Crypto-Fraudo-Mania, HOOD’s New Gold Card, AI Disruption Puts, And Much More

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

Q. Someone has to ask (lol), so here it comes – top 5 buys/ratings at today’s prices?

A. Top 5 stocks I’d nibble on right now are, in alphabetical order: Apple (AAPL), Crowdstrike (CRWD), Meta (META), Rocket Lab (RKLB), TransMedics (TMDX).

Q. Regarding Tesla (TSLA): Full self-driving (FSD) version 12 seems to be a big leap forward. While it still couldn’t make a U-turn, it delivered without intervention (except for the U-turns) to parking lots of 3 destinations for me this past weekend. While I still don’t see FSD going to level 4 without incorporating GPS-based algorithm, this dojo AI voodoo might have a leg up on Waymo and others. Personally, I’m still cautious on Tesla as lower estimates might still not be priced in yet. This quarter could be a shock for a lot of investors.

A. I downloaded FSD 12.3 last weekend and have been using it regularly since then. FSD 12.3 is a huge leap forward from every other version that I’ve used over the last five years that I’ve been driving a Tesla. This is the first FSD version that uses pretty much 100% Machine Learning instead of hard coding from human beings. And you can tell that this version drives a lot more like a human than the prior coded versions. It’s hard to explain but there’s a huge difference in how the car pulls into a highway or even drives me to my office and actually parks in an empty parking spot. It’s still not Level 5 autonomy yet, which is when the car will be able to drive itself with nobody in it, but I do think this is getting much closer now. It even slows down when we approach a speed bump in the road. On the other hand, Tesla’s probably going to miss on deliveries this quarter as demand in China has been soft and they had to shut down production in Berlin for a while after a fire near their facility. Then again, this FSD 12.3 software is so good that Tesla started giving a one-month free trial to every Tesla owner who wants it and Tesla is giving it free for one month and a personalized test drive with it to all people who are buying a new Tesla. At $199/month or $12,000 one-time payment with 99% gross margins, any incremental uptake of FSD software is going to be very profitable for Tesla in the coming months and quarters, exactly as we predicted in The Ultimate Tesla Book. We have a large position in Tesla, bought a little more common the last time it was near $160 and are mostly sitting tight in the name now.

Q. Some companies will surely be threatened by AI, rather than prosper from it. Is it possible that Adobe (ADBE) may be challenged, rather than benefit from AI?

A. Yes, it’s definitely possible. But so far, Adobe has done a good job of integrating AI quickly and making their products at the cutting edge of design. That said, I do think there a lot of software companies that are going to be badly disrupted by AI and we own some puts on the following names because of that: Appian (APPN), AvPoint (AVPT), FiveNine (FIVN), and Smartsheets (SMAR).

Q. Additionally, do you have any companies (a list) in mind, that may be displaced or challenged by AI?

A. Ah, I anticipated this question in your prior question, I guess. Please see my answer above.

Q. How far out are your AI disruption puts?

A. We’ve got puts on some of those aforementioned companies that will be disrupted by AI dated out to April and mostly out to May. We have no idea if these names will fall by then so we’ll have to stay vigilant and active in managing these put positions. I don’t have any puts on in my personal account right now and I don’t think most people at home should be trying to manage puts in their own portfolios either.

Q. Interesting, just seeing the note on Apple (AAPL) calls from Friday. I actually closed out some $180 April calls on Thursday that I had bought back on Mar 7. Made 63% which is not bad for two weeks! But now curious if I sold too soon… ha!

A. Nice trade, don’t look back. It’s the curse of any investor that we always wish we had more of the winners and always wish we maximized every winner we do get. Be cool!

Q. What stock would you currently pick to buy deep in-the-money (ITM) call options with a near-term expiration?

A. Hmm, maybe Apple (AAPL) or Meta (META) and maybe even Rocket Lab (RKLB). The prior two are a bit oversold right now and RKLB could get some mojo going this year as The Space Revolution keeps building.

Q. Would you reconsider a position in Snowflake (SNOW) after new CEO made a $5 million purchase on the open market a couple days ago?

A. I don’t think insider buying and selling is a good indicator of where a stock is headed most of the time but that’s an interesting note about the new CEO buying that much stock. I don’t like the way that SNOW’s former CEO came in and helped bring the company public and then bailed soon thereafter. The quarterly report and guidance weren’t great either and I’m staying away from SNOW for a while.

Q. I’m curious why Zscaler (ZS) isn’t on your security radar. Lofty price/sales ratio at 15 but growing decent 25-30% top line, positive earning surprises last 4 quarters and forward EPS revisions trending up.

A. Oh, ZS is certainly on our radar and we have done a bunch of homework on it and modeled out its numbers. The company missed last quarter and didn’t have great guidance and we think Crowdstrike (CRWD) is the better, more Revolutionary name in the cybersecurity sector.

Q. Current opinion on STMicroelectronics (STM)?

A. It’s cheap. It sells to the struggling automakers and it sells to the growing automakers like Tesla (TSLA) and BYD Company (BYDDY). It’s a leader in the new silicon carbide semiconductors and that could be a business measured in tens of billions of dollars in a few years. But STM trades with a discount because it’s a tech company based in Europe which rightly get less respect that tech companies based in the US. I get sick of this stock sometimes, but as long the company continues to execute I plan on holding it.

Q. Puts on Trump Media & Technology Group Corp (DJT)?

A. The stock is trading at 2250x sales and that’s pretty ridiculous. But there’s a whole partisan political fervor amongst those who are buying and owning this stock and I have no idea how to game that. The puts are wildly expensive too. We’re pretty much just watching this one from the sidelines.

Q. Do you have any put options on anything right now?

A. We usually have quite a few puts in the hedge fund most of the time and we do indeed have quite a few puts in the hedge fund right now along with a few shorts. But in my personal account, I have no puts on the sheets at all right now.

Q. You indicated $50,000 was your bitcoin (BTC) buy-more level. Do you foresee that happening with the volatility around the upcoming halving event? I want to get in but it seems frothy at these levels.

A. Feet-to-fire, I do think bitcoin is set up for a sell-the-news event around the halving event, which is going to happen in the next three weeks or so, and that soon thereafter bitcoin will trade down near $50,000 or maybe $55,000 or so. There’s a ridiculous bubble in crypto once again right now and the racist coins and the fascist coins and the silliness and fraud that’s once again running rampant in the crypto world are likely to collapse and never come back after the bitcoin halving. That said, I could be wrong about bitcoin selling off after the halving and I usually suggest getting a toe into the water in any asset you want to build up and then giving yourself some time to slowly buy more and so maybe consider buying a tiny bit of bitcoin here now and then doing more in a few weeks.

Q. What’s the play on this crypto-fraudo-mania?

A. Nice name. I’d also call it an Echo Crypto Bubble. I suppose the best thing to do is to not bet too much on crypto at all right now and mostly just stick with bitcoin if you must own crypto. If you’re hungry to try to make some money on a potential coming crypto crash, I’d probably look at buying some puts on the worst of the bitcoin miners (i.e. Bitfarms (BITF), Valkyrie Bitcoin Miners ETF (WGMI), Hut8 (HUT), Terawulf (WULF), Iris Energy (IREN)) dated out to May and using both in-the-money and out-of-the-money to diversify some of the price risk. Please don’t throw a bunch of money at these puts though, this would be a very risky trade and most people at home should just focus on owning great stocks for the long term.

Q. How does the Robinhood (HOOD) credit card change the thesis on HOOD?

A. It doesn’t change our thesis much because we have been expecting it and we modeled it into our numbers as we’ve been analyzing this stock over the last year. It’s definitely another positive step forward as the company builds and innovates its way forward.

Q: Question for Bryce – Cody mentioned you were taking advantage of Robinhood’s 3% match, to move retirement accounts to them. Have you been satisfied with the app and service there? I’m almost ready to make the move…

Bryce A: Yes, I’ve been very pleased with Robinhood’s service. The app/website is not quite as sophisticated as E*Trade (which is where I formerly held my IRA), but I don’t do much if any trading in the IRA so it doesn’t really matter to me. I recommend Robinhood to everyone I meet. Also, Robinhood just launched its new credit card for Gold members.

If 10 people sign up for the card using my referral link, I’m eligible to receive a solid gold card. The card offers 3% cash back on all purchases and 5% on travel. Here is my referral link to sign up!

Cody back again now: I leave you all with a picture of Lyncoln and her best friend and her best friend’s little sister who came down to visit us from NYC with their father who’s one of my best friends and their mother who is a good friend of my wife.