations have to come down to deal with that.
Doesn’t necessarily mean the real estate’s going to crash like it did in 2009. But like the stock market, I think real estate will be a hard business for the next three to five years until we work through the downside of the bubble, which is not necessarily a crash, but it at least has to be turned through to a healthier spot. I would be concerned. I’ve sold all my real estate in Ruidoso. I had two offices, the house. I guess we had three offices and a house. Sold it all. I’m owning my home in Carrizozo now, but I don’t have any income-generating real estate. I don’t like real estate here.
Cabana Crypto:
What about Gold and Nasdaq? Quick take on that before we get to the next one.
Cody Willard:
Gold, I love. I mean I think it’s a great defensive place to be. I’ve owned it. We put it in the hedge fund six months ago at much lower levels and haven’t sold any and probably bought some more in the last month or two on the downturn, anytime it’s down at all. Yeah, over the next year, I think it’s flat to up from here and five years from now I think Gold’s doubled. Maybe even 150% from here five years from now.
Cabana Crypto:
That’s a good looking chart, that’s for sure. Do you get the feeling that if there’s a recession, this would be the most predicted recession of all time? Does that make you want to flip it?
Cody Willard:
I love the question, and again, longtime readers know that I love to flip anything that’s traditional, conventional wisdom, turn it on its head. There’s our edge. If you want to be average, do what everybody else is doing. If you want to take risks and actually beat the markets and do something different than everybody else, you got to actually flip their logic and do things different. I don’t know that it’s that predicted. At this point, I think most people are whistling past the recession.
Number one, I think we are already in a recession with the traditional measure of a recession is two down GDP quarters in a row. We had that last year and somehow the Biden Administration convinced all the media and even Republicans to be like, “It’s not a real recession yet,” but it was. We went through a recession. We’re still sort of bumbling in a recession. It’s a matter of semantics at this point. We are in a recession. Whether it’s predicted or not, it’s denied. Nobody wants to admit we’re in a recession. We’re worried about a potential recession. Hell, by the time they actually think that they’re saying that we’re in a recession, we’ll be out of the recession and the market will probably be down from here when that happens and then we’ll have the buying opportunity. Yes, I want to flip it. I don’t want to be bearish, man. I don’t want to be cautious. I want to love these stocks. I want to buy everything, cover all my shorts, get out of my puts and make an 80% year this year.
Cabana Crypto:
I guess this one-
Cody Willard:
“You don’t always get what you want,” to quote The Rolling Stones.
Cabana Crypto:
The Stones.
Cody Willard:
There you go. Good catch. Nice.
Cabana Crypto:
Thank you. This one goes along with that, I guess, just as an aside. There are people I respect that say the markets will have a big 10 to 20% drop in the second half, and some whom I respect say the low is in. I see that every day. It’s the ever going argument, are we going to make new lows or are we going to bust out of this range? Not asking how to invest, but do you think there will be better valuations relative to today?
Cody Willard:
Yes, I do think there will be better valuations relative to today to buy most everything. I think we’re in an asset bubble still and we’re trying to get out of it and time and price will-
Cody Willard:
And time and price will make it happen. Prices don’t have to crash, but earnings have to grow. The economy has to grow and we can stay here at these levels and then the valuations get better. Yeah, man, I don’t know what the markets are going to do, but yeah, I think the NASDAQ… Look, both can be true. The bottom can be in and the NASDAQ can go down 10% from here. Avaya, the NASDAQ’s 35% off its low from December last year of… In my head, I think that’s about the right percentage. So yeah, it could drop 10 or 20% and still doesn’t hit those lows. I don’t think those lows are magical either though. We could challenge those lows. We could rate those lows. And one thing to remember about investing is so often you get fooled into thinking you’re just riding an escalator and suddenly you’re on an elevator straight down. Stocks go up like an escalator and they go down like an elevator and that potential is here, you can have a five or 10% whoosh down at any time.
Cabana Crypto:
I think we’re close to the end here. This might be it. Second part of that subscriber’s questions. FANG has moved up off of last year’s lows. Is it too late to get back in or do you see these stocks significantly higher by year end? You touched on it a little bit. I mean, the stretched valuations of with Apple, but do you have any more to add to that?
Cody Willard:
Yeah, look, FANG, Facebook, Apple/Amazon. Nvidia/Netflix and Google, which is actually Alphabet. So it could be FAANNG.
Look, it’s crowded man. Even these questions hint at that crowding. The FOMO that this particular subscriber is feeling, the fear of missing out, is it too late to make money in FANG? Oh, I want to make money in FANG. I think it’s too late. I mean, look, they can all move up another 5, 10, 15, 20% from here and then if that’s your goal, it’ll work out fine. But five years from now, I think FANG will probably… Look, each one is going to do its own thing. They don’t trade in tandem anyway. But two out of those three, two out of the five, two or three out of those five, will be flat to down from here five years from now.
Cabana Crypto:
I mean, if Facebook is Meta, then you have all the As and Ns, wouldn’t it be like, MAAANN?
Cody Willard:
Oh I forgot Facebook’s Meta now.
Cabana Crypto:
Yeah, you’re right.
Cody Willard:
And that’s sort of what I think unfortunately. I think it’s going to be hard. I own those in my personal account. I haven’t sold them. They’re forever positions. I don’t own them in the hedge fund right now. It’s crowded. Everybody wants to be in FANG. Everybody wants to be a revolution investor. Everybody wants to be an innovation genius. It makes my job hard. It’s so much easier for me to flip it when everybody’s bearish and hates tech and that’s when I’ve made all my money. We are not in that sector as evidenced by the questions we’re getting today. People want to own Facebook, Apple, Amazon, Netflix, Google, and maybe Intel. And that’s because I talked about those two endlessly.
Cabana Crypto:
That brings us I think pretty much to the end of those questions. Any other stocks you want to talk about? I guess Uber had a great quarter recently and Trade with Cody subscribers read I guess a great writeup on that with you and Bryce within the past I want to say two months maybe picking that out in advance. So that was a great write up and analysis and we saw the stock maybe finally break out from here. What are your thoughts on Uber?
Cody Willard:
I like how you phrased it, man. It might have broken out here. It also, like everything else could be a hard, upside for a little while as the markets digest ups and downs here. But Uber is one, they beat Lyft, which I’ve been saying since they both came public was going to happen. And you’ve got the logistics hauling business, which is very uncovered and people don’t really know much about it, but it’s going to beat the old-fashioned JB Hunts and CHRWs of the world that see Swift, these trucking companies, Uber’s going to beat them now. Uber’s got a more efficient network. It’s got AI to run that network. It’s going to handle it better than those traditional models too.
You obviously have Uber Eats, which I never travel anywhere. We don’t have Uber Eats in rural New Mexico, but if I go to Albuquerque for Amaris for two days at a hospital, I am ordering my highest-rated Japanese, Chinese, Italian, something. If I’m in Austin for a trip, I’m Uber eating every night. I love the Uber Eats. And then yeah, Uber obviously, it’s a verb and you can say let’s Uber over to our friend’s house tonight and have some drinks and then Uber home and not have to drive. And the biggest threat to Uber is not a real threat… I think the most cited threat to Uber is self-driving, full autonomy from Tesla and others. But the thing about Uber is it’s got the money to just buy the whole fleet of self-driving cars on day one. As soon as full self-driving is here or right before it gets here, Uber will be buying a fleet of self-driving cars and then their margins go through the roof. By far, the biggest margin for go for Uber is-
Bryce Smith:
Drivers.
Cody Willard:
… drivers. Eliminate the drivers. And unfortunately that’ll hurt a lot of people’s income, but it’s more efficient to let a robot software drive you around and deliver your food and packages to you. And Uber’s going to do it.
Cabana Crypto:
One late arriving question from this user named John on YouTube. Oh wait, no, he’s here on screen asking about the revolutionary industry of reasonable banks. John, what’s your question?
John:
Not revolutionary, just taking advantage of a situation. Any thought? Are you avoiding it?
Cody Willard:
Oh yeah, I’m avoiding regional banks. I have no edge. I mean, the problem is and Bryce about once a week is like we got to short the regional banks, Cody, and I’m like, I don’t disagree. If I had to choose to buy or sell or short regional banks, I would short them on a pop, but I don’t have to. And I’m a revolution investor and in the hedge fund people know what I’m trying to do and we’ll occasionally nibble something that’s demolished in the hedge fund that’s not a revolutionary company. And you guys have seen me do that in my personal account too over the years. But no, I’m not interested in trading the regional banks right now. I don’t have an edge. Everybody on the planet is an expert on regional banks all of a sudden.
Cabana Crypto:
Well, that is nice. We have a couple minutes left. So we spoke of something being demolished. So that brings up I guess to my mind like a Wolf Speed and MP Materials. You have some closing thoughts on those before we call this a show and wrap it up because those have been demolished, but MP’s earnings weren’t all that bad recording earlier. Wolf Speed went down quite a bit. But if we’re playing the long game here, it might be a very good opportunity. What’s your take?
Cody Willard:
That’s a good question. So they’re very different. MP is executing. Both companies are speculative, longer-term investments.
Cabana Crypto:
And another great writeup by the way for tradingwithcody.com subscribers.
Cody Willard:
Thank you. Thank you, Bryce.
Cabana Crypto:
Yeah.
Cody Willard:
So the MP is unique in that… Well, it’s like Intel in some ways or Rockwell that the onshoring revolution plays into MP. MP is the only United States supplier of rare earth materials and we need rare earth material supply in the United States. And so the government itself recognizes that and is giving MP welfare and protections and help. And five years from now, I think MP will be making magnets themselves, the finished product, for EVs, for wind turbines, for all kinds of different products. They all need magnets. So yeah, I think MPs in a good spot and they’re executing. Wolf is not executing. The silicon carbide revolution in the semiconductor industry is real. It’s a better chip. It’s going to be a less expensive chip over time and a more capable chip. It’s going to follow Moore’s Law, taking semiconductors to a new place.
But I don’t know if Wolf is going to win. Wolf is perfectly positioned to be a huge winner, but they’ve got to execute. They’ve got to get their factories up and they haven’t. And so there’s an execution risk on Wolf despite its positioning. And there’s obviously an execution risk on MP too. I mean, they’ve been executing, but that doesn’t mean a year from now they still will be. These are tough businesses, but they are very revolutionary. And in five or 10 years, silicon carbide will be a trillion dollar business and there will be huge winners in that industry. Magnets, rare earth materials will be hundreds of billions of dollar business and MP will probably be a beneficiary.
Cabana Crypto:
Boom. And with that, we are coming up on our hour. We’ve answered all the questions, so thanks for everybody in the chat.
