Everybody’s In The Pool, Space SPAC Risk/Reward, Crypto Crush, Earnings Reports And More

Here’s the Trading With Cody Live Q&A Chat.

Q. Cody, with the collapse in so many of the speculative stocks and with a pretty large part of our portfolio (the Faang Names for example) being flat for 6-8 months, would you say that your market concern is a bit more about extraneous factors (interest rates, inflation, maybe government policy for example) than valuation?

A. No, I wouldn’t say that at all. Trying to game macroeconomic forces and trends is not how I try to run my money, even as I constantly analyze and factor them into my analysis. When companies like CCIV/Lucid Motors are still trading at a $30 billion market cap without any sales, there’s clearly a lot of valuation risk regardless of the macroeconomy. I’d be willing to pay $30 billion for an EV company not called TSLA when they have about the same revenues as TSLA did when I paid $30 billion for it….that is, about $30 billion in revenue. There’s a lot of froth in many stock valuations, especially in small cap tech stocks, even after the big pull back in these names.

Q. Dear Cody, my 18-year-old is now trading stocks but especially cryptos and has bought some Dogecoin as well. Does this mark a market top? When I was 18 I didn’t know how to spell S-T-O-C-K. Thanks. -DazedandConfused

A. I’m not sure we can say this anecdote of your 18 year old kid trading stocks and cryptos and dogecoins is “The Top Marker” but it sure does indicate that there’s not a lot of people left who can get into the pool. If nobody’s left to buy, that’s not a good thing for the longs.

Q. Could you please consider adding a current price (bolded) to the Latest Positions reports when written. This would add a useful point of reference to the reports when they are revisited in the archived copies on the site.

A. Great idea and yes we’ll do that.

Q. I currently have about 4.5% of portfolio allocated into Space Basket, which is 40% VACQ, 25% SPCE, 10% HOL, 10% SFTW, 7% NSH and 4% GNPK. I have another 4% to allocate. What would be your suggestion on relative % allocation within the Basket? Should I also leave some dry powder for future additions in the space arena? Thank you!

A. I can’t go into more specifics than to tell you that the order in which I own the Space Stocks: SpaceX, VACQ, SFTW, GNPK, and the rest are smaller. And yes, I’d leave some dry powder for new Space Revolution names and/or for more nibbles on some of the existing Space Revolution stocks we own.

Q. Yes, How does one invest in SpaceX? Fidelity does not recognize SpaceX, for instance.

A. Two years ago when I invested some of the hedge fund’s money into SpaceX, it was a lot easier to get it done at reasonable terms. But even then, the only way you could invest in SpaceX was if you have millions of dollars and worked your butt off to make it happen in the private secondary markets. These days, it’s very difficult to invest in SpaceX without giving up future profits and lots of commissions to the broker who gets you into the private secondary markets for it.

Q. Compared to the App revolution, EV revolution and other revolutions you may have forecasted, where does the Space revolution fit in, regarding the strength of your conviction?

A. Hmm, good question. I’d say that when I started seeing the smart phone Revolution about to happen — say in 2005 or so when I’d write about how the iPod evolution path was going to make it so we all had a “iMiniMacBookPro In Our Pockets” as I used to call it before the word iPhone had ever been muttered in public, I was probably at an 8 out of 10 conviction level. By the time the iPhone and Androids started rolling out to the market place and the app stores started getting developed, I was at a 9/10 conviction level. EVs are different in a lot of ways including that I was much more excited about Tesla itself at $50 two years ago than I was about the EV industry writ large. I was at a 9+/10 conviction level about TSLA being a good investment at $50 and probably a 7/10 about the EV industry overall at that time. For The Space Revolution becoming a trillion dollar economy, I’d say I’m at about a 9/10 on conviction level. But only SpaceX is a 9/10 on my conviction level as an investment at this stage.

Q. I read an article that ARK has not invested in some of our space stocks because they are still in SPAC form. Is there a major risk that once the financial statements become public the financial characteristics of the frim would be so poor that the market will tank the stock price?

A. Yes, there’s always risks that the companies we invest in are not reporting fully transparent numbers. That is even more true for SPACs that aren’t merged yet. Be careful!

Q. I had not trimmed as aggressively as I should’ve on many of those SPACs. Given where things are right now, should I trim for a loss, or wait it out?

A. Oh man, I wish I could help but I have no idea what to tell you. I spend all day every day trying to figure out how to invest and trade to maximize my own and my fund’s risk/reward scenarios and that’s what I communicate to you all, all the time. I can’t do more than that.

Q. You mentioned you were looking at another crypto coin. Any updates on that? Also, what are your thoughts about Stellar? When did you buy that first?

A. No updates on my new crypto coin analysis yet, but stay tuned. As for Stellar, I still own what I bought years ago but I have no opinion on it these days. I’d rather own Bitcoin and Ether than Stellar. I first mentioned buying Stellar in August 2018 when it was at about 10 cents before it made this sustained run up above 50 cents. http://tradingwithcody.com/2018/04/23/trade-alert-buying-a-tiny-bit-of-this-cryptocurrency/

Q. Thank you for all your inputs. My question is- I have never invested in Crypto and I know I am late, but any advice how can I start? Or, which crypto should a beginner like me invest in? Thank you and looking forward to hearing from you.

A. Be careful is my best advice. Bitcoin, bitcoin, bitcoin and a little Ethereum is my second best advice.

Q. I am considering purchasing the Oculus Quest 2. Do you have the 64GB or the 256GB model? What apps do you use or recommend? Thank you.

A. I have and suggest getting the 256GB model, but either is great. I’m not a good app referrer because even as much as I love the Oculus, I’ve not been a heavy user at all lately.

Q. Have you been able to talk with the guys at Immersed any? I doubt much has changed, but feeling any different about the investment–same, better, worse?

A. We emailed a check-in to the CEO just yesterday. Not much has changed since we invested in it a few weeks ago except competition keeps heating up.

Q. Feet-to-fire, what are your expectations for AMZN earnings reports and market reaction for next week? Same question for FB; GOOG; QCOM; TWTR; TSLA.

A. AMZN feet-to-fire guess: Earnings are great, stock pops 3% the next day but closes down 2% that day. FB feet-to-fire guess: Earnings are great, stock pops 3% the next day and stays about there. Etc, etc. I don’t know.

Q. Would love to hear your take on NFLX.

A. I own NFLX for long time now and still do. It’s not a big position for me. The company keeps adding millions of new subscribers around the world every quarter even as the competition rises and the pandemic lockdowns in most places subside. They Revolutionized TV and movies and have created a trillion dollar streaming video industry.

Q. What is your opinion on MP, Both short term and long term?

A. Still long it. Bought some more the other day as noted in a Trade Alert.

Q. DVAX is hard to follow – one week it’s up at 11 and rising, then it crashes down to $9 where it is now – then I read an article that they are involved in at least 2 new vaccines, including one for covid. Seems to be very range bound. Any insights on DVAX?

A. Not anything more than I’ve explained when we bought and have continued to analyze DVAX. It’s a lot like you said — very volatile, somewhat speculative with Covid vaccine hopes and probably overvalued like most small cap tech stocks if it’s not got any actual upside from Covid vaccines in years ahead.

Q. Your thoughts on JMIA?

A. Still long it. Bought some more the other day as noted in a Trade Alert.

Q. What is your take on quantum computing?

A. Still studying it. I have no edge on it yet though.

Q. I hope you and the family are well. What are your thoughts on FUTU, essentially the Chinese Robinhood, with plans to go global?

A. I’m not a big fan of investing in a self-declared, always corrupt, Communist system. Other than JD, I mostly avoid Chinese stocks and that FUTU is one I can’t imagine ever feeling comfortable with.

Thanks for all of the great questions. Be safe, be careful and keep rockin!