Chaos, Trade War, Markets, Finding New Picks, Twitter, 5G and more

I’m proud to announce The Cody Willard Show, which is a much more highly-produced, once weekly 35-50 minute live show that you can find on Facebook, YouTube, Periscope, and Twitter. We’ll be publishing it each week in podcast form on iTunes and Soundcloud. Produced and co-hosted by former Fox Business producer Chris McHugh, I think you’ll find the new format much more easy to follow and consume. I’ll also send out a transcript of each show exclusively for Trading With Cody subscribers, as always.

On that note, I want to let you know that I’m also going to go back to doing the Live Q&A Weekly Chat exclusively in the Trading With Cody Chat Room each Tuesday at 11am ET. I’ll take three or four of the best questions that I answer for you guys in the chat room and expand upon those answers during The Cody Willard Show.

So with that introduction, here is the transcript to the pilot of the show which Chris and I streamed yesterday live. You can also watch a replay of this first pilot episode on Facebook, YouTube, Periscope, and Twitter.

Cody: Welcome, welcome everybody to what is I guess, the inaugural, the very first, hopefully not the finest, because we will have many more fine, many more finer episodes to come. This is the Cody Willard Show. I’m gonna talk about all kinds of politics, finance, stock picks, revolution investing.

Just last weekend, I was out on Mescalero Apache Indian Reservation, at the feast, watching a bunch of Apache dancers late at night. I’ve got some lessons that apply from what they were talking to me about there, and what those dancers were doing, and how they applied to economy, to the stock market, to society today. Stay tuned for that.

Let’s welcome my new Chief Executive Producer. It’s a C level executive position there. Chris McHugh, thanks for joining me, Chris. Thanks for doing all of this and helping with me get this whole thing up and running like this, the production quality looks fantastic.

What is our first topic today?

Chris: We’ve got tariffs, we’ve got trade wars, we’ve got Brexit. Why don’t you kick it off Cody?

Cody: It’s almost the same topic. That’s a great way of phrasing it. It’s tariffs, trade wars, Brexit, all of this stuff is happening in a geo-political level and most of the time, I tell my subscribers at tradingwithcody.com that most of the time if the markets are freaking out over a geo-political kind of thing like they were for Greece (remember when we had Greece financial crisis over and over again five or six years ago, the market get hit 5 or 10% and you could buy that every time even by some call options if you’re an aggressive trader) that geoplitical events usually don’t matter much to the stock market.

But when you have an entire trend, a geo-political trend that’s not just happening in Greece whose entire economy is smaller than Apples market cap by the way-Greece doesn’t matter to the United States stock market.

Apple matters more to the United States stock market than Greece ever would.

But the United States government, the whole system, the Brexit, Europe, the EU — these are much bigger than even Apple. And when an isolationist kind of trend is building, when tariffs are going to be increasing costs and as people are hitting upon, business leaders start to pullback too. They need stability and they need to know what’s out there to make long-term investments.

When all of those things are hitting, geopolitical events can finally matter to the stock market. Now, I’m not saying that this Bubble-Blowing Bull Market that we’ve been living through the last eight years since I left Fox and got back into investing, is over. I still think it’s pretty much intact because in large ways the Federal Reserve, the republican/democrat regime, the Trump tax package, old Obamacare, new Trump care, fighting the Obamacare — all of the things that the government does continues to try to inflate profits, prop up profits at giant corporations that make up our stock market and simultaneously with the Federal Reserve’s help prop up the stock market itself.

All of that’s not over. But you should be aware that we have crashes even in Bubble-Blowing Bull Markets. You saw 2008, you saw 2000. In the year 2000, the NASDAQ dropped 75% and I expect we’ll have another serious, significant, horrible stock market crash in my lifetime, but that’s not necessarily right now.

What all this gets back to what would cause something like that. Perhaps it would be tariffs. Perhaps it would be an escalating trade war.

As far as the idea that we’re not yet in a trade war, but it’s just maybe going to become a trade war — I think that’s asinine. The minute the leader of the free world started talking rhetoric about a trade war and how he could win a trade war, that started a trade war.

We are in a full-fledged trade war. One other thing I want to hit on is that of course the trade war doesn’t actually hit the economy immediately. But all these trade war factors will have unintended consequences, friendly fire causalities, other businesses, sectors, economic fundamentals will be hit by trade tariffs, Brexit and what I call The Great Trade War of the 21st century that we are already in.

So, you’ve got to be cautious, you’ve got to be careful and you’ve got to look at these things as potentially trend changing and that’s why it matters, but maybe not just yet. Chris, back to you.

Chris: Cody, I’m just trying to get my order in here for a Trading with Cody t-shirt that says ‘Bubble-Blowing Bull Market.’ Do you want blue or green?

Cody: Chris, it’d be even better if it weren’t a T-shirt, but boxer underwear, pajama pants that said Bubble-Blowing Bull Market.” My bad. My bad.

Chris: Stocks have been in big rally mode pretty much for the last three, two, three weeks there. Cody, what are your thoughts on the market now?

Cody: This ties right back into what we were just hitting with, the tariffs and everything else. I am more cautious now than I was six months ago, than I was five years ago, but I’m certainly not as cautious and bearish about the stock market as I was say in 2007 when I closed my hedge fund and took a TV job; traded stocks for TV, for media. Now, I mentioned earlier too that I was actually out at the reservation, the Mescalero Apache reservation just outside of Ruidoso on Friday night.

I was hanging out with Lariat Geronimo and my best friends from childhood, Syrus Wheeler and other old friends. I’ve known these guys for 30 years, 40 years or more. This is footage (Editor’s note: See video) that I took from that night and you’ll see the dancers. The dancers are always dancing in a clockwise circle. The men, as you’ll see here, are the elders right? They’re respected and they constantly have some rhythmic dancing and some rhythm and coordination to their movements and are always going in this clockwise circle.

The little kids in the middle painted in white without the crowns — those kids are chaos. They represent chaos and they don’t have any set patterns. In the middle of the event, one of the kids started doing one of those modern dance moves. I don’t even know what the modern day dance move was, but Lariat Geronimo sitting next to me was explaining this whole concept about the chaos and these children and just then that kid started doing that modern dance.

Such a modern dance move had no place at all at that beautiful, ancient feast tradition and Lariat says to me, “That’s so beautiful because that’s chaos. It’s the change. You can’t control children. Those kids could change the world.”

And that is true! In society today, that is true in the stock market, that is true in the economy.

Societally speaking, there are children, my daughter, your kids, you and me, we can change the world. There’s a set pattern out there, people have been doing things the same way in our country for so long, they’ve been voting republican and democrat, they’ve been partisan, they’ve been consuming partisan media, they’ve been part of a global corporate takeover.

It doesn’t have to stay that way. There could be children out there who are chaotic who will change the world for the better.

Chaos is not always bad. Those children choatically were dancing were beautiful.

You embrace chaos. That was what Lariat was trying to tell me and that’s what you have to do in society.

You have to do that in the stock market too, if you want to be in revolution investor, you’ve got find companies that are chaotic and revolutionizing the world and revolutionizing their sector.

With the economy, you’ve got to be aware that there could be some chaos coming that could undermine the Bubble-Blowing Bull Market or that could undermine the corporate earnings growth. This economic expansion could go in a heartbeat with chaos, be ready for it but not scared of it.

Chris: FBI, FCC, FTC, DOJ — they’re all investigating Facebook’s data leak, luckily Jack Bauer CTU hasn’t heard about this yet. Investigators, however, are looking into what Facebook knew about the data collection sold to Cambridge Analytica. Cody, you remind me of a young Jack Bauer sometimes, what’s your skinny on this? The lowdown?

Cody: Let’s keep it real man. I would never work for the government, so I could never be a young Jack Bauer. I’d love to be an action hero, but I’m going to have to be an Avenger type action hero before the UN took over their organization. I’ve never actually seen any of the Avenger movies, I’ve just saw 10 seconds of that clip the other day with Captain America rejecting global control of the Avengers. I was okay with that. I forgot the question.

Oh. FBI … The whole Facebook privacy thing. Now, the thing about that is that on the one hand, I don’t believe much of anything that Zuckerberg and Facebook have admitted yet. They have just barely started telling us what’s up and I’ve been saying that since the very day one when you heard and saw Facebook scrambling to let the world know that the world was about to find out that Facebook had all kinds of data breaches going back years.

That’s not over. There are so many more cockroaches out there. I welcome the investigation. I’m a Facebook shareholder, so it hurts me that the government is going to crackdown on these guys, I suppose, if they’ve broken laws, but I want a country run by rule of law. So absolutely, I am suspicious of what the commentary out of Facebook has been and I welcome and hope if there’s any wrongdoing — if Facebook has been covering their hide and not fully disclosing and/or misleading regulators, the government, the public — that there are consequences.

I don’t expect that will be the case though. As always, the government gets captured by the very corporations that are supposed to be cracking down and regulating. So, just for example, the whole new EU regulations, the whole new republican/democrat crackdown on privacy and trying to help people keep their supposed, their private, their data private — Which is first of all a shell game right now anyway.

If you’re on the internet, you’re out there man. Google, Samba TV, Facebook, they’re tracking you. They know what you’re watching, they know what you’re doing. If you don’t want your data tracked, then you’ve got to leave the internet. Alexa’s listening to me right now.

But the government isn’t actually going to hurt Facebook; they’re going to help Facebook. It’s much harder for a startup now to compete against Facebook. You think a social network could start on a shoestring today and possibly meet all of those cumbersome new regulations that Facebook has brought upon the industry? No.

So, as usual, stick with Facebook. I’ve owned the stock since it was at $20 a share, which makes it an official ten bagger yet again for the Trading with Cody subscribers who have owned it with me. But maybe we should sell a little more by the way. If you haven’t trimmed any Facebook and you owned it since $20, sell 10%, 20%, 30% or 40%. Take a little off the table. It’s same thing I was talking about being cautious. But don’t sell it all because Facebook’s going to be alright. Back to you Chris.

Chris: Well, as they say in good old Family Feud, “Survey says, three in four Americans don’t trust autonomous vehicles.” That’s three in four Americans. In related news, in 1918, three in four Americans didn’t trust airplanes. Hold on to your posterior Cody, it’s going to be a bumpy ride.

Cody: It is a bumpy ride and it … Speaking of which, I was actually in a driverless car back at CES in January. Neil Patrick Harris and I were doing a promotionwe had a driverless ride. He wanted to go to a show, Michael Jackson One and I really enjoyed that show very much. I love Michael Jackson, love Neil Patrick Harris and I loved my Lyft driverless ride powered by Aptiv Technology. That being said, we got to a stop light and there was a cone on the rode and the Aptiv-platform, Lyft-branded driverless car is going to hit the cone.

The car couldn’t figure it out so the driver had to go around it — he had to take control to go around it. But guys, that’s a snapshot in time. That happened six months ago. Even in the last six months, driverless technology has been revolutionizing chaotically and it is changing and it’s expanding and it is going to change and it’s going to get better. In 10 years, the data will prove it out that driverless buses, driverless semis, driverless cars, driverless planes, driverless submarines will be much safer than human error riddled human driven vehicles.

It was really interesting underscore that today, other than maybe Rain Man, everybody trusts airplanes better than driving a car.

In 50 years, people will only be driving rarely, if at all, and then only for fun. Nobody will actually be driving for transportation purposes; it will all be driverless and much safer. So you’ll trust it people; it’s coming.

Chris: You know what? I like mail bags and in case you guys don’t know it, but now you will, Cody reads all your questions submitted to him, he then types them out on a typewriter; I think it’s a Royal. He mails them to me, I receive them from my letter carrier who prefers to be called a mailman and this all builds up into a little thing we call Cody’s Mailbag. The first one we got here Cody is: Will 5G come or are there roadblocks that the masses don’t really envision?

Cody: What a great segue the way you introduced the Mailbag segment. Right? Because the first question is about 5G and the communications revolution and you underscored how silly it is to … And this even goes back to the last point about airplanes versus driverless cars and you underscored how silly it is that anybody would actually type something out on a typewriter and mail it these days.

That being said, I sure wish I wrote handwritten letters and/or typed letters and were sending them to my friends and stuff because I love to read books like have like Thomas Jefferson’s correspondence or something in them. So, there is something to be said for hard copy communication, but 5G, much like 4G, is taking us to a whole new world. If you think about it, the 5G revolution is built upon the 4G revolution; which is built upon the cellular revolution which is built upon the communications revolution.

Somewhere up there, there’s the internet that was built upon the communications revolution, too. All of which is built upon the electrical grid revolution. It’s all chaos and revolutions built upon other chaotic revolutions and it continues to change the world in ways we can’t foresee. 5G’s going to do the same, it’s going to eliminate the need for wifi in your building because anywhere you go, you’ll have much faster constant speed with your 5G smartphone, your 5G driverless car.

5G will enable new technologies, new ways of communicating just in the same way that the internet brought along email and you and I now laugh about the fact that you just play mailman to bring the mail.

Chris: Cody, regarding Twitter, I realize we are in it for the long haul, but do you think this current issue could cause a further drop to say 32 bucks? If so, I reckon we should gamble and sell some, buy it back cheaper. Rarely does a stock go straight up. Your thoughts? Much obliged.

Cody: The question was that Twitter and the point being that Twitter has been hit and it’s been hit hard. The guy was saying he was worried it would drop to specifically like $32 a share.

Now, Trading with Cody subscribers and I, we bought Twitter, probably 18 months ago, maybe up to two years ago at $14 a share. Darn near got it at it’s low. It’s now, you know, it ran up to $45 and it’s pulled back to $40 off the news that, as a I mentioned yesterday, they’re cleaning up their network. They’re getting rid of spam and junk accounts and crap. So the Washington Post wrote a report that said, “Hey, that’s probably going to hurt their user growth this quarter,” and the stock got hit 10% yesterday.

I wouldn’t worry about that at all. It’s no big deal.  You want Twitter to clean up their platform. The only way that Twitter becomes a valuable communications platform over the next 30 years is for it to be truly clean and only have real people and real commentary. I don’t want to read spam, I want to read Barry Reynolds or Jim Cramer or, I don’t know, Neil Patrick Harris.

Chris: Twitter has run up a lot in the last month there don’t you know. You said a few months ago that if you see the upside go to $50, it produces growth for the next year or two. Given that view of the upside, would you make sense to trim here, take profits if I brought in at 20s? Or do you see a bigger upside to that $50 down the road there?

Cody: Look, I wrote months ago, when the stock was at 20, that if the company continues to show growth, that the stock could get to $50. Well, it popped to $45 and now it’s at $40. I’m not saying that $50 is my ultimate price target that you got to sell Twitter if it ever gets to $50 and it’s never going to go higher. No, I was just saying that I think it could hit $50 this year if they really start showing continued growth like they have been and so far they have. The stock gets pulled back. No stock is going to go straight up.

That goes back to the other question like should you sell it if you think it might go to $32? Well sell a little bit, maybe sell 10 or 20%, but you cannot time stocks like that. I can’t. I’ve owned Apple since it was at $1 per share. It’s now at $190 per share. You know how many times the stock is pulled back 30 or 40, 50% in the last 15 years that I’ve owned it? A lot. And Twitter might pull back and I might be wrong. Maybe it never gets above $50 now.

But guys, that’s why it’s hard to be an investor. And that’s why you have to continually do your homework and think fresh and think free and try not to let partisan politics paint your approach to stocks. You’ve got to be, you got to know you could be wrong. You got to know stocks get crushed. You got to know that for every Apple, Facebook and Videa, AxoGen, BitCoin that you own that go up tenfold like they have for me, you might have a FitBit that goes down 70%.

So, I don’t have a crystal ball and Trading with Cody subscribers know that. But they know that over the last 10, 15, 18 years that we’ve consistently outperformed the market by buying and holding for the long run the very best revolutionary companies on the planet. Taking some profits sometimes when they spike, buying a little more sometimes when they crash and being a free thinker.

No easy answers. I can’t tell you that sell Twitter now, buy it back at $36 and then sell at $52. I mean you guys know that’s ridiculous. Nobody can do that.

Chris: Cody is Augmented Reality a good medium-term investment? Are there any companies out there that look promising?

Cody: Absolutely. I’ve even read a book several years ago, The Virtual/Augmented … The VR/AR Revolution. Shocker, right? We own Sony as a good VR/AR play, Facebook clearly VR/AR play and yes there will be pure play virtual reality and augmented reality companies that come public in the next three months, six months, three years, five years, ten years from now. There will be a great … 10, $100 billion augmented reality pure play that you need to be in, but you know, it’s … this is a revolution that’s quite chaotic right now.

There’s of course SnapChat, which is probably the purest play on augmented reality in 2018 and I don’t own that stock and I don’t like the management there and I’m not going to buy the stock even though I like augmented reality. Back to you Chris. Any other questions?

Chris: Yep, we do. It’s real nebulous but I think you can handle it here: Cody, any new picks?

Cody: I just noticed that I’m drinking a local coffee brand. I used to finish every one of my shows on Fox Business with not telling people to get their pets spayed and neutered, but to support their local business. Because it was a business show. We were there to drive business and I believe in business. Charity’s great, but the point being, support your local business and Zocca coffee. Local business, good place. I call in there and they know. I tell them I want “the Cody,” they know what I’m ordering. So Zocca Coffee would be a pick of mine. But the reason that question is so interesting is because it underscores how even my long-term Trading with Cody subscribers want new picks right now. That is a question from one of my long-term Trading with Cody subscribers and he wants a new pick. I keep telling my subscribers for the last few weeks that I want new picks too.

I wish I could find another Apple at $1 or a Facebook at $20, or a Nvidia at $28, but it just doesn’t work that way. It’s not like I can go, “Okay, well the picks today that are going to go up tenfold are these.” I spend hours every day analyzing, thinking, researching, going through companies, making phone calls, trying to find an AxoGen which is nothing like I’d ever invested in because it’s a nerve regenerative company.

It’s small cap company, but I was opportunistic. Someone brought it to me, my best friend from college who’s a hand transplant surgeon at Johns Hopkins said, “Dude, I’m using this company’s products and it’s really incredible, revolutionary.” And so, I’m trying to find the next AxoGen and I might have one —  Jamie, my boy, Dr. Shores sent me just last week an email that says, “Dude, this could be another revolutionary company. Just found it the other day. We’re using it, looking at it. Could you please analyze it? I know nothing about the business or how to analyze the stock itself, but what do you think?” So I’m doing that one and maybe that’ll be our next pick.

But, as I always tell Trading with Cody subscribers, sometimes the very most important trade to make is no trade at all.

Most of the time, the best trade to make is no trade at all. Jesse Livermore, the greatest trader, stock trader who ever lived, best quotes are all about how he never made any money trading, it was always sitting that made him big money. So, I’m trying to find them, but I’m going to be patient and you guys will have to be too. If you can’t wait for the next pick, you’re probably going to get burned somewhere else.

I don’t know that my next pick will go up tenfold, but I know that I will have poured my heart and soul into making sure that I have found a company that I think could, that I think has a good possibility of doing that, not just randomly picking a company because people want to trade. Slow down. Don’t drive, sit.

Chris: Alright Cody. Hey, the mailbag runneth over but now it’s empty. So, what do you say we … you know that my AOL dial up plan is like running out of minutes here, so I think maybe it’s getting around that time.

Cody: Look, I actually just got an email from one of the best investors I know and he’s worried. This is what the headline, “Risk off signs all around us. Market divergency divergencies appearing. Is there another shoe to drop this summer?”

There’s always concerns. For every guy who has timed the top like I did in 2007, there’s 1,000 guys that have lost, left billions of dollars on the table by trying to pick the top in the market and in the economy.

Now that being said, you got to be aware that when there are crazy divergencies, when emerging markets are down 20%, when China’s stock market is down 20 or 30% in the last few months, when treasuries and currencies are starting to act a little bit crazy … Yesterday the Britain pound down 2 1/2% after being up 1% and then reversed and those kind of chaotic factors can lead to actual chaos.

So, let’s wrap it up with that guys. Be careful out there. Be bullish, believe that this is the greatest time and place ever to be alive in the history of the planet and it is, but we can always make it better and always make it better. Let’s keep trying to make it better, let’s find better stocks, let’s find better politicians, let’s find better policies.

That’s it Chris. Thank you everybody for tuning in. Support your local business. That is the Cody Willard Show. I’m Cody Willard, that was Chris McHugh.