Moon Stocks, Spatial Computing, GOOG Earnings, And Much More

Q. Curious about your take on this viewpoint: if inflation keeps trending down, and we kind of stay in this goldilocks state with the economy, the Fed will need to cut or they’ll all but guarantee a recession. This is because the Real Fed Funds rate will increase as inflation decreases.

A. It’s a big IF that inflation might trend down. And sure, the Fed will probably cut if it does, but again, I’m not sure a Fed cut is a bullish thing.

Q. With some earnings coming now, and with Powell speaking today (I’ll be away until after that), where do you think the SPDR S&P 500 ETF Trust (SPY), Invesco QQQ Trust Series 1 (QQQ), SPDR Dow Jones Industrial Average ETF Trust (DIA), and iShares Russell 2000 ETF (IWM) head for the next 3 months leading into what market thinks is a rate cut? And do you still think the market sells off after a rate cut?

A. I’d guess that the markets fade a bit lower over the next few weeks and then if the Fed does cut, the markets pop 3% the day of the cuts and then tank 5% over the next month after the first cut.

Q. To diversify some assets away from stocks, where would you put money into fixed income, what with the Fed signaling they are likely to cut rates in 2024.

A. Maybe the money markets or the Robinhood (HOOD) 5% savings account (neither of which are “fixed income”). You could lock in 4% or so on the 10-year risk-free but I’m not doing that.

Q. With the selling of some of your positions and the recent run-up in the markets from November, are you getting a little more cautious/bearish, or do think we maybe just melt up for a bit? Do you think the market is in a relatively “good state”?

A. I definitely got more cautious in the last few weeks and I think the “melt up” cycle is probably over for now. I don’t think the markets are about to crash or something, but I don’t think there’s a lot of near-term upside.

Q. Could you please provide an updated Latest Positions and also a chart with prices you would buy your stocks at? In the meantime, what stocks are you comfortable buying or nibbling now?

A. Yes, apologies for not having done it already this week. I’ll stay late tonight and get it done for you all before I go home. As for names that I’d consider buying now, how about Tesla (TSLA), Rockwell Automation (ROK), Robinhood Markets (HOOD), and Tencent (TCEHY).

Q. Last time you unwound your hedges against Tesla (TSLA), it had a great run. Do you think the damage is done now, and are you bullish enough for some calls (heck, maybe even more of those long-dated calls on any of our names that can be 10 baggers again).

A. I do think TSLA can run over the next few months as long as the broader markets stay steady and/or as long as interest rates trend down. I’d consider some long-dated call options on TSLA, like maybe some November call options or something but I’d rather stick with the TSLA common stock for my personal account.

Q. In your 2024 predictions, you mentioned TSLA would have a tough start to the year and rebound higher towards year end. Do you still feel this way, if so what are the main catalysts you’re thinking for end of year?

A. Yes, I still think that the second half of the year could be big for Tesla. Potential catalysts include: FSD 12 getting ever closer to full autonomy; the Optimus robot getting prepared to be shipped in 2025; potentially lower interest rates helping boost demand and stabilizing profitability/margins; Cybertruck reception and ramp going through the roof; the stock getting oversold and outright cheap near $150 (if it gets there).

Q. AI AI AI… so many big caps getting a huge AI boost. What are the picks and shovel plays on AI…more under-the-radar type of plays?

A. Like I’ve said for the last year — NVIDIA (NVDA), Google (GOOG) and Tesla (TSLA) are my favorite AI names. Nvidia and Intel would be the picks and shovels for AI. There are going to be more AI stocks to choose from in coming months and years and I plan on finding the best 1 or 2 others to put in the portfolio as The AI Revolution continues apace.

Q. What do you think about ‘spatial computing’ as a trend? How soon is the mouse/trackpad going away and we just gesture with our hands in the air to move things around on big virtual screens? I mean it’s possible now but how long til it’s mainstream? Any guesses?

A. I already use my Oculus to work out sometimes and my 10-year-old daughter loves to use the Oculus. The Apple Visor is going to help drive adoption eventually but I think this first version of the Apple Visor with the dongle battery is going to bomb. The next version from Apple in a year or two will probably be much better. So between Apple, Meta (and Immersed), I think we could see some mainstream adoption of VR/AR/Spatial Computing three years from now and by 2030 it could be the norm. For those who don’t know, here’s the definition of Spatial Computing according to Wikipedia: “The term Spatial Computing today refers to advanced human–computer interaction that is perceived by humans as taking place in their world, in and around their bodies, instead of perceptually inside the computer’s world, behind the glass of a computer screen.”

Q: Can you please provide thoughts on the Google (GOOGL) earnings?

A. GOOGL had a pretty good quarter with both revenue and earnings up nicely and beating expectations. The stock was up a bunch coming into the print and was probably priced to perfection, evidenced by the selloff today. Google is just now getting its AI offerings to full scale and we expect to see the company will increasingly monetize the AI business as the year goes on. Unlike Microsoft (MSFT), Google isn’t generating tons of incremental revenue from AI just yet and the beat this quarter was the result of solid performance in Google’s traditional businesses like ads, YouTube, etc. There could be more upside if Google’s recent AI products like Gemini and Bard start to really kick in some additional revenue later this year.

Q. Rockwell Automation Inc (ROK) crushed. Any thoughts on the earnings report?

A. The topline was fine, but margins and earnings weren’t great. Basically, the company confirmed what I wrote recently: “There’s been a bit of a slowdown in the last few months in the industrial automation build-out from The Onshoring Revolution but I think ROK is a very well-positioned company and while it’s not terribly cheap right now, I continue to hold it mostly steady here.” It got cheaper today but we haven’t bought any more yet.

Q. Are we still building up our Disney (DIS) position with shares under $100?

A. We haven’t added to our DIS position in the last couple weeks or so. I’d probably buy some more DIS below $90.

Q. Somebody’s been buying up a lot of Intuitive Machines (LUNR). The stock has been up big the last few days on heavy volume. I’m up 57% since I bought 3 weeks ago.

A. We bought LUNR a few weeks ago around $2.50 and there’s definitely been a lot of buying pressure on it since then. Better than a sharp stick in the eye. We trimmed some yesterday and trimmed some more today, as we want to remain disciplined and not greedy.

Q: Indeed better than a sharp stick to the eye lol. well done!

Q. Apologies for repeating a question from last week but what is going on with LUNR? A big move up in a short period of time. Is it someone placing large orders or is this related to the company progressing?

A. Remember that part of the reason we started buying LUNR a couple weeks ago was because they are going to be landing a rover on the moon this month. I expect that we are not the only people who see that as a catalyst for the stock near-term. To be sure, the stock was also not a bad valuation at $2.50. It’s still not terribly expensive if they actually grow as much this year and next as they expect to, mostly off of NASA contracts.

Q: Would like to hear your investment thesis for STMicroelectronics (STM). According to Yahoo, negative sales growth in 2024 and single-digit growth are expected in 2025. EPS estimates trending down for both ’24 and ’25.

A. STM is expecting a flattish year in 2024 which is good compared to similar chip companies like Texas Instruments (TXN) which will probably have double-digit declines this year. STM is building out new fabs, has one of the largest and fastest-growing silicon carbide businesses in the industry, and counts great companies like Apple (AAPL), Tesla (TSLA), SpaceX, BYD Company (BYDDY), Rivian (RIVN) as key customers. STM is also one of the cheaper semiconductor companies out there currently trading at about 14x 2024 earnings estimates.

Q. What do you think of the Pfizer (PFE) result. Can you tell me quickly about the fate of the call options after this?

A. We are peeling out of the PFE calls slowly but surely.

Q. Any thoughts on PayPal (PYPL) and will it recover from the CEO debacle?

A. I assume you by “CEO debacle” you mean that the CEO went on CNBC a month ago and promised that Paypal would “shock the world with innovation” and then they rolled out like a new design for their “Buy now” button or something. I don’t think it’s a big deal long-term or that anybody will even remember that in a few more years. I think the stock is somewhat attractive here for the long term and maybe even for a bounce near term as long as the markets don’t continue tanking.

Q. Thoughts on China stocks like JD.Com Inc (JD), Baidu Inc (BIDU), and Alibaba (BABA), each will have their own version of AI that may give these stocks a boost. Also, China is a huge market and each of these cater to that populace. Surprised (maybe) that they are not solid position on the Revolution Portfolio. What keeps you away?

A. We worked on all the big China tech names and locked in on Tencent (TCEHY) as our favorite. China’s tough though, as they are, after all, communists.

Q. Have you also taken a look at DiDi Global Inc (DIDIY) for China? Even though it seems like China continues to be uninvestable right now.

A. We would rather own Uber (UBER) as we think it is well on its way to being the global standard for ridesharing services, and someday will have its own fleet of self-driving cars most likely. We also have plenty of China exposure with our TCEHY and FXI positions. By the way, Uber still owns a $1.8 billion stake in DIDIY which amounts to about 13% of the company.

Q. Do you have any more information on Immersed? Have you tried their Visor? It is a lot cheaper than Apple’s Vision.

A. I just texted the Immersed CEO today and will be catching up with him soon. I’ll ask him if we can try their new visor out. You can pre-order their new headset at Visor.com but I don’t know that they have let anybody outside the company test it out yet. We expect to see them ship in the next few months.

Q. What is your opinion on Luminar Technologies (LAZR) concerning profitability? I know Elon said he would never use LIDAR tech for self-driving but LAZR seems to have some strong companies onboard. Thanks for the insight!

A. We owned some puts and/or were short LAZR in the hedge fund a while back ago, as I mentioned in 2020.

Q. Thanks for all you do for my private investments as well as in the hedge fund. 2023 was a kick ass year! Keep up the good work.

A. Thank you, to the moon!

I leave you all with a picture of what I met outside of my house on my way home last night — that’s Becky, the miniature long horn looking for some treats from my Tesla Model S. I had to back the car up as Becky, Lizzy and Buckaroo Banzai were pretty sure I had treats in my car for them.