Hear Me Speak, Democrats Love Bubbles Too, Tesla Trillion, Sell Some Bitcoin, And More
I was interviewed by Aaron Task and Stephen Alpher for a podcast earlier this week:
A bubble-blowing, bull market, blow-off top phase – Cody Willard joins Alpha Trader
You can also hear me talk to Sean Bill of MacroCrunch on his podcast. This interview actually took place over a year ago when I was in Abu Dhabi at the SALT conference but he just published this week, I guess:
Cody Willard of the 10,000 Days Fund, a long / short hedge fund with a very, very long investment horizon. “Cody and I discuss his investment approach, which is to identify revolutionary companies that have trillion dollar addressable markets. We peel back the onion on his investments in Tesla and SpaceX.”
While I’m at it, you can also hear me interviewed on Kevin Price’s radio show talking about the market set up from earlier this week (Cody Willard on Why He is Cool on the Stock Market) and even talking about the Trading With Cody service earlier this week too (Cody Willard Talks About the “Trading with Cody” Approach to Investing).
Here’s the transcript from this week’s Live Q&A Chat.
Q. Happy New Year Cody! At Christmas I read Galbraith’s “Financial Euphoria” and started smelling the tulips. TSLA grew >45% of my portfolio, so I sold a lot at $700 to rebalance, then, as always happens, I felt bad when it continued its climb. I know you must steel yourself against taking stock personally, but I must not lament “missing out” on opportunistic gains. Once again, an increasing surge this week made TSLA a disproportionate share of my funds. I need to cull and take profits. A. No matter what you do, unless you’ve made an infinite amount of money in two seconds off of a trade, it’s not enough, right? It’s tough, but let’s not be greedy. Be thankful for all the wealth that TSLA has created for you so far and be thankful for the security and diversification that you get when you trim such an incredible, life-changing investment.
Q. Cody, some are saying we are entering the “Roaring Twenties” like a century ago where the market just keeps going and going, of course with pullbacks along the way. A. Yup. Some were also saying that the 2010’s would be a Great Depression because the world would never recover from the 2008 financial crisis.
Q. Cody, seems Democrats probably have a grip on the WH and Congress for a few years after yesterday’s debacle. How do you think that affects the market in the next few years? Thank you. A. The Democrats are going to nationalize every trillion dollar tech company. They’re going to create a three trillion dollar subsidy for fake solar companies. They’re going to legalize everything except crack cocaine. Just kidding. Look, the Democrats have the same corporate funders, the same corporate lobbyists, their own think tanks that justify complicated tax games that hide the benefits that giant corporations and banks get from said tax games and that also justify ongoing endless wars and drone bombing of children in the Middle East and so on. Not much that really matters to the economy or society will really change, in my opinion. But I’ll be on my toes as the world turns.
Q. You mentioned a few weeks ago you expected a 5-10% market pullback and possibly up to a 15-20% pullback in January here or even back in December. Do you expect that yet or has your opinion changed with the latest political and/or other outcomes? A. Nothing’s changed except that prices for many stocks have gotten even more outrageous while some others have finally started to crack and come down.
Q. Good morning everyone, Happy New Year.. Brand new TWC subscriber here. I look forward to engaging with the TWC community and Cody himself. From what I understand Cody had a stellar year in 2020…hoping it continues for 2021. Cheers! AND Q. Hi, I just joined last month too. Hope 2021 will be another great year! Cheers! AND Q. Hi Cody, I also just recently joined TWC and I am very excited to start trading with all of you. I’m not a real active trader, but would like to start building my portfolio for the future. I am a little concerned about starting too many positions now with the stock market close to all-time highs. At this time, would you recommend any of the portfolio positions to start a position in or would you wait for a slight pullback in the market? Thanks again for all the work you do and I look forward to being here. A. Thanks to each of you for joining the Trading With Cody community. I put a lot of pressure on myself to continue finding gems before the skyrocket but more importantly, we have a playbook that we follow to find great long-term Revolutionary companies that are changing the world and creating trillion dollar economies along the way. Slow but sure, steady and disciplined.
Q. Cody. Your view on Capitol Hill takeover yesterday and if and how it would affects the market in general as well as our stocks like TWTR and FB (which banned Trump). A. Not sure any of it matters to the market because I’m not sure any of it matters to corporate earnings power.
Q. Cody, When taxes and regs and spending skyrocket with the new regime, are you bullish or bearish in 2021? A. Like I wrote the other day, “Biden and the Democrats pass some form of new tax code which will include thousands of pages of new loopholes, subsidies and protections for giant corporations, banks and special interests, just like Trump and the Republicans did. Real tax rates will go down for most giant corporations, banks, special interest groups and people who make millions but will go up for the middle class and poor people, just like they did under Trump and the Republicans. Republicans will pretend to hate the tax bill but it will pass anyway while Democrats will pretend that it will do lots to help their base, just like how Democrats pretended to hate Trump’s tax bill but it passed anyway while Republicans pretended that it did something to help their base.” The Dems ain’t no enemy of the status quo that always favors a Bubble-Blowing Bull Market.
Q. Funny thing with the crypto, With Cody and this boards direction, I got in 2 yrs ago simply to diversify and stake in early. I staggered buys and value cost averaged near the highs. Terrible timing and still I’ve exactly doubled. Makes me smile. A. Money’s not funny! Consider trimming some while you’re smiling so you won’t someday perhaps be forced to sell when you’re frowning.
Q “RevShark” at RealMoney.com says BTC is one of his top picks for 2021. He seems to like GBTC as a way to trade BTC. Like everyone, he is wrong sometimes. But overall, he has a pretty good track record. He noted BTC is a very high risk trade. A. Rev Shark is on old friend on mine, and I even had him on my Happy Hour TV show on Fox. I just searched YouTube for it and found it but as usual, I found the clip of my old show to be way too uncomfortable for me to watch for more than two seconds so I’m not sharing the link. Anyway, I still follow Rev Shark on Twitter and find his market analysis and technical trend following stuff to be interesting, but I also find that he is such a pure momentum/short-term trader that he might very well move on from bitcoin by next week. I’ve owned bitcoin since 2013 at $100 per bitcoin and as you know we were buying bitcoin even for my hedge fund last year at much lower levels — and in my opinion, I’d rather trim than buy bitcoin right now. Speaking of which, consider this a Trade Alert that I’ve trimmed more bitcoin here into this latest spike here.
Q. From the Podcast. How do we get LONG USD v. Other Currencies? A. I am not trying to do that trade. I just agreed with my old friend Aaron Task (who used to be one of the primary contributors at TheStreet.com and an editor for me and Rev Shark nearly twenty years ago and who once came to my aid during a basketball league game when the benches cleared after I got tackled about to go up for a breakaway dunk and who is still a good friend of mine) who said that he thought that betting on the US Dollar vs a basket of other fiat currencies would likely be a good trade for 2021.
Q. In a podcast yesterday, Cody suggested that BTC is overextended (in the short term) and that gold is possibly his favorite investment right now. This podcast is referenced in Cody’s Twitter feed.
And Listening to the podcast in which Cody covers a bit more detail on his cautiousness. In similar vein I found it worthwhile to have a glance at the latest from Jeremy Grantham: https://www.gmo.com/americas/research-library/waiting-for-the-last-dance/
A. Yes, I meant to share that podcast I already shared on Twitter with Trading With Cody subscribers when it came out yesterday, and I need to go tweet about the other one too. Anyway, yes, I like GLD and gold a lot right here right now and while I still hold (HODL) bitcoin as I have mostly done since 2013, I think it could cool off a bit near-term sometime with a 20%+ pullback. I don’t know much about Jeremy Grantham, but a quick Google search reveals him to have been pretty bearish, like, forever, no? I’ve been long, strong and mostly bullish for the last ten years and from 2003 to 2007 too and I turned outright bearish and sold most everything in 2007 before the crash when I traded the stock market for a TV anchor career for a couple years. I’m not quite bearish and certainly am not selling almost everything right now like I did back in 2007, so I’d assume my analysis is probably quite different than his, even if some of what we’re saying right now overlaps.
Q. Cody, what do you think of this article about Jeremy Grantham’s warnings? If I have most of my net worth in the market in equities, what % would you recommend to potentially sell off to shield myself from some of the downside risk to come? A. Hmm, another article about this Jeremy Grantham fella. Here’s what I found when I Googled “Jeremy Grantham Stock Market Bubble” and locked in the time frame of 2011 to 2018:
2011: Jeremy Grantham: Stocks on the verge of being ‘dangerously overpriced’
2012: Jeremy Grantham Warns 2013 Will Be A Dangerous Year For Stocks
2014: Jeremy Grantham Makes A Very Specific Call About When ‘The Bubble Will Burst’: Grantham believes the market bubble will burst around or after the 2016
2015: GMO founder Grantham says markets ‘ripe for major decline
2018:M Investor who called two market crashes says bitcoin is a bubble
Q. So, Bitcoin… where’s it top out? I bought in back in October but have been trimming slowly ever since and now am wondering when I’ll be able to buy back in. I’d love another $12-$14k entry point, or is $30k a new solid bottom? A. I don’t have an answer for this. I don’t see the world in any kind of “solid bottoms” kind of way.
Q. You’re near the top of my list of those who have to be thanked. I’m 65 sheltering in place and also managing the stock portfolio of my Aunt’s who has Alzheimer’s and is locked away in Memory Care. Thankfully she is safe as is my 98 year old Mom. Long story short, when I started to actively manage her accounts 2 years ago she held stocks like ATT and mutual funds in Canada. Thankfully she also had her legacy AAPL which she had bought 200 shares at 20 per share while she taught Bookeeping to High School students. The AAPL assures she’s comfortable but the selling the junk and buying her Trading with Cody like TSLA stocks has doubled her net worth with 2 back to back 75 % yearly gains. We are now paying more then 13,000 for her monthly care, something that would have been hard to fathom before we connected with you. So thank you Sir. While I have you in terms of the chat tomorrow, your thoughts on ETH please. We missed the Bitcoin trade partly because I’ve never figured out how to purchase. A good friend suggested ETH as a viable alternative? Best to you and your family. Stay safe. A. I like ETH and recommended nibbling some a few years ago. It’s certainly risky though, so be careful. Thanks for the kind words and I’m glad your mom’s care is being paid for with TSLA proceeds. I hope you’ve trimmed some of her TSLA stock just out of discipline.
Q. What are your thoughts today on TSLA? You rated it 6+ last month but it continues to roar ahead. Are you still hedging TSLA in your fund? Where would you consider nibbling more? A. Yes, I’m still hedging TSLA and trimming some even. I have said since we bought it when it had a $30 billion market cap that it would become a trillion dollar market cap some day. A trillion dollar market cap means that there would be ONLY another 25% upside or so from these levels. I love TSLA and will hold it as my largest position still, but yeah, I think it’s a much better trim than a buy right now at $800 a share after having made it my largest position back less than two years ago when it was below $50 per share. I might consider nibbling more TSLA at like $500, or something.
Q. What’s the best way to combine Value and Emerging (for diversification)? A. Find the best “value” stocks and pick the best emerging markets at great times. Sorry, no easy answer. I spend my life working on the approach you see me execute every week here on Trading With Cody.
Q. I heard on the podcast you did that you were passing on the space SPAC you were researching, but you wouldn’t give a name. Could you give us the name here and a quick reason why you decided to stay away? I’m wondering if it was NPA (AST & Science) which I mentioned in the chat last week. I like the company based on what I’ve seen, but am interested in hearing why you’re not a fan. A. That is correct, I don’t like NPA. I didn’t like the background of the management, the CEO, the way the company is marketing itself, etc. I think NPA will be a good short idea some day.
Q. Good morning Cody. Now that the democrats control house and senate whats the play in the Marijuana space? A. CGC is still my favorite, I think VFF looks interesting too.
Q. Yesterday you sent a write up of virtual reality and the Oculus Quest Virtual Reality headset and a trade alert for Facebook in the hedge fund. Your most recent latest positions review of FB (part 4 Dec 21) seemed positive but made no mention of future prospects for revenue from virtual reality. What rating would you give FB today? A. Like I mentioned in the Trade Alert yesterday, I didn’t have my mind blown by Oculus Quest until four days after that Latest Positions review you mention. I’d rate FB an 8 out of 10 right now.
Q. Cody, thanks for the trade alert. Many consider FB among the most directly affected by Apples coming change in data privacy policy.. Since just about all of FBs revenue is from ads, how do we balance this with enthusiasm for Oculus? A. I think the market is already pricing in a lot of the downside risk of Apple’s data privacy changes.
Q. New subscriber here! Aside from FB’s business as a social network platform (IG, FB, etc.) what other levers can they pull for growth? You mentioned the VR business in the trade alert. Can you provide more detail in what you mean by this: “Long-time followers know that I was adamant that Apple’s iOS and Google’s Android were going to be the only two operating systems that won in the smart phone wars because they had enough this same platform virtuous cycle set up while their competitors like Blackberry and Microsoft and others did not have this set up and thusly the others all failed.” A. Read this article for example (and sorry for the flashback in a flashback):
RIMM is still truly dead
June 17, 2011 by Cody Willard
In case you had any doubt, RIMM is still truly dead, as I have been had the unfortunate job of predicting to much hatred and chagrin from RIMM longs over the last couple years. I don’t know what else to say. I’ve been writing variations of this “RIMM is dead” theme for a year (see RIMM Is Dead; now what? or 49 app stocks that should go up 1000% and one that won’t or RIMM is truly dead, for examples).
I also have a long history having been both long and short this stock in years past, mostly long as it was on its tear back in the mid-2000s. Most recently we shorted the stock in the Revolution Investing model portfolio back when it was above $70 (Revolution Investing subscribers will remember the newsletter edition from April 2010 called Time to add some short hedges).
As far back as November 2009, I wrote an article called, “Three problems facing RIMM”. I will reprint most of that here now because the tech, business and stock analysis in the article focus on how the smartphone/app revolution has passed Research in Motion by and are, quite frankly, completely relevant still today. RIMM might be researching in motion, but they must be in reverse. Bad pun, I know, but my mom will like it and it makes the point that this company has completely lost touch with the direction of the marketplace they once dominated. Here’s what I wrote in that article:
Three problems facing RIMM
November 16, 2009
I’m not sure I’d ever get long RIMM again, and I’ll give you three quick reasons why:
1. The Apps. It’s not about the number of apps. It’s about how easy it is to use the apps and how many apps actually bring value.
Apple’s got 100,000 apps plus, Android phones from Google’s vendors have 10,000 apps plus and RIMM’s got a few thousand apps available for Blackberry. There are lots of technologies being created right now that will make it ever easier for developers to adapt an app developed for one platform, say the iPhone, and make it run almost identically on another platform, say the Blackberry. But that’s now what the real issue is. It’s the ease of using those apps that’s key. I mean, I have some apps that I might use on my Verizon blackberry curve, but it’s such a pain to get to them, to get them running, to scroll that wheel to get me to the place I want to go. And trying to watch Internet video on my Blackberry is like trying to get my dog to play guitar. He’s better at fetching than at strumming, and my Blackberry’s better at emailing than apps.
See, the Android apps will become ever easier to use as your Android phones become ever more synched to your main computers which will become ever more synched to Google’s cloud and networks and technologies. Apple apps will become ever easier to use as the Apple platforms and integrations between your living room, your handset, your office, and your car and so on become ever more integrated with Apple hardware and software. Blackberry? You tried gaming on the Storm? I’d rather play pong.
Upshot is that there’s just so many more possible value-add apps that come from the Android and Apple operating systems and form factors than from Blackberry’s gadgets.”
Q. What do you think of the potential to monetize Whatsapp as a payments system, etc.? Lastly, how does this balance against the government’s potential involvement in tech company “regulation”? A. Any monetization of Whatsapp as a payments system would provide upside to analyst estimates. Not sure it’s going to work, but neither is Wall Street. Remember the last time the government cracked down on a big tech company? Nah, neither do I. Big tech corporations are some of the most powerful owners of the Republican Democrat politicians.
Q. Who are Oculus competitors and how do they compare? How much did your VR setup cost? A. The competitors are on Google: https://www.google.com/search?q=occulus+competitors. They don’t compare favorably at all, if only because, as I’ll keep mentioning, Oculus alone has the developer critical mass. Oculus Quest 2 is $299 but I got the one with a little more memory and it cost $399. I bet I’ve spent $100 on games and apps so far. Q. Who are Oculus competitors and how do they compare? How much did your VR setup cost? A. The competitors are on Google: https://www.google.com/search?q=occulus+competitors. They don’t compare favorably at all, if only because, as I’ll keep mentioning, Oculus alone has the developer critical mass. Oculus Quest 2 is $299 https://www.oculus.com/quest-2/ but I got the one with a little more memory and it cost $399. I bet I’ve spent $100 on games and apps so far.
Q. Incidentally, if you’re looking for a great workout app for your Occulus, download “Thrill of The Fight”. It’s a boxing game, it’s fun and a great workout. Also, for the kids, download Rec Room, it’s an amazing online community that developers add new games to every day. My son plays it with his friends every day. A. Dude, my buddy threw his shoulder out playing that game the other day on Oculus. I have played that game several times and I’m telling you, it’s one of the best aerobic workouts I’ve had in years.
Q. If you can find a way for us to invest in the company that developed “Rec Room” for the Occulus I would do it in a heartbeat. Big upside potential there just based on what I’ve seen with my son and his friends. A. Rec Room? Hmm, I’m going to go to the Oculus store and download it right now. Thanks.
Q. Is it stupid to go Long the MOEX? A. Have you heard about all the wealth that Russia creates for the common man through their stock market? No, neither have I. So, yea, I’ll go with that it’s at least not a great idea to invest in the Russian Stock Market Index or whatever MOEX is.
Q. Do you have a take/opinion on HEXO’s recent reverse split…is it a viable play in the cannabis realm? A. Reverse split from penny stock cannabis stocks? Uh, I’d avoid it at all costs except maybe someday as a short idea.
Q. Happy New Year Cody and Group! I cant find a NVDA Graphics Card anywhere. The 2x series are out of stock as well as the 3x series. When they do become available they sell out in minutes. Waiting lists are long. I am thinking they are going to have their best earnings repot in early February. Any feedback Cody? A. I like that insight, thanks for sharing. I’m liking NVDA a lot still, still holding it steady.
Q. Cody. TLT is breaking down. Are you still in this and how would you play this now.? I own some vertical puts 159/152. A. I don’t know what vertical puts are but I did still have some TLT short position on, but it was small and I actually covered the last of it today.
Q. Have you looked at DM (Desktop Metal) 3D printing metal? A. Just did and it looks like it’s unprofitable and trading at about 70x next year’s revenue estimates. I’d like to see it cheaper.
Q. What’s the outlook for CRSP going forward. A. It’s much more expensive now, but the fundamental idea for investing in it hasn’t changed.
Q. Do you think 5 years from now we will regret selling CRSP shares now? A. Other than trimming some of the shares in CRSP that have more than tripled since we bought them less than a year ago, I don’t understand the question.
Q. What is your opinion on JMIA? Should we hold long or trim now? A. If you haven’t trimmed some, yes, I’d trim some as it’s up huge from where we bought it a few weeks ago. But I’ll hold some of it steady of course.
Q. I know you look for game changing companies and revolutionary ideas… I’d like to think ZM, DOCU, and CRWD have that potential, but are they ready for high growth this next year? Are they burned out? Do you feel there’s a LOT of cash on the side (yours and mine included I think) that even the well-known and well-owned stocks have solid upside? A. We have owned ZM and DOCU since March and have huge gains on them and then trimmed them down near their highs a few weeks ago. I’m still holding each for now. CRWD is a great company but I don’t own it (yet?). No easy answers, I spend all year answering this type of question in my ongoing analysis.
Q. Whenever Cody is live in the chat room I have a problem with how comments update. Each comment causes my feed to bounce to the latest so that I lose place and waste time scrolling back to an earlier comment. Is there a tweak you can make so that latest comments don’t automatically do this? A. Just click the “Scroll” button beneath the chat and it will turn off the scroll.
Q. Cody, I have a number of BABA shares. I am concerned about the possible delisting. I doubt it will happen but it could. I wanted BABA for a long term investment. What happens to a delisted stock? Does it go to zero, does the price drop fast? Does my account just loose the stock? I am very concerned and should just sell the stock off but I don’t want to panic either.
A. I don’t think your delisted stock would go to zero but I don’t know much about the process beyond that. It’s yet another added risk for US investors who risk their money on stocks from China.
Q. Cody, do you have an app for this site? I’d use it way more often. A. Oh, I did have an app. It was pretty sweet and we’d even do live streaming Live Q&A on it. Maybe I’ll look into launching another one someday, but not anytime soon. Too much on the plate right now to add another project, sorry.
