Chat Transcript: The Iran War Threat to the Markets and more
Here’s this week’s Live Q&A Chat. Be sure to send me an email with your answer to this question: Let’s do a poll. Please post your answer. “I am: Buying more / Trimming / Doing Nothing.”
Q. I just trimmed a bunch of winners across the board (leaving the underperformers alone – TWTR, UBER, WORK, etc.). This upward rocket market seems too high too fast. But, as with many of my predictions, I’d do the exact opposite. Haha! Anyone else trimming? Concerned?
A. I like this question. Let’s do a poll. Please post your answer. “I am: Buying more / Trimming / Doing Nothing.”
Q. Cody – Thoughts/Actions based on the potential retaliation from Iran and this progressing to a real war? The recent hedges may kick in sooner than expected, but any other more defensive actions? AND: Amid analysts’ claims that the market is overbought, and concerns of deepening conflict with Iran, what say you? AND What is the chance of killing of Iranian general Soleimani constitute a black swan event (unforeseen event with unpredictable consequence) for market ? World War 1 started with the assassination of Archduke Franz Ferdinand . Though I am not expecting another WW, we haven’t considered Iran-US relations when you did full analysis back in Oct. AND Happy New Year! On a somber note, what effect would a hot war with Iran have on global markets?
A. First, let’s put some perspective on the might of the US in comparison to Iran. United States’ GDP is 40x larger than Iran’s GDP. Put another way, it takes the US about 9 days to generate as much economic activity as Iran does in an entire year. The Iran economy is contracting, the US seems to be, as I’ve explained many times over the last few years, getting stronger economically and technologically and monetarily. The US will spend more on defense this year ($750 billionish recognized, much more in reality) than Iran’s entire GDP ($500 billionish). So in view, it’s like this: #1) War is bad, always is. Fog-of-war, unintended consequences, death, destruction, expenses, waste/fraud, etc are bad. #2) The US has been and still is in a bunch of disputes in the Middle East and has bases all over the world and has dropped 100,000s of drone bombs in the Middle East for over just the last decade. All of this is bad, and has brought fog-of-war, unintended consequences, death, destruction while the cost and waste/fraud has run into the trillions of dollars. #3) It’s possible that a war with Iran escalates, causes unintended consequences that are truly Black Swan-like, because that’s always a risk when you go to war. #4) But it’s probably most likely that the US economy and the government’s budgets/games can cover the costs, both monetarily and reputation-ally….and it’s most probable that this Iran conflict doesn’t itself derail the Bubble-Blowing Bull Market.
Q. Cody, question for tomorrows Q&A. You sold Spotify only few months back due to concerns of growing competition. Are you convinced this time that Spotify can handle competition ? I do have lot of Amazon echo and Alexa is ‘pushing’ me to buy Amazon music a lot (when we request for a song or kids stories). Spotify’s low gross margins show the competitiveness. Do you feel podcasts and unique collection will help it drive revenue or any other unique feature in Spotify that makes it stand out? AND Cody- you had $SPOT last year and sold out. What changed?
A. As I’d outlined in the SPOT Trade Alert, it was the fact that Spotify kept showing up on new platforms as it has truly established itself as the music streaming/podcast de facto standard over the last year. The valuation has gotten more compelling also, as the company has beaten estimates and analysts have had to raise their longer-term projections but the stock has stayed flat for the last year and even since its IPO almost two years ago. Being flexible is a good thing. Spotify’s churn rate is going to continue heading lower too, as a result of its critical mass state.
Q. I am looking into opening an IRA but unsure which would be best for me. Any advice? I’m 32.
A. I would need to know many more details about your profile, risk tolerance, upward mobility, etc to be able to answer your question. You might consider one of my Deep Dives.
Q. Cody – any interest in online sports betting as an investment? $DRAFT?
A. No, probably not. I’m not a big gambler or sports bettor and I don’t know the industry or its regulations at all. Here’s more info on (DRAFT).
Q. When you presented your perspective on TSLA at the conference in Vail this June it was clear that most of the attendees had an opposite perspective. Just wondering if any of these folks have reached out to you to acknowledge that you had the right perspective.
A. I’ve been in contact with a few of the guys from there, none of whom were short or bearish on TSLA though.
Q. Am still amazed at Cody’s analysis .. Just on Oct 7, he wrote the following about Tsla – “I feel safe in predicting only that the stock won’t be at $231 two years from now.”
A. Haha, I have better quotes about $TSLA than that one!
Q. What is you view of Crispr Technologies… This has one of the best mind in Gene-based Medicine.
A. Seems like a good company. I have written about it before and here’s a clip of me talking about this very company on Fox Business a few weeks (though I’m not sure if Charles was talking more about CRISPR the technology and not just Crispr the company. Anyway, I just couldn’t get comfortable with it.
Q. Any view on CRWD Croedstrike? With Cybewar picking up with Iran.
A. At 20x sales and unprofitable it’s not cheap. Good company, wish it’d drop a bunch to a valuation where I’d be more comfortable buying some.
Q. Iv’e seen a few discussion about WORK if it hits 23 it could be off the the races. Any thoughts on this would be appreciated. I have a decent amount of shares but wouldn’t be against buying a few more. Thanks
A. I think trying to game a break out can take too much time, energy and might raise the risks vs just owning the stock longer-term. That said, looking at the chart, yea, I could see it breakout with a strong volume close above $23.50 or so.
Q. What keeps SQ from a solid rally? Always seems to pull back.
A. Maybe it’s Jack Dorsey-taint? Frankly, the stock’s not terribly cheap but not terribly expensive, so I could see it trading around these levels unless there’s a blowout quarterly earnings report coming up soon.
Q. Cody: any thoughts on DDOG? Barron’s mentioned them as stock to own for next decade
A. I’ve been researching DataDog, but haven’t gotten my arms around it quite it yet. Sure is expensive though, at 30x sales.
Q. I know you don’t like TTD but what about the opposite side of TTD? RUBI and TLRA merge to be a big player on Sell Side for programmatic TV.
A. FB and/or GOOG is cheaper, probably safer, maybe has as much upside as those companies anyway. I’m not a fan of the second tier ad companies.
All right folks, that’s a wrap. Be sure to check me out on Fox Business tomorrow between noon and 2pm ET and on Wednesday between 2 to 3 ET.
