Buying U Stock, 5 Potential Black Swans, Bitcoin Advice from 2013 And Much More

In the Trade Alert I sent out earlier today, I neglected to mention the symbol of Unity Software, my new platform play on the Virtual Reality and Gaming Revolutions. The symbol for Unity Software is simply the letter U.

Here’s the transcript from this week’s Live Q&A Chat.

Q. Cody, lots of talk about interest rates going to 2%. And its impact on Big Tech, negative. If you have a chance tomorrow, your thoughts? Thanks.

A. We bought TLT puts a few weeks ago in a bet that interest rates are heading higher. 2% probably won’t kill the stock market or the economy but if rates climb towards 3% or higher, it could get ugly for the government and corporations and people to cover their debt payments and still grow/invest.

Q. Feet to fire, what are the most probable Black Swan events that can sink the market within the next 6 or 12 months?

A. 1) If more variants, more problems with the pandemic if too many conspiracy theorists and vaccine haters and most especially the billions of poor people in poor countries who can’t get access to the vaccines keep the Coronavirus Crisis front and center instead of fading in the rearview mirror. 2) If interest rates double for the US government. 3) Oil somehow either goes to $10s/$20s and stays there or if it Flips, if oil were to rocket to $80-$100s and stay there. 4) War/terrorism/worldwide escalation of violence. 5) (And perhaps most likely): Dozens of companies that are worth tens of billions and a handful of companies worth more than $100 billion are revealed as fraudulent, panicking the stock market holders and popping this Blow-Off-Top-Phase part of the Bubble-Blowing Bull Market.

Q. If market get lower today… are you still on trimming mood or buy the dips? (with regards to your portfolio / revolutionary stocks).

A. No set answer. If some stocks get to levels that I think they look like they’re good set-ups and values, I’d probably nibble more. Others, I might trim. Steady as she goes.

Q. What do you think of the Great Reset (WEF 2030 agenda)? If this is something not too crazy to happen, how do you suggest to protect our hard obtained patrimony? Is it gold / bitcoins / stocks … ? Everything seems prone to be confiscated.

A. Never heard of it. There’s plenty of potential for economic and societal crisis in years ahead, just as there always is.

Q. Cody, can you update your “short” positions and their ratings? QQQ, SPY, IWM, SMH, EWU.

A. I’m still short each of those but I did cover a little bit yesterday in the hedge fund where I trade a little more actively especially on the short/hedging side of things.

Q. I know you offered a couple of options last week, but what’s your defensive strategy? My portfolio primarily tracks the market, but is heavy in Small Caps and Tech. I’ve thought about halving the first 20-30% and parking 15% or so in a REIT or cash to reinvest when we see opportunities over the next few months. Thoughts? Something you like better?

A. No easy answers on this one. I spend all my days writing about my strategies to approach this market and I don’t know enough about you or your life or your risk-tolerance or potential for earnings and upward mobility and so on to help. Cash is the only real “safe” asset and even it’s not safe if/when inflation goes nuts.

Q. I’ve often seen you cite : 1. stock price to forward sales estimates and 2. topline growth rate as two key metrics for determining when to pull the trigger on a potential revolutionary idea. What are the ranges that you like to see for each of these measures?

A. No short answers on this one. I taught people how I analyze stocks including what kind of metrics you want to look for a couple weeks ago. Watch this /read this.

Q. What is the best way to purchase bitcoin? I tried to use coinbase but my local bank made it impossible to transfer money to coinbase for a purchase. I had the same problem transferring fund from my BofA account to coinbase, but Citibank works with coinbase for me. I had also bought bitcoin a few weeks ago on my paypal account. FYI, Cody actually recommended trimming bitcoin at this level. What is the safest exchange to buy bitcoin on?

A. Here’s something I wrote in 2013 about how to buy bitcoin back then (It’s much easier now!): “Maybe I’m nuts, but if you’d moved like I did to put 1% of your portfolio into BitCoin when I first suggested doing so at about $100 per BitCoin, you’d already have more than a triple on your hands. I’ve been slowly but surely buying more BitCoins when its crashed and I have been accepting BitCoins as payment at a discount on TradingWithCody.com to build up even more. Obviously, I think there’s still more upside and potential for BitCoin in years to come. In an article back in July called Expect fireworks in gold heading into expiration I wrote: ‘I think there’s plenty of room for both physical gold/silver and bitcoin in our portfolios.’ Still do. In a tweet on October 2nd I wrote ‘Nothing’s changed for Bitcoin $BTC on this news. It’s a rogue currency. I’ll hold my tiny $BITCOIN position probably 4ever.’ I still do. And in an article back in May called Save your portfolio from the currency wars I wrote: ‘That’s why you have to not just buy gold, but also silver, a little bit of BitCoin, etc.’ I promised my readers an overview on the been working on methods of buying Bitcoins, and let me tell you first and foremost — it’s not easy to buy BitCoins yet. It might get harder before it gets easier too, as regulations and systems are created in coming months and quarters. Like I said though, I actually could picture BitCoins going up another 10-fold versus the dollar if all those BitCoin investment businesses and systems get approval and go mainstream. If not, there’s certainly downside potential in BitCoin versus the dollar so let’s not speculate very aggressively no matter what. Currency speculation is risky, always. Certainly this BitCoin stuff is extra risky while it remains so cutting edge. To buy Bitcoins, we’ve used several different platforms, but Coinbase.com will allow you to buy them directly from your bank account. Signup for an account then follow the Quickstart Guide for buying your first Bitcoin through the account. You will need to first verify and link a bank account and a phone number to your new Coinbase account before buying any Bitcoins.” Nowadays, at Paypal and at the Square Cash App it’s probably even easier and more straightforward. You can also buy bitcoin futures (BRR) you can buy bitcoin ETFs (they usually trade at a high premium to bitcoin because they’re so easy to buy in a stock portfolio). Be careful out there. Bitcoin is up not 10-fold since I wrote that post in 2013, but is up more than 170x since then — bitcoin was trading at about $300 or so back when I wrote this. Long-time Trading With Cody subscribers — you’re welcome!

Q. Cody what are your thoughts on RIOT?

A. I’d steer clear of RIOT. This is a company that looks quite fishy to me even though I do think they are actually mining and building up a bitcoin balance sheet. I don’t get the compulsion to buy fishy former penny stocks that say they do bitcoin stuff when you can just stick with bitcoin, you know?

Q. RIOT??? This is the same company you wanted to short several years ago around $25?? And now trading at almost $70? Are they really making any money trading Bitcoin?

A. Yeah, it’s the same company. It did drop back to 50 cents from the $25 level we talked about wanting to short it at a couple years ago. I’d steer way clear of this puppy.

Q. Hi Cody question for the Q&A. What do you think of crypto interest bearing wallets like BlockFi? Any reservations on storing assets with them versus mainstream online wallets like Coinbase? Thanks.

A. Yes, I’d be terrified of places offering free money.

Q. Are you still suggesting GLD or physical gold since interest rate rising and gold is @ a 2 months low?

A. Yes, I still like GLD and gold here for the next year or two in this current economic and cultural set up.

Q. It is quite evident that EV will be big in the next 5 years. So besides TSLA, what other stocks you would recommend.

A. I think there are other EV companies that will do great, grow big and be very successful in coming years. But most every good and bad EV stock have seen their valuations go up commensurate with TSLA it seems, even though none of them have delivered and executed yet. Rivian will be a great company and I’d like to invest in it someday. But other than that, I think we’re mostly in an EV valuation bubble and I’d avoid most other EV names until/unless they come down 30-50% or more.

Q. Cody, can you provide some thoughts on HYLN (Hyliion)? Texas-based Hyliion has two products. One, which is already shipping, is a kit to convert diesel-powered semi trucks to hybrid-electric operation. The second, due in 2022, is a complete battery-electric heavy-truck powertrain with a natural gas “range extender. Seems like a cost effective way for the heavy trucking industry to convert from fossil fuels.

A. That doesn’t sound like the kind of company I’m looking to invest in. It sounds like the kind of company I might want to short actually. The fact is that a one-year chart of HYLN looks a lot like what I think most EV-related SPAC one-year charts will look like six months from now.

I’d add that the fact that HYLN was founded but just two years ago(!) is another reason I find it a better looking short candidate than a buy candidate.

Q. Any thoughts or opinions on black sky (satellite company) merging with SFTW? Have you heard of this company?

A. Hadn’t heard of them til this week. We are starting a spreadsheet of Space Stocks. I’ll share it with you guys after we get it built up a little bit more. Just started the spreadsheet to track the Space Stocks yesterday and I want to work on it a little bit today and this weekend.

Q. A few weeks ago you said you were looking at EDIT… are you buying now that it’s pulled back a bit?

A. No, I’ve decided that for my other ideas other than CRSP in the Genetics Revolution that I’m looking for next gen CRISPR companies.

Q. As an add on to the question about adding to CRSP… you mentioned NVTA and EDIT before. Did you look into those anymore?

A. Yes, I looked into them. See prior answer. I’m looking for some new platforms and new ideas other than CRSP.

Q. What about CRSP? is it a buy?

A. Yes, I like CRSP here but I’m in no rush to buy too much more since we already own plenty from much lower levels.

Q. Your thoughts on MP at this level in today’s market. Feels like there is persistent buying and it wants to go higher.

A. I don’t do that game well. MP is up more than 200% since we bought it four months ago. I’m more inclined to trim it and let the fundamentals catch up with the stock price than I am anything else.

Q. Good morning. Any thoughts on PLTR? Almost 50% off its recent highs.

A. I don’t like to invest in companies that depend on the government for their revenues.

Q. Do you think that we have seen the top of the semi “bubble” for the time being. They have gone up a ton and seem to be going sideways now.

A. Maybe. Semi’s, because they are increasingly complex and under supplied, might be a sector that continues to rally for a while to come even as other sectors like the aforementioned EVs and maybe solar stocks and cloud stocks come down to reality.

Q. A few weeks back you mentioned you wish you bought Unity Software U at IPO. Any interest now that it’s down quite a bit from highs?

A. I’m working on it! [Update: Cody sent out a Trade Alert that he is buying U this morning].

Q. Feet to fire with JMIA earnings Tuesday as this is now a pretty big position for me since buying with you at 19/sh?

A. No idea about the last 90 days of business for JMIA. I’d rather trim than buy this name after its nearly quadrupled for us in the last few weeks since we bought it.

Have a great weekend everybody!