Market Rotation, Communist Tech Stocks, Space Blockchain Scams and More
Here’s the transcript for this week’s Live Q&A Chat. Have a great weekend.
Q. Cody, a question for today regarding Big Tech. AAPL, AMZN, FB and GOOG are off highs by 17, 15, 6 and 5% respectively. I hear lots of caution such as rotation, higher interest rates, etc. hurting these stocks. I know you like FB a lot. Do you feel the others will get hurt badly going forward or just modest pullbacks? Thanks.
A. I know it’s apparently common knowledge amongst the talking heads that “higher interest rates are bad for tech stocks” but I don’t understand that logic at all. Is anybody out there really selling their tech stocks because they want to buy Treasuries that are still only yielding 1.5%ish. I mean, other than the people who are saying that on TV and those who are listening to them, I don’t think anybody really sits around shifting allocation strategies because the Treasuries went down a little bit in the last few weeks. So maybe there has been a self-fulfilling rotation out of tech stocks and into “reopening/value” stocks, but I’m not sure that will last. I mean, remember that I also do a LOT of work on valuation and I try to buy our Revolutionary tech stocks when they are good “values”. Anyway, if we are in a pullback (or even burgeoning bear market) phase of the market, then I don’t think most tech stocks will be fine. Well, they’ll be “fine” but there could and most likely would be 5-15% potential downside in even the biggies that you mention.
Q. Hi Cody. With the recent rotation pullbacks, what are your top 5 stocks at these levels?
A. Last week, I’d answered it this way: “Favorite stocks at this moment, though I’m not pounding the table on any of them right now, would probably be: FB, VACQ, HOL, GLD, TSM in that order.” This week, I’d answer it the same way.
Q. It sounds like the space revolution you write about is like your picks of AAPL at 20 cents or TSLA at $50. Is this accurate?
A. I hope so, but it’s a much riskier bet because these companies are still start ups and valuations are going to be a while before they make “sense” for a lot of people.
Q. Hi Cody, How long can a bear market last? Do you foresee a rotation out of tech as a real threat to our positions? When will you sell DELL as it goes to expiration on our calls? Thank you.
A. A bear market can last ten years or more. In this day and age, I’d expect the markets would overcorrect to the downside in a matter of months because we live in a day of Kurtweil rate of change. Yes, a rotation out of tech and into “reopening/value” stocks could mean that tech stocks underperform for a little while, but longer-term Valuation-minded Revolution Investing in secular growth industries will probably continue to outperform all other approaches. I’ve trimmed some DELL calls along the way as they’ve tripled and quadrupled in value but I still hold some April and July Dell calls that are also up like that already.
Q. Cathy Wood recently suggested that Chinese tech could outperform in the markets moving forward. What’s you’re read on it? And if you agree, what percentage of your portfolio would you think a reasonable allocation to it?
A. No way do I think an even more corrupt system of technology and government in an outright communist regime in China will ever outperform over the long-term. I’ve always said that I don’t want to bet very much on the companies that are able to succeed in that system over there. Nothing’s changed, has it?
Q. You doing any trades today?
A. Just some maintenance in the hedge fund around expirations mostly. Nothing in the personal account today.
Q. Not long ago, you mentioned your hedge fund portfolio allocation for these market conditions that was 50-75% long, 0-25% short, 10-30% cash, 10-20% gold and silver, 1% BitCoin. That was really, really helpful for me in making adjustments to my own portfolio and probably saved me a lot of pain with this recent correction. If possible, can you provide periodic updates to this that reflects current market conditions? That would continue to be really helpful to me and others. Thanks again for that.
A. Whoa, whoa, wait a minute. I didn’t ever say this: “hedge fund portfolio allocation for these market conditions that was 50-75% long, 0-25% short, 10-30% cash, 10-20% gold and silver, 1% BitCoin.” What I said was that I had written those words back in 2013 and that “not much has changed.” But that was my allocation suggestion back in 2013 for a friend — that was NOT and never has been the way my hedge fund is allocated. Sorry for the confusion. My hedge fund is net long but hedged with shorts and puts and other balancing methods. I have less than 5% of the hedge fund in gold and silver right now, and that’s more than it’s ever been. I have about more than 1% of the hedge fund in bitcoin (which I stopped spelling as BitCoin back in 2014).
Here’s how I finished that post about allocating the portfolio: “Cody back in real-time February 25, 2021: Dude, for the people who listened to me and invested in Revolution Stocks and had put 1% of your portfolio into bitcoin when it was at $100 as it was when I wrote that back in 2013, we’ve had a helluva lot of profits since then. Don’t be greedy! This latest phase of the Bubble-Blowing Bull Market that we were riding confidently back in 2013 is getting ever riskier and I don’t think it will end well at some point in the next year or two.”
Q. Cody. Do you see more down side for TLT?
A. Depends on a lot of factors, but it’s still the path of least resistance as interest look like they will probably continue higher.
Q. Cody, what’s your ratio for investing in VACQ and HOL? Are you doing a 50/50 split between the two or are you investing more in VACQ than HOL?
A. I’m more like 55/45 or 60/40 as I like VACQ a little bit better and feel like it’s a little bit “safer” than HOL.
Q. Thank you so much helping us going through these volatile markets! what’s your recommended distribution between VACQ & HOL?
A. Please see prior answer.
Q. Yesterday’s short note on VACQ and HOL is greatly appreciated! This is exactly what I look for on days like yesterday. Thank you!
A. I do my best.
Q. Cody, I am a happy TWC subscriber since 2012. Any guidance on TLT short term?
A. Thanks for being a long-term member of the community! I’m afraid I don’t have much feel for TLT short-term here. It could bounce in a countertrend or it could keep slowly fading lower. Six months or a year from now, I’d expect TLT is lower than these prices, but by how much?
Q. Does gold look like it can squeeze the shorts bigtime….Been very quiet and congested for several months now
A. I don’t know if there’s enough shorts in gold to squeeze, but it does look to me like gold is a relatively safe place to have some money right now.
Q. Cody your thoughts on MP JMIA CRSP IN 3 to 5 years sir.
A. See the initial write-up I did on each where I mostly outline that vision as I explained why we invested in them. Not much has changed for those three in the last few months.
Q. What is your rating on DVAX? I think you forgot to mention it in your latest rating update.
A. I’d rate Dynavax a 7/10 right now.
Q. I bought $100 of Immersed through Republic Now I invested some more in Immersed through WeFunder. It’s a VR startup. You should look at it. It has impressive partners. AND Hi, Good catch. Did you get Immersed thru Republic Labs (or Republic Now)? I don’t see it in Republic Labs. Look interesting, definitely along Cody’s VR interests. Looks like 1st round funding. Would like Cody’s input, only 8 days left to invest. AND Yes. I bought some through Republic Co. …..Cody is on the Republic board and had mentioned Republic several times before. Today I bought through WeFunder. 4 years since they began and they are sounding pretty advanced to me.
A. Thanks, we’ll take a look.
Q. Thanks for all your recommendations and periodic updates. I am really new to your portal but enjoying every information and learning from you. I recollect you mentioning about Republic in the last chat- Do you have any recommendations or a way to find which companies listed there are worth consideration?
A. I’ll have a report coming out in a few days all about Republic and my latest batch of favorite names to invest a tiny bit of money into on there.
Q. Any thoughts on We Work merger?
A. I can’t believe that company still exists. No thanks on the stock for me.
Q. Do you have any thoughts on a Renewable Natural Gas play?
A. I call it “Cow Fart Power”. No, I don’t know any ways to viably invest in that sector yet.
Q. Do you still feel confident in U?
A. Yes.
Q. Hi Cody, Uber disrupted the taxi industry. Airbnb disrupted the hotel industry. And now, Rocketfuel Blockchain, led by CEO Peter Jensen (Oracle, Symantec) is coming for the payment processing industry, by utilizing crypto currency as a form of payment for e-commerce merchants. After all, E-Commerce merchants give away 3% of their incoming money whenever a client uses Visa, MasterCard or another credit card. That might not seem like a lot, but it adds up over time. Customers, on the other hand, find themselves having to create a new account and input sensitive information like their credit card and address in every new e-commerce store they’re visiting. That’s exhausting. On March 31st, RocketFuel Blockchain, Inc. (OTC: RKFL) (“RocketFuel” or the “Company”), a global provider of online payments options using bitcoin and other cryptocurrencies, will launch of their solution with Sky-Tours and Bear Tax, empowering and democratizing use of crypto currencies as a payment method upon checkout.
A. OMG, this is a real email that I just found in the Trading With Cody email inbox. I knew it would be a matter of time before crappy promotional penny stocks would start changing their name to pretend they are Space Revolution plays, but I never pictured combining Space with Crypto! Stay away from companies that are called “Rocketfuel Blockchain”
Have a great weekend. I leave you with a picture of antelope in a dust storm I took from the car last week that sort of reminds me of us during this current market environment. There are no filters on this shot, by the way:
