Near Holes-In-One, TSLA Earnings, Trimming Strategies, And Much More

Here’s the transcript from today’s live Q&A chat. Also, Bryce and I are going to be in NYC next week and I’ll be appearing on Fox Business with Charles Payne on Tuesday sometime around 2:00-3:00pm ET. And don’t forget to follow us on Twitter @TradingWithCody!

Q. We have some good gains and the market seems somewhat happy. All the pundits are bearish. They claim the forward PE is too high, the indices are back to 2021 levels, yet interest rates are at 25-year highs. (Just watch the first 10 minutes of Fast Money, for e.g.) Are we trimming anything? TSLA? MSFT? META? NVDA? RKLB? Or are we long and strong and not worried?

A. We sent out a note yesterday mentioning that we were trimming 5-15% of most of our long positions in the hedge fund. I’m surprised you say that most pundits are bearish because when I turn on CNBC it seems like most commentators are quite bullish and/or complacent. Extreme sentiment can be the biggest catalyst for a market to change directions but it needs to get extreme. I should do our poll — who’s more scared right now, the bulls or the bears? Post your answer in this chat today and/or send us your answer via email when the transcript goes out later today. Thank you.

Q. What does your crystal ball say about Fed? Will it be one next and done?

A. I’ve been saying for the last year or so that I think the Fed will take rates up to 5-6% and keep them about here for a while. With rates currently near 5% or so, I think they’re pretty close to being done with the hikes. I think if/when they cut rates again, it will be because the stock market has tanked and it might tank more when they first start cutting rates.

Q. On Fast Money they have been bearish all year through this big rally – and still can’t believe the market went up. The invited guests that work for the investment firms that are invited talking heads on CNBC are pretty useless – if the market is up they say “we are bullish” – until they don’t.

A. Agree on the last part for sure. I’ll watch Fast Money tonight if I get a chance and see what the vibe is.

Q. What do you think about the correction in the Nasdaq?

A. Would be healthy and normal if the Nasdaq/tech stocks would pause and/or sell off for a while here. But it’s been a market of extremes for the last four and a half years with little “normalcy” to speak of. So who knows.

Q. Cody, seemed like turned more bullish on BTC recently compared to the last year. Can you give some insight into the reason for that? Do you still feel most of the non-BTC coins need to crash?

A. I still think there are LOTS of crappy, silly, fraudulent cryptocurrencies that need to go to zero and that the SEC et al should be much more active in prosecuting violations of securities laws that most all of the non-bitcoin non-SKTL tokens are guilty of. But if/when bitcoin gets hits hard/fades hard when the collapse/crackdown on those crappy, silly, fraudulent cryptos happens, I plan on aggressively building up my own bitcoin and the hedge fund’s bitcoin exposure at that point.

Q. Would you be supportive of a BITO nibble here?

A. If you don’t own any Bitcoin, maybe nibbling a little BITO here isn’t a bad idea. I think Bitcoin is a great long-term value holder/hedge to our dollars but I would rather buy it on the next panic selling move that always happens every few months in crypto LOL.

Q. How does a BITO generate its dividend?

A. BITO does not invest in Bitcoin directly, but instead buys and holds Bitcoin futures contracts. When Bitcoin futures go up, BITO generates taxable income because it must sell the in-the-money futures contract and roll out to the next month, otherwise, it would have to take delivery. When Bitcoin goes down, BITO’s futures contracts expire worthless, and thus the fund won’t have any income at all and will not pay a dividend. As a registered ETF, BITO is required by law to distribute nearly all of its taxable income to unitholders, so it calculates its anticipated year-end taxable income, if any, and pays out a dividend every month accordingly.

Q. Any other crypto that interests you other than BTC?

A. I only own BTC and SKTL but I do think Dogecoin might work out because of Elon’s influence.

Q. In previous Q&A’s, you’ve mentioned that you’re not super excited about the returns for the FAANG stocks. Seems that you’re more bullish on Google though. Can you please expand upon the recent optimism?

A. I still like all the FAANG stocks overall but GOOG’s been an underperformer compared the rest of FAANG ever since Chat GPT rolled out because of the obvious potential threat to its core search business. But the fact that Chat GPT has given me lies and misinformation and just boneheaded wrong answers in many of my queries in the last few weeks makes me think that Google will be fine. Not to mention that Google’s not exactly sitting on its own AI hands as it develops many brilliant AI features, services and products for AI in the coming months and years.

Q. Along the lines of FAANG, one of our old holdings NFLX reported earnings last night. Any interest in re-visiting this name or do streaming stocks still not interest you? What are your general thoughts on NFLX?

A. Great company, doing many brilliant things. As long as Ted’s running that place, it’s probably a great stock to own too.

Q. Can we please get your thoughts on the TSLA earnings from last night?

A. Read the investor presentation and/or listen to the earnings call last night and you’ll be impressed at how the continue to innovate, grow, build, etc. Cybertruck baby!!!!

Q. Where do you see TSLA going in the next quarter(s)? Do you still have your hedges on? Where (when) would you buy more common and/or cover your hedges?

A. TSLA is an outsized position for us even with our hedges on it in the hedge fund. We took some of the short call hedges off on TSLA on today’s whoosh down but still have some hedges on.

Q. After TSLA’s earnings yesterday, when would your next TSLA buy level be?

A. If you don’t own as much TSLA as you want to own, I might consider nibbling on some here today with this 9% sell-off in TSLA. We covered a little bit of our hedges in this name today. I’d probably buy more TSLA outright near $220 or so.

Q. Great job with the recent trade alerts. However, I feel like your write-up is a little misleading since you are only highlighting your lowest-priced tranches. For instance, although RKLB has been amazing as of late, I still have nibbles at over $10 from trade alerts you sent as well. Would you be willing to send out trade alerts as percentages of what is considered to be a full position relative to our own portfolio size? This would be helpful as far as averaging down on your trades. Thank you.

A. I think this is a fair criticism about the write-up we sent out yesterday. As for your request about percentages, it’s hard to do that because each of you has different goals, risk tolerances, etc. We trimmed about 5-15% of most of our longs yesterday.

Q. What a recent run from RKLB! Are folks just starting to catch on to this name? Assuming the recent run is driven by their successful launch this week. I saw an article this week that the “space race” is on. Seems like we’re positioned pretty well then. Any updated thoughts on RKLB?

A. Nothing much has changed but the company did do a great job of executing their recent launch this week and recovering the booster from the ocean for reuse. I still think it’s undervalued at less than a $4 billion market cap but they do need to raise some money in the next year or two so there’s some dilution threat for existing shareholders.

Q. We have other space holdings as well that have had a nice run – BKSY and RDW. Are we looking to build up those positions? I believe when you sent out the trade alert a few months ago they were smaller positions.

A. Yes, we nibbled and bought up slowly but surely some positions in BKSY and RDW earlier this year when they were left for dead. They have both been on fire lately and we trimmed some even though they aren’t big positions. Easy does it. I will likely buy some more of them back if they get hit in the coming weeks or something.

Q. Your thoughts on ANET? Someone has to help carry the water on AI.

A. Good company and we’ll take a fresh look at it as an AI play and if we find it interesting, we’ll send out our analysis.

Q. Interested to hear your thoughts on VZ. Would you rather have cash sitting with a 4% yield or go after a little VZ here with 8% dividend Thoughts?

A. I can think of worse ideas than buying Verizon with an 8% dividend yield, but I’m not sure the stock is going to double or anything anytime soon.

Q. What’s your best shorts right now?

A. Hmm, please be careful shorting stocks and consider using some puts (which require a lot of diligence and focus and work to keep on top of), but here are some of my favorite names to be short and/or own puts on right now in alphabetical order: AI, APLD, AVGO, BE, CLSK, GDRX, RUN, SPWR, SMH, WCLD.

Q. Thank you for the sell 5-10% trade alert on Tuesday night. Your timing is immaculate. Selling is one of the most difficult things to do, and getting a push from you is what we all need.

A. So many people don’t ever sell until they have to. No easy answers though. Also, as for the immaculate, I learned that word when Madonna released her Immaculate album when I was a sophomore in high school. I might listen to that album next time I play the golf simulator in my office.

Q. I think I have lost track of exactly which stocks we still own. And when he says he is selling something in the HF, how about his personal account too? Can you post a full list of all stocks currently owned by this service? It would be great to have a page with that info that is kept up to date and includes dates and prices of each tranche and each trade alert transaction. Seems like it should be easy for you all to update whenever anything is traded. Right? That would be very helpful indeed.

A. As part of the site redesign we are doing right now, we will include a section that shows the names and tickers of each of the current longs in our personal account and hedge fund (they are both very similar anyway). Thank you.

Q. So I’m having a hard time keeping up with all the position changes and top 5 Etc. I was wondering if you could make a chart of “where I’d buy more” positions with cost basis, etc, like you used to, please? Thanks.

A. Yes, I’m headed to NYC next week though and we have lots of earnings reports with which to update our analysis so let’s plan on doing that the first week of August. Our Top 5 Largest Holdings in the hedge fund right now are, in alphabetical order: INTC, RKLB, ROK, TSLA, and UBER.

Q. And finally, thank you to you, Bryce and the TWC team! The service (and performance) here has been fantastic!

A. Thank you for the kind words. I’m proud of the work I’ve done here at TradingWithCody.com for the last 12 years and of the work that Bryce has been doing with us for the last six months.

I leave you all with a shot of where my first hit landed on a 140 yard par 3 at Ruidoso’s worst golf course (there’s like 6 or 7 golf courses in this town of 8000 people!) last week. Gonna get a hole-in-one someday, I hope!