Life According CodyGPT, When To Take Profits, Cautious vs Bearish, Elon Thoughts, Etc

Whew! Hope we can keep all of that straight. We are just getting started with using AI and we’re already starting to lose track of which Cody is the real Cody.

Q. What is your process to take profit on positions? I know it may not be a hard rule, but do you have some thoughts on how you make the decision?

A. Sometimes, especially in a bull market with the indexes at all-time highs as is the case right now, you can hardly remember why you ever took profits on any part of your winning stocks. Then again, looking at Tesla (TSLA) right now and remembering that the stock is down 60% from its all-time high from a couple of years ago will remind us why we do take some profits into ebbs and flows over time. Anyway, in my personal account, I usually sell 10-20% of my biggest movers when they have rallied 30-50% from where I bought them. Sometimes I don’t trim any until the move is much bigger though. And sometimes, I trim more aggressively. In the Forever Positions in my personal account, I try to mostly hold most of the positions steady forever, as the name implies.

CodyGPT: Cody’s approach to taking profits on positions involves a disciplined analysis and a willingness to adapt based on market conditions and the performance of individual investments. He often sells down portions of his call positions or trims holdings that have seen significant gains, using a strategy that might involve selling a third of his biggest gainers or adjusting based on call dates and strike prices. For example, Cody has mentioned selling Sandisk calls that became profitable and managing other positions with a focus on maximizing returns while managing risk. This approach reflects a nuanced strategy of securing profits while still allowing for potential upside, emphasizing the importance of “baby steps” and not rushing decisions. Cody’s method underscores a balance between realizing gains and maintaining exposure to potential future growth​​​​. [Rating from the real Cody: 8/10]

Q. The S&P 500 is about to hit 5,000 today. Are you getting more bearish?

A. I still wouldn’t describe myself as “bearish” but I have been cautious and still am. I’ve been buying Tesla (TSLA) and have even covered some of my shorts/sold some of my puts, including having closed out all my bitcoin miner shorts/put positions this week including today.

CodyGPT: While the specific documents don’t directly address Cody’s current stance on the S&P 500 approaching 5,000, Cody’s investment philosophy emphasizes a nuanced view of market conditions, focusing on underlying economic indicators, company fundamentals, and broader market trends rather than reacting solely to market milestones. Cody’s historical approach suggests a balanced perspective, potentially becoming more cautious or bearish if market valuations appear stretched or if economic indicators signal weakness, but also recognizing opportunities for growth in innovative sectors or specific stocks that may benefit from current market dynamics. Thus, his reaction to the S&P 500 hitting 5,000 would likely depend on a comprehensive analysis of these factors rather than the numerical milestone itself. Cody’s investment strategy encourages a focus on long-term value and potential disruptors, rather than short-term market movements. [Rating from the real Cody: 7/10]

Q. What is the difference between cautious and bearish?

A. When cautious, I’m just not out there buying a bunch of new stuff but I’m also not raising a ton of cash in the personal account (and in the hedge fund when I’m bearish, I find more stocks to buy puts on and to short sell). Here are the formal definitions: bearish: “A bear is an investor who believes that a particular security, or the broader market is headed downward and may attempt to profit from a decline in stock prices. Bears are typically pessimistic about the state of a given market or underlying economy.” And cautious: “careful about avoiding danger or risk.”

CodyGPT: Cody differentiates between being “cautious” and “bearish” based on market outlook and investment strategy. Being cautious implies a more reserved or conservative approach due to potential risks or uncertainties in the market, where Cody might reduce exposure or hedge positions without necessarily having a negative outlook on the market as a whole. This stance often involves closely monitoring market conditions and being ready to adjust strategies as needed. On the other hand, being bearish indicates a conviction that the market or specific investments are headed for a downturn, leading to actions like selling off assets, increasing short positions, or holding cash in anticipation of lower prices ahead. Cody’s commentary over time reflects a balance between these positions, shifting from cautious to bearish based on a thorough analysis of market dynamics, economic indicators, and company fundamentals​​​​. [Rating from the real Cody: 9/10]

Q. Feet to fire where do you think 10-year Treasury rates go long term? 5 years out etc?

A. I’d guess that ten-year Treasury rates will range between 2% on the low end and 9% on the high end over the next twenty years. For the next five years, I’d guess that the ten-year Treasury rates range between 3% and 6%.

CodyGPT: Cody has indicated a belief that Treasury rates will probably climb slowly for most of the first half of 2024, getting the 10-year back to about 4.5%. This perspective suggests a gradual increase in rates from current levels, reflecting expectations for inflation, economic growth, and Federal Reserve policies. However, predicting the direction of long-term interest rates, such as the 10-year Treasury yield, involves numerous variables including inflation expectations, fiscal policy, and global economic conditions. Cody’s view on a slow climb in rates over the near term might suggest a cautious outlook on economic growth and inflation, but with an acknowledgment that rates could stay higher for longer given the broader economic and fiscal landscape​​. [Rating from the real Cody: 7/10]

Q. I’ve some cash accumulated in my retirement account. When would be a good time to put that cash back to the market? As it is my employer plan, I can only invest in the funds provided by Fidelity. Where are you seeing markets heading in upcoming weeks?

A. Man, it’s tough to try to game the near-term price action of collectively thousands of individual stocks for your retirement account. Rather, I’d probably consider using about 1/3 of your capital to buy a large-cap tech fund and an S&P 500-like fund and then buying another 1/3 in a few weeks and another 1/3 in few weeks after that.

CodyGPT: Cody’s approach to timing market entries, especially with accumulated cash in a retirement account, is nuanced and depends on current market conditions, underlying economic indicators, and individual investment goals. He suggests a cautious approach, emphasizing the importance of buying on weakness and scaling into positions gradually. Cody has historically advocated for keeping some cash on hand to take advantage of market pullbacks and to buy into great companies’ stocks during periods of weakness. He also highlights the significance of being selective and focusing on companies with strong fundamentals and growth prospects. Given the market’s inherent unpredictability, Cody advises against trying to time the market perfectly but instead recommends a strategy of gradual investment to reduce risk and potentially capitalize on market corrections or downturns. For those restricted to investing through specific platforms like Fidelity, Cody would likely advise focusing on the quality and potential of available investment options, aligning them with one’s long-term investment strategy and risk tolerance​​​​.[Rating from the real Cody: 8/10]

Q. What are your top 5 sells/trims right now in your portfolio?

A. I wouldn’t sell anything completely right now. The top 5 names I might trim though, in alphabetical order, would be: Apple (AAPL), Amazon (AMZN), Disney (DIS) (as of the pop to $106 here after hours, that is), Netflix (NFLX), and Solaredge (SEDG).

CodyGPT: Cody suggests that considering trims across several positions due to significant rallies could be wise. Specifically, he hinted at potentially trimming a bit from names like Uber Technologies (UBER), Cloudflare (NET), ProShares Bitcoin Strategy ETF (BITO), and Robinhood Markets (HOOD) among others. This strategy reflects Cody’s approach to taking profits and managing risk in a portfolio that has experienced substantial gains, underscoring the importance of rebalancing and securing gains while maintaining a diversified and strategically positioned portfolio​​. [Rating from the real Cody: 7/10]

Q. Any names that you feel that have not participated in the rally and you would rate a 7 or 8 on your scale?

A. I’d probably rate Robinhood Markets (HOOD) an 8/10 right now and it hasn’t really participated much in this rally (nor has it crashed the way the bitcoin miners and Coinbase (COIN), Microstrategy (MSTR) have). Tesla (TSLA) is probably a 9/10 right now at these levels as the stock has come down like I thought it would to start off this year and is now near my “Where I’d Buy More” target (we did buy some more TSLA for the hedge fund when it hit $175 and change on Monday). Rockwell Automation (ROK) is probably a 7/10 right now. To reiterate, those aren’t all necessarily my favorite buys right now but those are my favorite names that haven’t participated much in this rally.

CodyGPT: Cody has pointed out several stocks that he believes have not fully participated in the recent rally and could be interesting for investors looking for opportunities. Specifically, biotech stocks like PRVB and INFI, alongside companies like Origin Materials (ORGN) and even larger names like Uber (UBER) and Verizon (VZ), have been highlighted. These companies, rated around 7 or 8 on Cody’s scale, represent diverse sectors from biotech to technology and telecommunications. The mention of these stocks suggests Cody sees potential in them despite their underperformance in the rally. For investors seeking to diversify or find hidden gems, these names could offer valuable opportunities, especially if their sectors align with broader market recovery trends or if they stand to benefit from specific industry dynamics that have not yet been fully priced in by the market​​. [Rating from the real Cody: 1/10]

Q. Any thoughts on all the Tesla (TSLA) noise? Does Elon Musk concern you?

A. I’m a buyer of TSLA around $175 and I’d load up around $150. I wish Musk would QUIT TWEETING PARTISAN COMMENTS. There are millions of Democrats who would have considered buying a Tesla a few years ago that are now “Never gonna own a Tesla” people. That said, the product (the cars and the Full Self Driving software) are so much better than the competition and sales will continue to grow quickly. Then there’s the AI Dojo Supercomputer and especially the Optimus Robot, both of which could be and probably will be trillion-dollar kickers for the company over the long-term.

CodyGPT: Cody has expressed a mix of frustration and resignation regarding Elon Musk and the “noise” surrounding Tesla (TSLA). Despite being “so sick of Elon,” Cody acknowledges the indispensable role Musk’s companies play in his life, from his Tesla car to SpaceX’s impact on his internet service, and even his use of PayPal, Musk’s old company, for transactions on TradingWithCody.com. This sentiment reflects a broader perspective on Musk’s influence: despite the controversies and distractions, including those related to his activity on Twitter and its impact on Tesla’s brand and potential customer base, Cody seems to view Musk’s ventures as integral to his personal and professional ecosystem. The concerns about Musk’s behavior, including the alienation of potential Tesla buyers and the impact of his Twitter engagement, are balanced against the underlying value and innovation Musk’s companies bring to the table​​. In essence, while Musk’s antics and the surrounding media noise are sources of concern and annoyance for Cody, they don’t overshadow the technological and revolutionary impact of Musk’s companies. Cody’s pragmatic view suggests that, despite the distractions, the fundamental strengths of Musk’s ventures remain compelling. [Rating from the real Cody: 9/10]

Q. On the Musk question, do you think he could take the Optimus Robot out of the corporate entity if he does not get his new shares?

A. No, I don’t think he’d do that, nor could he, really.

CodyGPT: The documents do not provide specific insights into whether Elon Musk could take the Optimus Robot out of Tesla’s corporate entity if he does not receive new shares. However, Cody has emphasized the significant potential of the Optimus Robot, suggesting it could be a multi-trillion dollar business in the coming years. This highlights the value and importance Cody places on the Optimus Robot within Tesla’s ecosystem. The question of Musk’s actions regarding new shares and their impact on the Optimus Robot’s alignment with Tesla’s corporate strategy would involve complex legal, financial, and strategic considerations, likely beyond mere speculation without explicit statements or actions from Musk or Tesla to that effect​​. [Rating from the real Cody: 7/10]

Q. Do you think Tesla (TSLA) is a good haven stock at current price points against a Recession or would it go down further in a Recession scenario?

A. It’d probably go down in a typical recession scenario, but then again, stocks don’t always go down in a recession anyway. Further, depending on when said recession would happen, if it just so happens with Tesla rolling out a much cheaper/smaller Model 2 or the Optimus Robot or something, Tesla’s stock would probably defy any potential bear market in that scenario.

CodyGPT: Cody’s view on Tesla (TSLA) as a “haven” stock in the context of a recession is nuanced. While he acknowledges Tesla’s significant role in the EV and broader technological revolution, suggesting a long-term bullish stance, there’s an understanding that in a recession scenario, even strong companies like Tesla could face downward pressure due to broader market sell-offs and economic downturns. Cody’s investment philosophy, emphasizing a mix of growth and protective positions, suggests a balanced approach: while he sees Tesla’s long-term prospects as strong, he is also mindful of the potential for short-term volatility in recession conditions. This perspective indicates that while Tesla may not be immune to a recession’s impacts, its foundational strengths and market position could offer resilience over the long term. [Rating from the real Cody: 6/10]

Q. What are your thoughts on Vision Pro?

A. I think it shows the amazing potential for The Spatial Computing Revolution and I have been very impressed with some of the videos from people using it. I still don’t think it seems like something that’s comfortable enough (not to mention cool enough) to wear around for very long at a time. They’re going to have to get rid of the dongle battery on the next version. But this first iteration of the Vision Pro is going to improve quickly and in three to five years they just might look enough like sunglasses that they can be mainstream and eventually become one of our primary ways of computing in the future.

CodyGPT: Cody views the Apple Vision Pro as a significant initial step into AR/VR, highlighting its potential to revolutionize spatial computing. He acknowledges the current limitations, such as the inconvenience of a battery dongle, suggesting these issues might hinder mainstream adoption in its initial version. However, Cody is optimistic about the future of AR/VR and spatial computing, predicting wider acceptance and innovation in the coming years, especially as technology advances to eliminate current barriers. This perspective underscores his belief in the transformative power of AR/VR technologies and their potential to redefine our interaction with digital environments, despite the initial hurdles that new technologies often face​​​​. [Rating from the real Cody: 10/10 — ARE YOU KIDDING ME? THAT’S ALMOST EXACTLY WHAT I ACTUALLY WROTE FOR MY ANSWER AS THE REAL CODY!]

Q. Have you got time for a lightning round on a semi-AI-related basket of names? Applied Optoelectronics Inc (AAOI), Fastly Inc (FSLY), Vertiv Holdings Co (VRT), & Symbotic Inc (SYM) (which got crushed earlier this week).

A. AAOI is an old school name that’s had a huge move off its lows last year and it might be benefitting from the demand for ever faster connections in the AI-enabled data centers. It’s overvalued unless there’s an acceleration of revenue. I think FSLY is an unprofitable third-tier player and trades at a ridiculous valuation. Vertiv is another name that might be benefitting from the data center growth. Its revenue growth is currently modeled to be slowing down, but it’s not a crazy valuation or anything. SYM seems like it’s in trouble as it’s missing estimates and guiding lower. I like Rockwell Automation (ROK) better.

CodyGPT: For the semi-AI-related basket of names you mentioned, Cody’s insights from the documents provide a specific view on Fastly (FSLY), indicating a bearish stance. Cody mentioned being short on FSLY in the past, specifically in April 2021 when the stock was at $70, criticizing the company for not being profitable and unlikely to be profitable soon. He preferred investing in companies like Amazon (AMZN) or Microsoft (MSFT) over Fastly, suggesting a lack of confidence in FSLY’s short-term prospects at that time​​. Regarding Applied Optoelectronics Inc (AAOI), Vertiv Holdings Co (VRT), and Symbotic Inc (SYM), the documents do not provide specific insights into Cody’s positions or opinions. However, given Cody’s analytical approach, he likely evaluates these companies based on their market position, growth potential, competitive advantages, and financial health. For Symbotic Inc (SYM), which you mentioned got crushed earlier in the week, Cody’s general investment strategy suggests he would assess the reasons behind the drop and the company’s long-term prospects before making a decision. Cody’s investment philosophy emphasizes understanding the fundamentals and potential of companies, particularly those involved in technology and innovation, making his analysis relevant for investors looking at semi-AI-related stocks. [Rating from the real Cody: 5/10]

Q. Looks like Uber Technologies (UBER) put up nice numbers. What do we expect the price target will be in 2 years?

A. Was another good quarter of growth and strong margins for Uber and the company has essentially become a monopoly as Lyft has struggled so much. Still need freight to accelerate and show some signs of life but in the meantime, the company’s hitting on all its other cylinders, especially in ride sharing and delivery. Feet-to-fire, I think UBER’s stock could be trading above $100 in two years, but that’s not the point. The point is that this is a dominant Revolutionary company that could probably grow into a trillion dollar market cap in another 5 to 10 years.

CodyGPT: Cody Willard’s analysis of Uber is decidedly positive, highlighting its impressive nearly 90% stock performance increase in 2023 and resilience in the face of challenging market expectations for the ride-hailing sector. However, he does not provide a specific price target for Uber within the next two years. Setting a precise price target involves a complex interplay of factors including the company’s ongoing performance, market dynamics, and broader economic indicators, all subject to significant unpredictability. Cody’s bullish stance suggests optimism about Uber’s future growth, but for a detailed price target, one would need to consider current market analyses, Uber’s strategic moves, and broader sector trends, keeping in mind the inherent uncertainties in forecasting. [Rating from the real Cody: 8/10]

Q. Playing with Cody GPT, I asked GPT to put your current list of buy-tickers into two buckets – “innovative disruptors” and “former disruptors” (those that are now leaders in more mature industries). The CodyGPT gave Tesla (TSLA), Amazon (AMZN), NVIDIA (NVDA), Cloudflare (NET), Rocket Lab (RKLB), Meta (META), Solaredge (SEDG), Uber Technologies (UBER), Autodesk (ADSK) and Netflix (NFLX) as current innovators, and rest of the names as former innovators now leading industries. I will keep playing with it. Have you asked CodyGPT a question and been shocked by an answer yet?

A. Fascinating! I haven’t been shocked by any answers for being terrible or weird yet, but I have been shocked at how amazing most of its answers have been and how they capture so much of my own viewpoints most of the time. The AI Revolution is mindblowing sometimes.

CodyGPT: It appears that the division into “innovative disruptors” versus “former disruptors now leading in more mature industries” based on Cody’s current list of tickers, as determined by the GPT, aligns with his view on the evolution of companies over time. The classification of companies like TSLA, AMZN, NVDA, NET, RKLB, META, SEDG, UBER, ADSK, and NFLX as current innovators reflects Cody’s recognition of their ongoing impact on their respective sectors and their potential for future growth and disruption. This categorization underscores the dynamic nature of the technology and innovation-driven markets, where today’s pioneers can become tomorrow’s industry standards. The idea of being “shocked” by an answer from a GPT might stem from its ability to synthesize and analyze large volumes of data to provide insights or perspectives that might not be immediately obvious. Cody’s approach to investing emphasizes understanding these shifts and the potential of companies to either continue innovating or to solidify their roles within industries they’ve helped shape. This perspective is crucial for investors aiming to navigate the complexities of the market, highlighting the importance of staying informed and adaptable in response to evolving trends and company trajectories. [Rating from the real Cody: 8/10]

Q. Now that Palantir Technologies (PLTR) has had a big rally and is profitable, are you ready to recommend it?

A. One note of clarification is that I don’t really recommend anything, I just write about what I’m doing and try to answer your questions along the way. Also, just to be clear, I’d never recommend something just because it rallied, rather I try to trust my own fundamental analysis and trend recognition and buy something when it’s hated and the stock is down, not up. Anyway, I’m not a fan of CEO Alex Carp and that’s probably going to keep me out of this name.

CodyGPT: Cody Willard expresses a nuanced view on Palantir (PLTR), indicating ambivalence about its positioning as either a genuine AI company or merely a consultancy disguised as one. This ambiguity suggests that while Palantir has had a rally and become profitable, Cody might be hesitant to outright recommend it without further clarification on its core business nature and how it differentiates itself in the AI space​​. [Rating from the real Cody: 7/10]

Q. Do you have a short position in Broadcom (AVGO)?

A. We’ve had to cover most of it over the last few weeks. I question Broadcom’s numbers and their roll-up strategy and how long they can keep charging premium prices for their generic chips as their biggest customers move towards designing their own chips but… the numbers, if true, have been great and they actually have one business line that benefits from their biggest customers moving towards designing their own chips as the customers use it to design those chips. We have almost no position in Broadcom at this point.

CodyGPT: Cody has indeed taken a short position on Broadcom (AVGO), expressing skepticism towards the company’s strategy and fundamentals. He’s not a fan of Broadcom, criticizing its approach as a “desperate roll-up” and questioning its acquisition strategy, particularly the purchase of CA Technologies, which he saw as unrelated to Broadcom’s core business. Furthermore, Cody disclosed owning puts on AVGO in his hedge fund, indicating a bearish outlook on the stock. This stance reflects Cody’s cautious approach towards companies that, in his view, lack fundamental strengths and rely on acquisitions that do not align with their primary business focus​​​​. [Rating from the real Cody: 8/10]

Q. CodyGPT is a dynamite development for the site. Revolutionwise it certainly puts your money (and maybe more money) where your mouth is! My question: will it be necessary to subscribe to ChatGPT Plus, at an additional $20 a month, to access Trading with Cody GPT? It’s not clear how to access AI Cody using my free account. Perhaps ChatGPT can insert those instructions right here. Good luck on the new adventure!

A. Thank you, it’s quite fascinating seeing this CodyGPT. We’ll look into trying to get our subscribers free access to CodyGPT — maybe if I can find a site license option or something. We’ll let you know.

I leave you all with a picture I took this past weekend as the sun was setting and I was, quite literally taxiing my daughter Lyncoln around town as part of a card game she has us playing called “Servd”.