Most Hated Man/Stock In The World, Oil Crash Helps Everyone But Oil Cos, Need More Crypto Washout & More
Here’s the transcript from this week’s Trading With Cody Live Q&A chat.
Q. Are you buying anything?
A. Not doing much buying of anything outright right now. I’ll send out another “Where I’d Buy More” list soon but most of the prices I’m interested in buying at are still close to what they were the last time I sent it out. Some of our stocks, many of which bounced big off their recent lows, might revisit some of those levels. PS. In the hedge fund, I’m buying a few TSLA calls, slightly out of the money, dated out to the next week or two. Not a high conviction trade, but a counter/contrarian nibble.
Q. Cody, what are your favorite buys right now?
A. See prior answer. Not buying much of anything since we did our recent tranches at those lows that everything bounced so strongly off of.
Q. Cody, a Big Tech question for the chat. I keep hearing earnings estimates still need to come down. Plus some, AAPL, MSFT, and AMZN have high p/e ratios that need to come down, it indicates still more pain to come. Do you agree? Are we talking a 10% or more drop? Thanks.
A. I do think earnings estimates in general are probably too high for the S&P 500 and for much for tech for next year, but much of that is already priced in. Then again, a real downswing in the economy could take earnings estimates for next year quite a bit lower here and that would likely take the market down more than 10%, I think. Ebb and flow with the ups and downs. Buy the panics. Sell the whooshes. Just like we’ve been doing. We’ll be all right and take the pitches that the markets throw us as they come.
Q. Cody, follow up to my previous question. I only watch one market show but it seems quite good and the group there feels the Nasdaq does not stop going down until AAPL bottoms. And they question AAPL only dropping 16% while other big tech has dropped 30, 40, 50% and more. You say buy more AAPL at $120, so it seems you feel a drop may be coming too. The P/E is still high and earnings projections need to be lowered. Do you agree? Thanks.
A. I think AAPL needs to whoosh down at least one more time into the $120s to get its P/E low enough to be interesting on the long side, but most likely I think AAPL will tread along here and plod slowly lower in coming months.
Q. Cody, good afternoon. It seems like oil breaking down here and maybe a repeat of 2008. Fed seems to want to take this thing down, lots of peeps calling for 3000 S&P. What say you?
A. 3300 might be a more reasonable downside target, but who knows. Be careful and focus on slowly buying some great names.
Q. Oil falling, who benefits?
A. Everybody but oil companies, really.
Q. What are your thoughts on TSLA and why you bought the calls?
A. Elon is certainly the most hated person on the planet right now. Everybody is sick of his Twitter saga. At this point, it’s almost like they’re treating TSLA as if its TWTR. He’s going to get a permanent CEO installed into Twitter soon and that will likely help alleviate some of the hatred (it’s more than overhang. It’s hatred right now.) I’ll buy hatred of a great company. Not sure I’ll be right though.
Q. General Motors said something surprising at its investor day in New York City on Thursday. Fixing Teslas is a growing business for the 114 year-old auto maker. That’s right, GM (ticker: GM) dealers are fixing Teslas. Since 2021, GM dealers have fixed more than 11,000 electric vehicles from Tesla (TSLA), according to GM President Mark Reuss. “That’s a growing business for us,” Reuss told the assembled analysts and investors, “I gotta say it’s a new business.”
A. Yea, apparently both Ford and GM dealers are being paid by Tesla to help with service. PS. I bought some GM puts in the hedge fund today, dated out a couple weeks or more, slightly out of the money.
Q. I have a small position of ROK and wanted to add more but it is not coming down to your suggested price level of $210. Do you consider it to be way overpriced at this level ($265)?
A. I always suggest that you consider buying a small tranche of any name you want to own more of and then wait a week or four and buy a little more. I do think ROK will probably see some lower prices, but it’s pretty darn cheap still on 5 years out numbers.
Q. Hi Cody. Is it possible/likely that the issue of space debris will be fixed by government regulation, making SKTLs mission statement unnecessary? How do you think that might affect SKTLs prospects as a cryptocurrency? “The big challenge right now is environmental. Low-Earth orbit is just a massive dandruff of orbital debris,” says Gerry Oberst, a senior counsel at law firm Hogan Lovells who deals with telecom regulations. A cascading series of collisions could create a bigger field of junk that “could ruin access to space in the first place,” he adds. Government authorities worldwide are tackling the problem with new regulations. The Federal Communications Commission in September proposed new rules that would limit the lifespan of low-Earth orbit satellites to five years, after which they must drift or move themselves into a controlled burn-up in the atmosphere. Earlier, ad hoc rules set no common limits for the satellites.” (Wall Street Journal)
A. No, I don’t think so. I mean, the whole point of the SKTL crypto is to help pay for the space debris clean up so that governments don’t have to tax people to do it in the same ol in efficient manner that governments do everything.
Q. Cody, you recently wrote that you’d nibbled on BITO (a bitcoin ETF) instead of bitcoin itself. I can only imagine this was because of the current risk of using one of the exchanges. Is there any reason you chose BITO over GBTC? Isn’t GBTC trading at somewhere in the neighborhood of a 50% discount over spot BTC?
A. I’ve never liked GBTC when I’ve looked at it in the past, so I didn’t even consider it. BITO ain’t a perfect solution either.
Q. Cody, what was it about GBTC that made you not like it?
A. I don’t remember any more. Something fundamentally, systemically worried me.
Q. What do you think the future holds for Ethereum?
A. I’m not sure I trust that dude who created it much any more, not that I ever did terribly much any way. I think the gas fees on Etheruem are too high still. And that they’ll drop 90% from here. And that Ethereum token prices will probably see sub $1000 and closer to $500 at some point in the next year or two.
Q. Cody, for ETH to go to 500, wouldn’t that require BTC to get near $10k (since they both mostly move in tandem)? If BTC isn’t falling off a cliff here (with everything going on around it), what would it take for a collapse like that to occur?
A. BTC would probably hit $10k or lower if/when ETH hits $500. Just because bitcoin has hung relatively tough in here so far during this crypto washout doesn’t mean it will the whole time. There’s still 10,000s of crappy/silly/fraudulent tokens out there to washout before this is all over and many of those are what ETH depends upon for their gas fees and valuations.
Q. Cody, just to throw more at the wall. Upsidefoods.com is a private company, post round C funding, is successfully ‘growing meat’. Ideally, vast implications on improving costs and environment. Just interesting and something to watch. Also, vast headwinds to social adoptions (unless it becomes super cheap meat for us penny pinchers).
A. We all know meat consumption is inefficient, but the real thing sure is delicious. 100 years from now, people will rarely eat real meat, I’m sure.
Q. Cody, what’s your take on CRM? It lost 50% since peak its on Oct-21. Do you think it is a good buy at this time?
A. I’ll run it through my WiNR algo’s this weekend and if it’s a good one, I’ll let you know.
Q. INFI got slammed this week. Are you still in it?
A. No. Back in May, I sent out a Trade Alert telling you all I was selling it.
Q. You wanted to let me know about EquityBee for investing in Startups. Do you think they’re legit?
A. One of my investors/readers of Trading With Cody sent this to me when you asked last time: “EquityBee’s business is facilitating loans to employees: offering upside sharing agreements in exchange for you providing loans to employees to exercise their employee stock options.” So I’m not sure if they’re legit and they don’t provide a service I would ever need. Hope this helps.
Q. I found the “Where I’d Buy More” Trade Alert from 10/24/22, it’s very helpful. Is it possible to update it each weekend for any name where your view has significantly changed? Also, wouldn’t those buy points be different if it was a new holding rather than an additional purchase with an average cost? Since I don’t know anyone’s average cost, what is relevant to me is “Would you open a new position at this price?” Thanks.
A. I’ll try to keep doing those Where I’d Buy More lists once a month or so. The reason it’s called that and the reason I send it out is because the whole point of this service is to simply communicate to you/keep a personal track record of my analysis and trade reasons. I can never look into each subscriber’s personal portfolio/risk tolerance/upward mobility/inheritance prospects/family needs/etc without talking to them at length and even then I’d only give broadish guidance tailored for them.
Q. Who wins the National Title in college football?
A. Man, KSU has got the best player in football, in that Duece Vaughan guy. He’s going to be a great NFL star. Georgia’s got the best defense. OSU will beat Michigan. OSU vs Georgia in the finals. Georgia wins 28-24.
All right, folks, that’s a wrap. Piper and I are playing music tonight at Rosie’s Pizza in a small town of 800 people tonight. Should be rocking!
I leave you all with a shot of our donkeys making a mess at our barn as I drove by yesterday after lunch. The little black mini donkey is named…wait for it… Dawn Key Willard.
