More Market Purgatory, Bitcoin, UBER, HOOD, And Much More

Here’s the transcript from today’s live Q&A chat. And don’t forget to follow us on Twitter/X.com @TradingWithCody.

Q. Do you think this rally is short-lived and things are probably headed lower? Or are you dip buying?

A. I still think the market is a bit in purgatory status where it can rally 3-5% or it can drop 3-5% and we’d still be a bit in purgatory range. I’d probably trim/sell longs and buy puts more aggressively if the broader markets do rally 3% and I’d probably do more tranche buying and/or buying some calls if the markets tank 3% again from here. I’m doubtful that the markets will explode higher in the near-term. I’m more concerned that the markets could go sideways with a downward bias for the next few months or so.

Q. Are the puts you bought yesterday more of a hedge or a more firm position on the downside of those particular stocks/indices?

A. Mostly just hedges. I’m not terribly bearish or terribly bullish on the broader markets right now. I do think there are a lot of crappy stocks out there that are still headed much lower but even a lot of those have just been demolished lately and might have some bounce in them near-term so we just navigate the ups and downs as best we can in the hedge fund by trading around some of those puts and shorts. Most individual investors shouldn’t mess with options, puts or do too much hedging.

Q. Gotta ask…if you were making 3 buys today, what would they be?

A. Hmm, not doing much outright buying right now but I do have a small-cap stock that I’m very excited about and have been building a position in, and I’ll be writing about for you all soon so stay tuned for that. Feet-to-fire, the three stocks I’d buy right now other than that one are: Robinhood Markets (HOOD), Walgreens Boot Aliance (WBA), Blade Air Mobility (BLDE) (and Bitcoin/BITO, I suppose).

Q. Any thoughts on the Fed’s direction?

A. As always, they’ll mostly chase what the free market is doing. That is, in reflexivity, the economy and rates will impact what the Fed does and the Fed can maybe impact the economy and rates somewhat but overall the markets do the work and the Fed just tries to take credit for anything that goes right and to avoid blame for anything that goes wrong. Feet-to-fire, rates will probably be right around here this time next year regardless of whether or not the Fed does another one or three moves with their own rate hikes/cuts.

Q. Powell really is an a$$. Inflation is trending down. Enough with the tightening already. Listening to him speak and backtrack twelve times and hedge every sentence twice just underscores how he has no clue what will happen and is trying to cover every single contingency with double talk and overcompensation. Truly disgusting. Also, this might be the most Whack market I have ever seen.

A. Well said! I can’t believe that Powell actually said these words: “As is often the case, we are navigating by the stars under cloudy skies. At upcoming meetings, we will assess our progress based on the totality of the data and the evolving outlook and risks. Based on this assessment, we will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data.” Like, he just explained why the Fed should not exist. Why would we let unelected bureaucrats control our money supply? They are clueless and he admitted as much. As I used to say on Fox Business and CNBC all the time: End the Fed! As I’ve said for the last 10 years — all roads lead to Bitcoin. He just explained why.

Q. This quote of his says it all, no? “…we are navigating by the stars on a cloudy night.” Doesn’t inspire confidence in the direction we’re headed. Let’s hope when the clouds clear, we don’t find ourselves way off course!

A. Exactly!

Q. Question with regards to Bitcoin. Apologies if foolish/naive. We have bitcoin exposure through the Bitcoin Strategy ETF (BITO). Isn’t that an ETF that tracks the performance of Bitcoin (BTC)? How is Grayscale Bitcoin Trust (GBTC) any different? Is BITO the best way to get BTC exposure? I’m assuming yes otherwise you wouldn’t be holding it/adding to it recently.

A. We’ve spent a lot of time over the years trying to figure out the best way to invest in Bitcoin for the hedge fund. For my personal Bitcoin, I prefer to hold it myself in a cold wallet but the custodial issue for the hedge fund is an issue — it’s not like our investors (or ourselves) would be comfortable with a cold wallet solution (think of a USB drive sitting in a safe for example) for the hedge fund. I’m not a fan of the GBTC management and that led me to BITO which isn’t perfect either. If/when a real spot Bitcoin ETF is approved, that will be the best solution for the hedge fund to get Bitcoin exposure.

Q. Great new design and format. I sensed a kind of neutral cautious tone on Uber Technologies (UBER) echoed with your “Where I’d Buy More” price of $30, which is considerably lower from where it is now. Could you elaborate? Have a great Labor Day weekend. Hard to believe the end of summer coming.

A. Thanks for the compliment about the new TradingWithCody.com site. We still have a large position in UBER and that’s a reflection of our long-term belief in the Revolution(s) UBER is creating with ridesharing, delivery and logistics using AI and creating a critical mass of suppliers (drivers) and customers (riders, food order-ers, etc). We loaded up and pounded the table on UBER when it was much lower and was hated and have taken some profits recently to balance the size of the position and to be disciplined. I think UBER will be much higher ten years from now but I think it could drop 10-20% from here near-term if anything goes wrong. So we just do our best to balance risk/reward and to balance the disciplines of being long-term investors/taking profits.

Q. Does a Bitcoin rally or the approval of a Bitcoin ETF impact Robinhood Markets (HOOD)?

A. Maybe a little bit as it validates Bitcoin and the major cryptocurrencies a bit and that’s good for Robinhood but on the other hand, it makes it easier for investors to get into Bitcoin without actually buying it through the Robinhood app. I don’t think it really matters to Robinhood though.

Q. Thoughts on adding to NuScale Energy (SMR) here after it’s been knocked down a bit?

A. We did some nibbling on it last week below $6. It’s a mid-sized position for us but that’s about where I want it to be. I’m sick of SMR’s price action to be sure though! LOL

Q. Thoughts on Walgreens (WBA)?

A. Walgreens might be the most hated stock on Wall Street right now. Not exactly a Revolutionary pick per se, but big dividend and trading at 3x our profit projections for just three years from now.

Q. At what price range would you consider Maquia Capital Acquisition Corp (MAQC, the SPAC merging with Immersed) a good buy?

A. I probably won’t buy the MAQC at any price. It probably won’t go much below $10 at least until after the De-SPAC’ing happens because the shares are redeemable for $10 up until that point. Be careful with this stuff. I’m still learning how they make the SPAC sausage as this process is playing out for Immersed.

Q. Checking in two old positions. Any interest in Roku (ROKU) or Jumia Technologies (JMIA)?

A. ROKU is a good company and a good product but with so many similar offerings from Amazon, Samsung, etc, I’m just not sure I get the long-term Revolution it is driving. Jumia is a mess and I’d rather short it than buy it.

Q. When should you short Carvana (CVNA)?

A. Oh it just keeps squeezing the shorts but I do think it will be at $0 in the next three years. In fact, it’s been a while since I had any CVNA puts and I’m going to buy a few CVNA $40 puts for October right now while it’s here near $50 a share. It will be a tiny position and won’t make it a big one. Be careful out there as always and see my prior commentary about how most individual investors should avoid shorts/puts/hedges.

Q. Looking at shorting PTON your thoughts?

A. Most of the meat is probably off that bone but on the other hand, I have no idea how they ever plan to make any real money for investors.

Q. Thank you for part 1 of the write-up of our positions. Love the new design/format!

A. Rock on. Having Bryce here to help me write and analyze and trade is so helpful in enabling me to get more content out to you guys more often. As for the new design, layout and features at TradingWithCody.com, we’d put an ad on Upwork for help on all that and interviewed a few candidates who applied for the job but I realized after talking to them that I should probably just try to do it myself because it might be just as easy to dealing with new people. So I came in this weekend and spent time on Monday night doing the new design, layout and features on TradingWithCody.com myself. I’m pretty pleased with the final result but I plan to make a few more improvements along the way here. Thanks to all of you who prompted me to get the site improved.

That’s a wrap, folks. Thank you! I leave you all with a couple shots of Amaris. First one, she’s giving me a big ol’ kiss, which has been one of her favorite things to do lately. Second one, I’ve got her pretending to ride on Bernice our remaining Great Pyrenees, who’s not too happy about being a horse to ride LOL.