Bad Social Media Vs Pinterest, Bad Cryptos Vs Bitcoin, Welcome To Space, Etc
Here’s the transcript from Friday’s Live Q&A Chat which we did live over Zoom. You can watch the video here:
Cody:
Welcome to another edition of the Trading with Cody live Q&A chat Zoom version. I come to you live from Ruidoso, New Mexico today as usual since the pandemic. The coronavirus kicked in and cut all my travel along with just about everybody else’s. Look I don’t even have much of a preamble today. You guys know I’m concerned about the near-term potential for political violence. Although it sounds now like a lot of the perhaps more violent, potentially more violent factions are worried that the call to the capitals is a trap by the government or something.
Cody:
Maybe things are going to not be too crazy, and even if they are crazy, you don’t know if the market will crash. It’s not like if there’s violence in 10 capitals over the weekend or into next week or something, and then therefore you know that the market will be down 3% or something. So, it’s hedging. You’ve got to stick with investing in the most revolutionary companies that you can find, buying them at good valuations, trimming them a little bit when they get crazy and rally too much. Otherwise, let the wealth build. That’s what we try to do especially in our personal portfolios and also in the hedge fund. By definition, I’m a little more aggressive about hedging.
Cody:
But in case you just joined us, I shaved for this meeting for the first time in a couple of days. I realized five minutes before the meeting started, I hadn’t shaved, and so I shaved. I rushed it, and then I cut my lip. So, that’s why you see me messing with my lip. It’s annoying. I feel like we should postpone the whole thing, but I guess I’ll trudge through it. I broke my hand once. I broke my finger on live TV one time. It was 2008, 2009, and the new smartphones were just happening. And so, I took a smartphone and I was going to smash it with a hammer and break it apart and show everybody you can buy anything that goes inside of this smartphone. And on live TV I went slam with the hammer, then, “Ouch! You can buy anything inside a smartphone. Back to you Eric and Rebecca. Argh.” I had broken my finger.
Cody:
I also had Bell’s palsy break out on live TV. Half my face froze in the middle of an episode and my eyes started watering. So I think I can trudge through a little bit of a cut lip. I’ll be all right. Questions. I got answers or at least opinions.
Subscriber:
Number one, I ordered the Oculus, got Oculus. Give me your thoughts on the pullback on Facebook, and I’ve heard people talk about Facebook being in the same category as cigarette companies and stuff like that. Have you ever heard anything like that?
Cody:
I like the analogy to cigarette companies. I had not quite heard of it in that way, but I heard it more as a drug dealer because it feeds you an addiction. We all know at this point if you’ve watched Social Dilemma, the movie that came out a few months ago on Netflix, and… I spoke to the guy who made that movie and got a transcript of that. I’ve been meaning to edit it and send it out. I will do that.
Cody:
But look, we all know that Facebook, Twitter, and the other… Instagram, these other social networks literally have designers and programmers who are trying to make you addicted, and they’ve succeeded. I don’t consume anything but Twitter, and on there I’m probably only on maybe 10 to 20, 30 minutes a day during the market hours, sort of seeing what traders and things are doing. But I do not consume any Facebook, or friends’ tweets, or I don’t need to know what all my family and childhood friends think about Trump or Biden or Bill Gates or vaccines or whatever echo chamber they’ve put themselves in that they’re getting back from Facebook and Twitter.
Cody:
And so, I’m out. I think you should be too. Nobody else is though. Billions of people every day continue to feed their own addiction on Facebook and Instagram. I’ve said from the beginning that I separate my investment thesis and analysis from my morality because at least, in this case, I’m somehow able to justify that. I can’t do it with weapons manufacturers. I do not want to invest in companies that make guns that we send to developing countries who then shoot each other, or even in our own country.
Cody:
So, look, I’m not… That’s where my own morality has landed in that way. I could understand people who won’t buy Facebook because it’s an evil addicting product, and I get that. All right, now let’s head into the investment analysis now that I answered that part of your question. Yes, it is like a cigarette company. It’s evil, and it’s addicting, and they do it on purpose just like cigarette companies did.
Cody:
So, then we’ve got the investment analysis. We’ve got to look at… I think the reason the stock has pulled back, what? 10-15% in the last weeks, couple three, four weeks, it’s one of the few stocks that’s not really had much momentum in the last six months even. And I think a large part of it is it’s a question last week in the chat hit on that Apple is changing their terms and conditions in a way that are going to hurt Facebook’s ability to target specific ads as you feed your addiction on their platform.
Cody:
That’s just noisy. Facebook’s fine. They’re going to figure out how to target you and monetize it and grow. I don’t think that’s going to matter to the stock long term. I don’t think it affects long-term earnings potential or anything. So, in that sense, I think that’s an opportunity, and then I think with the Oculus, I think on the conference call when the earnings… When’s Facebook’s earnings? Probably in the next two weeks or three weeks. They’re going to talk about their incredible demand for the Oculus Quest 2 specifically. The one that you don’t have to plug into a computer. It’s a self-sufficient virtual reality device.
Cody:
I think it’s a neat, incredibly revolutionary potential product and not just because of the gaming. But when I put that headset on, I really wish I could do it with my stock as another app in there… And I’m not even a trader, but I can just imagine guys who have six screens in front of them. I had just my big iMac computer. I don’t even have an extra screen. I’m not like Warren Buffet where I don’t even have a quote machine in my office, but I’m not six screens. And even me, I would love to be able to have CNBC, and my stocks, and maybe analyzing some Bloomberg data, and turn around this way and the Masters are on.
Cody:
It’s going to be revolutionary for work people too. If you spend your time at all on a computer, eventually, I think you’re going to probably have some virtual reality parts of your job. It’s coming, and I think virtual reality, the platform that people are going to build for is now Oculus. They’ve got critical mass. Maybe there’ll be another one, but that’s the one, for now, I think that’s a clear way to bet on VR.
Cody:
And so, yeah, Facebook’s down for maybe a reason that doesn’t matter, plus they’ve got an Oculus kicker. I like the Facebook setup here, and that doesn’t mean it’s not going to be at $240 in a week or two weeks. Or it doesn’t mean it doesn’t go down after earnings because they said they’re going to have to ramp up spending or they’re going to get sued by the federal government for XYZ things. That happens, but risk-reward, looking at Facebook right now, long term I’d stick with it. Short term, dang, it looks pretty attractive too. Next question.
Subscriber:
Hi, Cody. What do you think about NIO? Having a huge run. It seems like a good play, but I never trust China stocks because I’ve seen them run, and then the government steps in and squashes it. Thoughts on the company and its fundamentals, thanks.
Cody:
Should have had NIO. I should have had NIO at two or three bucks. I don’t know why I didn’t do that one. I’d looked at it. It looked like a pretty good Chinese version of Tesla, and doggone it, I didn’t buy it at two or three, and now it’s at 50… I don’t have it on my screen, but the thing’s gone vertical like anything else in the electric vehicle industry.
Cody:
$57. It was at 60 yesterday. 52-week low $2.11. I should have had that at the all-time lows. We’ve done some of those, right? Space, Twitter… We’ve probably got a handful of stocks that we bought at… Even Apple back in 2003 that we bought within five or 10% of the all-time low. Should have had that NIO there.
Cody:
Nio It’s a good company. It’s a good Chinese Tesla. They’re raising more money because their stock’s through the roof just like Tesla did. I think the question pointed out the risk of investing in a Chinese company brings its own elements that I don’t necessarily want to play with. From government intervention to just being in a communist country, which is guess is sort of the same thing or at least related.
Cody:
NIO’s market… $90 billion. $90 billion for a Chinese electric vehicle startup. 90 billion. This is my speechless face. I didn’t know it was $90 billion. I genuinely didn’t. I thought it was 30, 40, 50 billion. And now I’m like $90 billion… This is a $100 billion company. Do you know how hard it is to build a company that’s worth a hundred… One-tenth of a trillion dollars. I’m out.
Cody:
Just out of curiosity, you guys want to guess what the revenue is? I don’t know what the revenue is. Revenue estimates for next year on NIO, I’m guessing five billion United States dollars. Let’s go check see if it’s on here. Next year estimates. What did I just say? I already forgot what I said. The estimate is 4.95 billion. Did I say five billion? Did I say five billion? I did say five billion, didn’t I? Bizzle bizzle boop. This is what we do at our house now. Bizzle bizzle boop.
Cody:
My six-year-old daughter thought it was really funny when I was telling the dog bizzle bizzle boop. Now it’s turned into a whole thing. Anyway, that means this company’s trading at 20 times next year’s revenue estimates. It is doubling in size every year in revenues. It’s great, but not profitable, not going to be profitable anytime soon. Let’s see what the gross margins are.
Cody:
Negative gross margins! It costs them more to make the car than it does to sell it before they even add sales, general administration. Tesla has 25-30% gross margins and that’s not great. I mean that’s great for a car company, but… This is literally cost of goods are more than the goods are sold for. No, I do not like NIO as a stock or as an investment. Yes, I think it’s a great company. There you go. Done.
Subscriber:
Any updates on Republic Note?
Cody:
Not really. I think I got an email from them just yesterday that said there was an update, but I did not yet read the email. Yeah, so we’re stuck in limbo I think at this point, just from them trying to make sure they do everything by the book. And this is one of the things I like about Republic. When they get this done, it has got every i dotted and every t crossed, and every anti-money laundering and anti-terrorist statute has been met. The Republic Note isn’t a short term trade. Those are for distance.
Subscriber:
Hey, Cody. I have a question here on a fintech. Two companies that I’d like to ask you about. One is more old guard, which is Fiserv, FISV. They also have Clover, which is like a Square type platform. Just wanted to know your thoughts on that. And then the second fintech company is SoFi, which is coming public through another Chamath Palihapitiya SPAC. Just wanted to know what your thoughts on… And I’m a new subscriber, so looking forward to a great trading relationship with everyone here.
Cody:
Hey, thanks for being a part of Trading with Cody. Let me say one thing about the relationship with everyone here. I’ve mentioned this recently before that it’s great to have camaraderie, and even a check and balance on me and everything in our chat rooms. I advise you please do not recommend stocks and please do not take stock recommendations from random people in the chatroom, even though they are part of Trading with Cody. I haven’t obviously vetted them, so just take that for… It’s a community, but be disciplined, right?
Cody:
Fiserv.
Cody:
The profile says, “Provides financial services technology worldwide.” Oh, it’s First Data. Used to be First Data. .
Cody:
Yeah. Now, what are we going to do with an old company like this. There’s nothing revolutionary about an old First Data. It’s a processing company, great. No, not for me.
Cody:
Even with their subsidiary Clover, which is like that Square type platform?
Cody:
I’d rather own Square. Yeah, the other one was SoFi, IPOE.
Cody:
Look, I’ll need to do more work on it specifically. I wish I could say Chamath Palihapitiya’s name correctly. If I were on TV I would be trained. A producer would not let me go on air like I’m doing right now without being able to say someone’s name like Chamath. I think he’s a brilliant guy, and I think that’s a good start, but I’ve also already got two of his things in my portfolio, right? MP and SPCE are both his, and it’s going to be a high bar for me to put another Chamath Palihapitiya’s stock in my portfolio.
Subscriber:
CRISPR Therapeutics? I’m relatively new too, and that was the first purchase I made under you.
Cody:
Okay. Welcome, and look, all of the stuff that you see in my portfolio is stuff that I plan to own, I guess indefinitely is probably a good way to put it because I don’t ever want… It’s not like I have a price target for things and I’m like, “I’m selling it if it gets there or something.” I will sell things when the fundamentals change or if I decide I was wrong.
Cody:
I will always adapt and try to be flexible, but in general, something like CRISPR, unless you see me say, “Hey, there’s something I should mention about it,” it means that, look, I think it’s pretty steady as she goes. CRISPR is certainly… We bought it at 50 at Trading with Cody back in March last year, and now what is it? 220 today?
Cody:
Well, actually, it pulled back. It opened at $220, now it’s $206. Is the market down a bunch? Yeah, everything’s down 1%. I haven’t looked since we started chatting 30 minutes ago, but look, it’s fine. It’s overvalued. It’s a great company and very excited for the revolution, the genetics revolution. I think I should probably add one or two other names, I’ve been working on a couple of them that are related.
Cody:
I’ll just give you the symbols: NVTA and EDIT are two that I’ve been looking at. EDIT looks pretty interesting to me. NVTA, I’m a little confused by their business model still, but again, these are all good genetic thematic companies. I actually just got emailed last week that I have the opportunity to invest in 23andMe in the private markets. They’re trying to do a new round, but I don’t know if I’m going to do that either.
Cody:
Anyway, look, I like genetics revolution. As you guys are new you might not know this. I have a five-year-old daughter who has a genetics disorder. It’s called trisomy 13. She has a trach that she breathes out of. Needs oxygen because we’re at such a high elevation here in Ruidoso, which I might have to change soon for her. Get her off of the mountain here.
Cody:
Anyway, so genetics is a personal thing for me that I’ve been trying to learn more about for the last five years. It’s interesting. Maybe it’s a lack of confidence now that I think about it. I don’t feel like I can understand genetics as well as I can electricity or wireless revolutions and technologies and things. I think it’s because I just don’t trust my own biology background, my own chemistry understanding. I learned it, but it’s not second nature to me. I don’t use it very often. Anyway, I’m trying to learn more about genetics revolution. CRISPR’s is a good one.
Subscriber:
Could you talk more about the SpaceX potential coming up with, I guess, putting private investments another round. Would you be looking to put funds in there?
Cody:
Probably not. One of the things that’s happened in the last few months as the bubble has gotten more extended here, more aggressive, the fervor has risen, the private markets, the deals are still there and they’re at this quote-unquote valuation. But the terms that you dig into are getting very onerous and expensive. Everybody wants part of the profits and/or it’s more than a 7-10% commission if you really dig into it and things.
Cody:
And so, we bought SpaceX in the hedge fund. I didn’t do it in my personal account, but in the hedge fund, we own some SpaceX from almost two years ago now. I’ll probably just let it ride because it was a good vehicle that we got into, SPV, a special purpose vehicle, on terms that were fair. I think it was like 5% commission, and that was it. No riders, no profit riders. You don’t have to share the profits. No incentive fees. No ongoing management fees for it.
Cody:
There’s a lot of stuff out there now that I just think look like bad set ups… So, if the terms were right, I’d be absolutely happy to do it. But in order to get good terms, you probably need to be able to write a seven-figure check, and I don’t think I’d want to put a seven-figure amount into SpaceX at this level, at this moment. As much as I think SpaceX would be a half-a-trillion-dollar market cap if it were public, and it’s trying to raise money at 90 billion, I would love to buy more, but I’m just… I don’t want to pay for it in the wrong way over time.
Subscriber:
Okay. Given what you just said, given the potential for it if it ever goes public that people will flood into that. That’s why I was asking that question. Fair enough.
Cody:
Yeah, look, I don’t think SpaceX will ever come public, but I do think Starlink their satellite internet business will come public in the next 12 to 18 months, maybe two years. So, you will have a way to invest in part of SpaceX’s business, but I don’t know that anybody… I don’t think Elon’s ever going to sell shares in SpaceX. After his nightmare with Paypal board and Tesla shortsellers, he’s not going to play that game with SpaceX.
Subscriber:
Okay. Thank you. Appreciate the insight.
Cody:
Opinion. Perhaps insightful opinion.
Subscriber:
Yeah, you’ve probably heard of Cathie Wood’s creating a space ETF. I’m sure it’s bigger validation for SPCE and other Space companies.
Cody:
It’s validation for your Trading with Cody subscription, people. I get you into SPCE at $7. She gets you into it at $30. I get you into SRAC at $11. She gets you into it at $22. I got you into Tesla at $50. Made it my biggest position, and then next thing I know she’s on TV six months later after it doubles talking about how it’s going to go to the moon. But I will say she’s brilliant. I love her analysis. I don’t know her individually, but if I were on TV these days, I would be begging my producers to book her all the time. I love the way she thinks.
Cody:
And her Space fund just going to be one of many. If the space revolution is going to be a trillion-dollar marketplace in five years, that is the first one. We need J.P Morgan starting a space fund, and we need Goldman Sachs starting a space SPAC business. That’s what needs to happen over the next five years. But you’re welcome. You’re welcome for getting you into space two years before anybody else.
Subscriber:
I had a question here about the… When I got in a couple of years ago, you were big on the 5G revolution and touting Calix and a couple of other things. I’m just wondering since you said it was a couple of years out that they might start moving, and they’ve started to move on their stocks. I’m just wondering-
Cody:
Yes, 5G is happening. I lost patience on it mainly because I get more excited about space and some other places, and I also… Here’s really what moved me on from 5G was six months ago, nine months ago when SpaceX’s Starlink business… When the Starlink business started materializing and the way this business could work out, I think we could have a complete disruption of 5G and DSL and cable broadband businesses.
Cody:
I think those businesses, certainly cable and DSL businesses, I think are really going to be in trouble a year from now. Satellite business too. I think Dish Network is a good short, I think AT&T is a good short, I think Comcast is… I’m not shorting these names yet, but I’ve got some puts on Dish. It’s not like I’m out there just saying, “Hey, now is the time to go do this,” but at some point, I think these things are in big trouble because Starlink is that disruptive.
Cody:
So, 5G’s got competition that I don’t think people are quite aware of. Starlink competes more purely against the cable and DSL because it’s sort of you’re going to get it for your house or your business and have a Wi-Fi network at your house that feeds off of that Starlink connection to the internet from the satellites. So, it’s a fixed-location business as it is now, but if Starlink’s everywhere it wouldn’t be too hard to picture somehow it partnering with Apple and Android Google to, “Hey, we’ve got something better to offer your customers than 5G. You could also use Starlink as your internet provider.”
Cody:
And that’s maybe three or five years out, which is why 5G is probably going to be okay for another year or two, maybe three. But long term, there’s competition for 5G that I don’t think people are thinking about.
Subscriber:
With the Democrats winning the Senate and Biden and Kamala in, you think the cannabis revolution is here?
Cody:
Zzzzz. Oh, the administration’s changed. Oh, yeah. Democrats like green stuff. Weed, and pot, and solar, organic stuff. And so, they’ll probably incrementally point a little bit more welfare subsidies, protections towards that type of stuff, and incrementally take a little bit away from, I don’t know, whatever the Republicans like.
Cody:
Look, I’ve said all along, the problem with cannabis is that it’s not truly Revolutionary… Buy yourself some CGC, buy some CRON, even VFF I think looks interesting. I’m not anti-buying or investing in cannabis. I think it’s probably here and the Democrat control blah, blah, blah makes it blah, blah, blah easier blah, blah, blah, and more likely blah, blah, blah. And so those stocks will blah, blah, blah probably group up blah, blah, blah. But that’s not my thing. That’s not how I invest. That’s not how I do this. So, it’s not for me.
Subscriber:
Cody, I can’t be on the live Q&A but wanted to ask you a question. Any thoughts on Schrödinger? SDGR is a revolutionary stock software platform for the pharmaceutical industry to reduce the average time and cost required to identify a drug development candidate and to increase the probability of drug discovery programs entering clinical development. I would appreciate your input on this name, and if you would consider it a revolutionary stock candidate for your shortlist.
Cody:
Not my “short” list, let’s just be clear. A “brief” list because a short list would be stocks that I’d want to short. SDGR. Didn’t I look at this a few weeks ago at Trading with Cody Chat and I just decided it was too expensive? I think that’s what happened.
Cody:
Company became public… Whoa, why was it at 85 cents? Is this a reverse merger? This might be a good short. Reverse merger SDGR. Must include SDGR, no. What’s that? Where is that coming from? There it is. I don’t like the way this chart looks. The stock was at 85 cents and now it’s at $90. It looks like… Right. I don’t know. I’m going to have to do some work on this. I don’t know SDGR.
Cody:
Let’s do the work real quick. Let’s look. SDGR. You know what I should do? I bet you guys will want to do this. If all of you guys here right now, if a majority of you guys agree that I should do this, I’ll do it. I could do a one-hour class that says here’s how I find the numbers I find. Here’s how I analyze the stock I analyze. Here’s where I go to to find this number, and here’s how my brain is analyzing this and saying 20% top-line growth, and seven times sales, and 50 times next year’s earnings estimates, and why that’s cheap, and why that’s not. I could do all of that and call it an hour. Maybe two sessions. You guys want that?
Subscriber:
I would love that Cody.
Subscriber:
Yes.
Subscriber:
Yes.
Subscriber:
I was typing yes.
Subscriber:
That sounds good, I like it.
Cody:
All right, I’ll do that. Let’s do that. You want to do that for chat next week instead of chat?
Subscriber:
Absolutely.
Subscriber:
Absolutely.
Subscriber:
That’d be great.
Cody:
All right, let’s do that. I’ll schedule it. I never know when I’m going to schedule the chat, but it’ll either be on Wednesday, Thursday, or Friday next week. We’ll do a one-hour session on analyzing stock. Just the fundamental stuff forgetting all the… I don’t know, we’ll see exactly what it is. It might even include a little bit of the revolutionary analysis framework. But I think it will mostly be about here’s how I find something cheap or expensive, and here’s where I’m getting those numbers and doing the math and things. So, let’s do that. We’ll do that next week.
Subscriber:
How much Excel skills will we need?
Cody:
None. None. You bring a pen and paper. We’ll do Tesla clearly because it’s right now the standard-bearer of what we do, but we’ll do something much smaller too. We’ll go look at an MP or… We’ll do two or three. We’ll just… I don’t know exactly what the agenda/curriculum is, but we’ll do something. It’ll be helpful I’m sure. Even for me to think it through with you guys.
Subscriber:
You mentioned gold and bitcoin as two of the bigger holdings for this year. Just wondering if you could expand on your thoughts on those two especially for this year.
Cody:
Check the Bitcoin part. It’s not as big as it was. That’s what I mentioned in the article I sent out last night. I’ve trimmed a good chunk of Bitcoin here. I still own it. I still think it’s going much higher over time. Just don’t like the risk-reward at this… Part of the biggest problem with Bitcoin as it always has been as I’ve explained since we ever bought Bitcoin at 100 bucks in 2013 is that there is none of that fundamental analysis I’m about to do a lesson with you guys and talk about next week when we do a stock.
Cody:
We do a stock or we do the markets, we can do some fundamental analysis. Your payback period is this amount of time. You get this kind of cash flow dividend yield. You get this kind of earnings yield. You can do some math that gives you grounding and project things out into the future and say, here’s how much more there will be of that stuff to support this stock price. With Bitcoin, it’s probably worth more dollars now than it was then. I think more people are going to buy Bitcoin and sell dollars. I think Bitcoin will go up versus the dollar. That’s about all you’re doing.
Cody:
And same thing with sort of gold, right? I mean, gold there is some intrinsic value and people will do jewelry and goes into semiconductors and electric vehicles and things. Goes into people’s teeth, but the vast majority of the price of gold is simply people think other people might want it at about this price. So, I’m not going to give it away at this price. Maybe a little higher I’ll give it away.
Cody:
So, I like gold. I think it hasn’t moved. I think it looks much less volatile, much more boring than Bitcoin does, and I think boring might be awesome in 2021. I don’t think it’s going to be all parades, and roses, and unicorns, and rainbows, and bizzle bizzle boops. There’s going to be some bummers, some badness, some negativity, some stress.
Cody:
Here’s what I picture, okay? Let’s just drill down on that Bitcoin thought a little more. It’s not Bitcoin that’s the problem. It’s the 90% of the other, excuse my language, shitcoins. These things are stupid. Tron, go to that… Where do you go? Coinprice-dot… I used to go to some thing and there was the hundred largest market cap cryptos. You can take 90 of them and short it and make money, and I think now’s probably about the time they’re going to… They’re in the middle of a bubble so you can’t call it a top, but it’s feeling very toppish in the non-Bitcoin crypto world.
Cody:
And when that happens, it’s likely going to take Bitcoin down with it too at least a little bit. So, being as bearish as I am on the non-Bitcoin, non-Ethereum, non-top five or 10. If it’s not in the top five, not in the top 10 biggest cryptocurrencies out there, it’s probably going to crash this year.
Cody:
That’s the trade. I wish I could come up with a way to short a basket of the 50 to 100 biggest… Not the top 50. Go from 51 down to the 100 on the list of the biggest market cap cryptos, put them in a basket, and short it. Buy puts on it. Bet that it’s going lower, and I think 12 months from now you will be a very wealthy person. That trade doesn’t exist. There is no vehicle in which I know of to easily and safely put that trade on, but that would be my favorite trade for 2021 is one that is not helpful to you at all. Sorry. Or me. It doesn’t help me at all.
Cody:
It’d be like living in your house and recognizing it’s about to go down and being like, “I should make some money off of that.” You can’t. You can’t buy a put on your house. Maybe we should start a business. Boom, let’s do a SPAC for a company that sells puts on homes. All we do is short puts to people. “Hey, you want to buy some protection on your house going down? I’ll sell it to you.”
Cody:
Or maybe we should start a business that buys puts on houses, and take that one public in a SPAC. Sarcasm, I hope you guys know. That probably will translate better on the Q&A transcript if I say the word I’m being sarcastic right now. Right here. Next question, otherwise I’m going in the chatroom. Better be quick.
Subscriber:
Hi Cody, not sure if you talked about Bitcoin yet, but I termed 10% at 30k and 10% at 40k. Looking to reinvest if it reaches 20k. What do you think of the strategy and what are your thoughts on Bitcoin for the near term?
Cody:
Yeah, I talked a little bit about that earlier. Bitcoin long term, yes. Bitcoin short term, careful.
Subscriber:
Cody, a question for today’s chat. Social media stocks generated lots of discussion lately, good and not so good. Twitter, Facebook, Apple, and Google get lots of attention with blocking Trump and Parler. Does this concern you on social media stocks?
Cody:
No, this is just standard. This is what happens. This is predictable with the Republicans and Democrats doing what they do with these social media companies and this’ll get uglier and messier. And it’s of the main reasons I like I love Pinterest so much. Love Pinterest. The last time I looked at Pinterest was five or six years ago other than when I bought it. I went to pinterest.com and asked my wife about if she still loved it. Then the other night she’s on her phone. We’re looking at some stuff doing some research on some house stuff, redecorating stuff. She’s like let’s go onto Pinterest and search balloons. I don’t know what the… Deck, astronomy, whatever you want to look up. And there’s no anger.
Cody:
There’s nobody on Pinterest yelling, “Trump had the election stolen from him!” And no one else is like, “Trump’s the worst person ever!” And no one else is like, “Yeah, go green and go socialist!” And no one’s over there like, “Boo, the liberals are stealing my country,!” None of that. None of it. None of it. It’s just Pinterest and it feels positive and good. So, I… Where’s my phone? Yeah, check it out. I just did it. I said I’m not on social media. I do not have… You type in Twitter; I don’t have Twitter. I do not have Twitter on there. See, none of that.
Cody:
Type in Pinterest. I downloaded it this weekend. Look at this thing. For you, see I’ve been looking at some pool stuff and some housing and some libraries. Today, some daily inspiration. I don’t know I had daily inspiration, but I could use a little daily inspiration. “The nature fix we all need right now.” Following. Who am I following? Oh, I’m following my wife, but it’s beautiful. This is what social media can be. Oh, goodness, people. Buy yourself some more Pinterest and go download yourself some Pinterest and get off of Facebook. Get off of Instagram, get off of Twitter. Go read yourself some Pinterest and buy the stock. I’m telling you right now. So, yeah, the rest of it’s all just standard social media battles.
Subscriber:
My wife told me to buy Etsy. It’s done well.
Cody:
Yeah, I’m surprised at Etsy doing that well. My wife uses Etsy, but I don’t… It’s a marketplace for people to buy and sell stuff, which is great, but Pinterest is a whole platform, and I think there’s things happening in that Pinterest business model that I’m not figuring out yet, but they have, and they’re monetizing stuff in ways that Etsy is just taking a commission. And that’s great. That’s a good business and brilliant company, but I sure like Pinterest better. Listen to your wife, man, next time she recommends a stock. Kidding. Kidding. If she doesn’t do the homework, don’t listen to her.
Subscriber:
Cody, in your recent letter to fund investors that you sent to us, you said that prior to recently hedging with some ETF puts, ‘I’ve been continuing to build up some small shorts and/or buying some puts in many small-cap stocks that I think look fraudulent and/or outright bubbled up and ready to crack.’ Can you name some of these ready-to-crack specific stocks? You did after all name the ETFs. Thank you.
Cody:
I don’t know because they’re small caps, and if I was talking about buying it, I’d feel better about saying the names, but recommending shorts. I don’t know, let me pull up my shorts and puts and see if there’s anything in there that’s worth mentioning. That I feel comfortable mentioning maybe is the better way to say it. Ooh, is the market really crapping the bed since we’ve been talking? Whoa, maybe these highflying bubble stocks are finally getting their pullback.Did small caps know how to do this? They’re red or down. What? Say what?
Cody:
All right, here we go. All right, well, GRVY, careful with it. It’s very illiquid and it’s down 6% today already, but maybe if it runs back to $200 keep an eye on that as a potential short. GEVO, G-E-V-O, is another one down today. Nikola. $LIT is a ETF for lithium things that I’m also short. Carvana, I’ve tried it again recently. Is that enough? I think that’s enough.
Cody:
I’m not a short-seller per se, right? That’s not what business I’m in, so that’s another reason for me not to tell you these names, and for you not to listen to me. You’re here for the long picks. You’re here for the revolutionary ideas. You’re here for me to help you to help yourself be careful and cautious when you should be. You’re here to help me help you defend your gains and your profits over the long term. But trying to make money shorting stocks is not why you are here at Trading with Cody.
Cody:
As a trader, if you want to try to play a little of those, great, but these things will also rip your face off. They’ll be up 10%, 15, 30% one day. So, this is not for the average investor at home. Don’t be playing with these. Don’t short this stuff. You should buy yourself some put hedges if you want on the ETFs but raise some more cash. That’s what most of you at home should be doing to protect yourself from this stuff crashing, which I think a lot of this stuff is going to crash, and it’s going to take the IWM and a lot of small-cap stocks that are good will go down because this crap stuff that’s up 2000% is going to drop in half or 75% in the next few months.
Cody:
So, all those things I just mentioned some of them are very small cap, some of them are very liquid. Be very careful. This is not why you’re here.
Subscriber:
So, Cody, along that note, what will you be looking out for in terms of I guess either metrics or trends for the market to start rolling over?
Cody:
What’s interesting is the blow-off top phase here in the last few months especially in the small caps and semiconductor and a lot of tech stocks. The higher it goes, the less bullish I’m going to be when it pulls back because the vicious cycle on the flip side of this bubble is going to get uglier at some point because it went too high. So, I don’t know what I’m looking for. I don’t know that I’m going to be terribly aggressive on the first five or 10% pullback we get.
Cody:
I spend all of my Trading with Cody writings and analysis trying to answer and talk about this thing that we’re doing right here, and that’s my only answer is I’ll keep writing. I will keep looking. There is no technical chart magic thing that I’m looking for. If you’re really looking for the downs to try to capture when the downside hits, it’s probably not wise to keep trying to catch the top, but you want to try to let things crack and then bounce. And then maybe if it really…
Cody:
This is what drives me crazy about technical analysis. I don’t know how to tell when it’s the real pullback or when it’s the fake pullback if the chart does this or that, or the chart’s doing this and then therefore it’s the real break out not the fake break… That’s all BS man. What is this stuff? I don’t know what you’re looking for technical analysis-wise. I do know that when my analysis starts turning bullish, I know it. When I start getting excited because everybody’s scared and the charts are horrible and stocks are cheap again, and I see something that makes me truly go, “This is good. This is good risk-reward, man, let’s go.”
Cody:
There’s none of that right now. Very little of that. Maybe 1% of my time I think, “Boy, that’s an exciting opportunity.” And 99% of the time right now I look and analyze and think to myself, “I don’t like this.” That’s it.
Subscriber:
Are you still buying calls on Dell?
Cody:
No. no, I’m riding the ones I’ve got, but I’ve not bought anymore since I talked about it. Maybe I nibbled it a little more a few days after or something when it pulled back. Yeah, it is what it is. A bet was made, and stock’s up maybe a little bit since we made it. Or maybe it pulled back yesterday and then it was up today, so it’s break-even where we did it.
Cody:
It’s a small bet. Let it ride for now, and maybe if it comes down another 10 or 15%, I might go in and try another charge. But the bed’s made. The bed and the bet have been made. Now I have to sleep with it or roll with it.
Subscriber:
Hey, Cody, I have a quick question for you. Positive, I know there was record gains made last year, and you said that in your note. Any way you can let us know what’s your percentage that you made this year or last year?
Cody:
No, that would be illegal according to my attorneys who do not let me market my performance, so I cannot tell you. It didn’t suck. It could have been better. How’s that?
Cody:
I’ll leave you with this final thought, and that’s a good segue to it. Talked about it many times and even just recently that like with the Tesla. When Tesla was at 50 bucks a share in March a year-and-a-half ago, almost two years ago, I called up some of my best hedge fund advisors, I called up my advisory board and I told all of them over and over for weeks on end, I was like, “I sort of want to just become the Tesla fund. I think I should just become the Tesla fund.” I spent 15-20% of the fund, Tesla and let it go.
Cody:
And of course, you don’t do that in a hedge fund. You don’t buy… I guess you can, but it’d be very risky to put 15% or more of your hedge fund in there. Most hedge funds maybe top out at 10 or 12% at most on a position. And since then… So, I bought a bunch. I made it huge. It was by far my biggest position in the fund, but it didn’t make myself the Tesla fund. And now the stock’s gone up, what? 1400% or 15… I don’t even know. 15 times whatever, 17 times whatever we paid for it is what it… It goes up in one day more…
Cody:
Today, these days it goes up more in one day than our purchase price is, our cost basis for this thing is 18 months later. And if all you did was just let your Tesla ride, who knows what it might gain? I mean, holy cow, I would have been a… Plus, I had some calls along the way in Tesla. But you’re always going to have that. You’re always going to have that what if thing. It can drive you crazy if you let it. You have got to let it be. You’ve got to be patient. You can’t be greedy, and you can’t regret not being greedy.
Cody:
You would have been greedy if you had bet on XYZ and then never sold it and blah, blah, blah, blah, blah. Whatever that thing that you’re regretting is you were being… It’s greed that is making you feel that. And I have it. A good hedge fund manager is always pissed off at himself/herself because you could do better. Always you can do better.
Cody:
I read a quote by Michael Steinhardt a few weeks ago, and he’s a brilliant very successful hedge fund manager retired now, I think. But he talked about how he thinks about all the mistakes he made over his career, and he can hardly believe he even made any money. And that’s the truth of it. You’re going to make all kinds of mistakes. We’re going to make all kinds of mistakes. We’re not going to make as much money as we could, but that’s what hedging is. That’s what risk-reward analysis is. There is no guarantee. You don’t know that Tesla was going to do that.
Cody:
If you go back and rewind, you hear me over and over explain that Tesla at $50, the calculus was simply about the number of cars that was going to sell in the next 12 months to 18 to 24 months. And if they beat or exceeded the amount of cars that they were hoping to sell, they were going to be fine, and the stock would probably really go up. I never thought it would go up 17 times our initial price in 18 months. That’s just okay. Thank God, thank goodness, thank the universe, thank your analysis, thank your fingers for pulling the trigger. Thank you for all of the life-altering, life-changing, life-improving, wealth-growing picks and growth that we’ve had over time, and let’s really try so hard to protect it and to continue doing it without regret. Without greed.
Cody:
But it’s hard. I could have done better. I could have done better last year. Easily. Just don’t be stupid, Cody. All right, on that note everybody, good night. For real, good night. Thanks, guys. I’ll leave us on the don’t be stupid Cody thought. See you soon.
Cody:
Thank you, guys, for being here. Thanks for being a part of the community.
