Bear Market Length, The Great Codini Says, Companies That Become Verbs And More

Here’s the transcript from this week’s Trading With Cody Live Q&A chat. Just an FYI, in the hedge fund, I nibbled some puts on SI, COIN and MSTR today, dated out to the next week or two and at prices both below and a bit above the market. Not something I recommend for most personal portfolios.

Q. Do you see this as a short bear market? Or, do you think it will take a few years for another bull market to appear?

A. It could be both. It could that we put in some bottoms in many/most stocks here this year but that it takes a few years for a broader bull market to develop. Picking great stocks at good valuations and navigating the ups and downs flow is what will work in that environment.

Q. Cody, you mentioned in yesterday’s email that you feel THE lows are perhaps in. What’s the main reason for your feeling? Was it mostly the NVDA post earnings, or some other metrics?

A. Hmm, I don’t think I wrote that…here’s what I wrote: “Are THE lows in? It’s possible, if not quite likely. I plan to get a bit more aggressive if the markets do find another excuse to do another panicky sell-off towards and/or past those lows from earlier this week.” That is, I do think we are getting closer to the lows if those recent lows are not the final lows and I plan on buying/covering shorts whenever/if the markets do end up hitting new lows in the next few days or weeks.

Q. What’s your thoughts in general about the future of real estate going forward?

A. I think land is probably an okay investment for the long-term in most places. I think most real estate is mispriced for what people can afford and I wrote about how I sold millions of dollars of real estate in the last year.

Q. Heyyyyy the great Codini, what’s your crystal ball saying about the outlook on cost of building supplies, new home sales, realty, interest rates, etc.? Thanks.

A. Ah, the Great Codini says: “Man who stands on toilet is high on pot.” He also says, “inflation is going to be a problem for a few more years if the end of globalization and the domestication of most supply chains becomes a global economic theme because as the moth knows, an attraction to light can’t be overcome forever.” He also says, “interest rates might stabilize even in a high inflationary environment because the world used to have negative interest rates and as the grasshopper knows, the absence of pain can be considered joyous.”

Q. Cody, I know it’s both but do you lean more towards this inflation being caused by supply chain disruption or currency printing? I’m just trying to think out how long it will last and the difference between plays a major role in determining that.

A. It’s both. The currency printing issue has already been alleviated in many ways as the cycle has turned. But five years from now, domestication will be a bigger inflation input.

Q. With RKLB under $5/share, have you nibbled on some shares? I haven’t nibbled since it was $8/share and considering adding some here. Would you be supportive of that? Thank you and have a great Memorial Day Weekend!

A. Yes, nine days ago I sent out a note mentioning that I was buying more RKLB.

Q. Cody, has RKLB hit its bottom? Can we add aggressively or do you see it going lower?

A. No idea, as this company still has to grow and execute and do a lot right too. deliver on becoming part of the sustainable space economy. In two years, if it’s profitable or getting very close, it would likely be higher than these levels. In ten years if it really grows into a big player in The Space Revolution it could be much much higher than here. It could also drop another 50% this year even if it eventually does deliver on its promise in ten years.

Q. Good morning, I took a big hit on INFI & SKLZ please tell me RKLB and PRVB will not follow suit? The market sure doesn’t like those type of stocks, huh?

A. I like RKLB for the long-term and I love investing in good Space Revolution companies and it’s just about the only publicly-traded one I really like. PRVB is a lottery ticket biotech play.

Q. Can you please expand on your thoughts on Roku? I know this was an old position in the portfolio and now it’s back in. Did something change with the business model? Or did the valuation just become so compelling with the stock down 80% in less than a year?

A. ROKU is one of the few formerly highflying stocks that is actually looking quite compelling now on a valuation basis. I was shocked when I ran it through my spreadsheets and algorithms and it came in with such a low P/P ratio looking out five years. Then when I went and played with their app on my phone and I saw how many high quality shows and movies that I can stream on there along with the live broadcasting movies, news, sports, reality TV, music videos and all the other live cable-like channels on their app, I was very impressed with the product. Then I stepped back and thought about how Netflix found that they couldn’t raise prices much more and they are already losing some customers and how the blue collar worker and middle class world citizen who up to now was willing to pay Netflix $12-20 a month are probably going to find a LOT more value out of the ROKU competing product. So I’ve been building a position in ROKU.

Q. What is P/P ratio?

A. It’s from those Casket of Big Cap Crashes spreadsheets I sent out in which I’d run through each company’s financials, growth estimates and looked out a what their respective profits would be in five years. So it’s my Price to Profits ratio which I have started called my “P/P” ratio because I thought in a childish way that was funny.

Q. What is the five lowest P/P in our portfolio now?

A. Here, I wrote a long article about which stocks are cheapest and put out a couple screenshots of the entire P/P spreadsheet.

Q. Hi Cody! Can you share the zoom link on how you value your stocks again from 2020? I can’t find it in the the e-mail. much appreciated.

A. Here you go: Everything You Need To Know About Analyzing A Stock

Q. Similarly, we started up a new position in Uber close to a year ago. And recently nibbled some more this week. What specifically about Uber has you continuing to add to this position? I know you like companies that become a verb.

A. Yes, I like the fact that Uber became a verb that describes ridesharing. I also think they’ve got a lot of potential upside in their logistics and delivery businesses. In the food delivery business, they have a major cost advantage in the way that their drivers can choose whether to move around food or people while their competitors only do one of those two services each. And of course, one of the main reasons I like it here is because it’s cheap on my P/P ratio valuation numbers.

Q. Cody, what’s the main reason you like PayPal here? Is it because Venmo has hit critical mass? I find myself using Venmo daily. It’s even easy enough to use for the older generation!

A. It’s cheap on a P/P ratio five years out and Venmo has hit critical mass. I kept thinking Square’s Cash app would catch up, but venmo remains a de facto standard way of sending money between to people.

Q. Cody, any thoughts on BABA after earnings going forward? Thanks.

A. Same ol for now.

Q. Speaking of old positions that could be compelling, would appreciate your views on Square and Disney? Along the lines of Square, why do you prefer PayPal over Square?

A. I ran DIS through my spreadsheets and it came out much more expensive than I’d expected. I love DIS’s business model but without more growth it’s just not a very compelling valuation here. I like SQ and it’s gotten cheap on my spreadsheets so I might take another stab at that one at some point.

Q. Hello Cody, I was wondering if the story has changed for CRSP? It was caught up in the mania, but now looks sane again.

A. I’ll take a fresh look, but I sorta think the world might have moved on to Crisper 2.0 and CRSP might be Crisper 1.5.

Q. Cody what’s your opinion of MTTR’s buy point and what is your opinion and rating of the company?

A. I just ran MTTR through my P/P spreadsheet to see if it can get profitable and I don’t see it how it can over the next five years unless they somehow pivot the business or somehow make it more profitable than anybody expects.

Q. In order to swap our SKTL for BNB do we have to go to the actual pancake swap website and connect our wallet? Or can we just do it directly from Metamask? Also, is BNB the only token we can swap SKTLs for? Thank you.

A. One of the SKTLs team volunteers will work with you one on one to help you sell your SKTLs if you’d like. One of the volunteers is happy to send individuals like yourself some ETH or some BNB directly to your metamask in exchange for sending your SKTL tokens directly to him. Email cryptocreatures13@gmail.com if you’d like to go that route. There are several other ways to skin the SKTLs trading cat. BNB is not the only token but it’s the one that’s sort of standard on Binance. You can do it directly inside the Metamask wallet by opening the browser in the wallet and going to pancakeswap.finance but you will need a little BNB in your wallet to do that too. Email missioncontrol@sktls.com and they will help you with a one-on-one call or zoom.

Long one today! That’s a wrap. Thanks all!

I leave you with a shot of one of the six new baby cows at my ranch.