Odds Of A US Collapse, Inflation Thoughts, Hedge Fund Crypto Strategies And More
Here’s the transcript from this week’s Live Q&A Chat.
Q. Cody, How likely do you think US could collapse in the next 10 years? Ray Dalio think it will happen in 10 years but his data + logic is suggesting every democratic country should collapse in 10 years. What do you think of this? I think the productivity gain from the coming innovations will keep US alive but in a bifurcation.
A. I normally think there’s about a 5% chance of the US collapsing in the next ten years. Right now, I’d say it’s a 15-20% chance. Still quite unlikely, but uncomfortable to think about.
Q. Do you think inflation has plateaued, and F2F, when will Powell stop hiking rate?
A. I don’t think inflation is going to 10% so, yea, it’s probably “plateaued” but I don’t think it’s going back to 3% or even 4% anytime soon. Inflation could run at 5-6% for a few months or longer I suppose. I have no opinion on when the Powell’s bosses at the big banks tell him they think the world will accept lower rates again.
Q. Cathie Wood mentioned there will be 5 new industries (block chain, AI, Energy storage, gene sequencing and robotics) creating 300 trillion dollars of value by 2030. Feet to fire…what % do you think will go to China vs the Free World Alliance (USA, Europe, Japan if you can break it down).
A. Seems to me that she just makes up the most ridiculous numbers sometimes. The entire global GDP is $84 trillion a year so for that $300 trillion dollars of value (I suppose she’s looking at market cap I guess), it’d mean that those three industries alone will somehow have to equal the entire global GDP from 2022 in just eight years (throw a 4x revenue multiple on $80 trillion to get to her $300 trillion of value I guess). Anyway, I have no idea what to say about how to break down what are probably just silly numbers anyway.
Q. Bill Gates lobbied Congress hard for the IRA. He has made a lot of investments in Green Technology companies. So this Bill bill will no doubt benefit the companies he has already invested in. But he is basically giving away his entire fortune so …is this actually bad??
A. I’m not sure he was lobbying for you to help his companies with your taxdollars. But if you’re right that he did and he did it for profit motive– well, he can give away his fortune without doing that if he wanted to be actually be benevolent.
Q. How are we feeling about the metaverse? Do we still believe in Meta? What is the current rating?
A. I still fully expect a trillion dollar economy in The Metaverse Revolution. Meta’s still the best positioned player to dominate it. I’d rate META the stock a 7/10 right now.
Q. How does INTC look in the PPP model?
A. It’s the PP model, actually LOL. INTC got a bit more expensive in the model courtesy of how bad the prior quarter was but it’s still very cheap at under 9x five year’s out numbers. Fact is though, that nobody knows just what INTC’s numbers will look like in five years, not even their best internal analyst or their CEO. I mean, if they pull off the Onshoring Revolution and become a monopoly in the West (or if they fail to pull it off) and/or if something happens between China and Taiwan in the next five years — everything will be very different than current estimates on those out years. Intel is making a much bigger bet-the-company move than most any other big cap tech name I can think of.
Q. Would you recommend a nibble of RKLB? Not sure why the stock price pulled back but earnings sure looked great.
A. Most speculative small cap tech stocks have pulled back hard from their recent highs and RKLB is included in that. I agree the numbers were great. As usual, my answer to whether or not to buy a name that I personally own and still like is that I’d suggest nibbling a little bit here and more over time if you want to own more of it.
Q. These aren’t names in the portfolio anymore but can you please provide your take on NFLX, JMIA, W and FUBO? Thank you very much!
A. I think NFLX is okay, JMIA and FUBO are probably still in trouble and W might be a good investment some day but they probably have to figure out how to pivot their business model a little bit first.
Q. Cody would you add a little to META here?
A. I still own it and like it, so I’d give my stock answer as noted above — maybe a nibble if you want to own more.
Q. Can we use INTEL’s stock price as an indicator of the likelihood of an invasion on Taiwan?
A. I think you give the market too much credit for connecting all those dots, but maybe?
Q. Hi Cody, How will Intel beat TSMC in R&D? Is it through augmenting its scientist’s intelligence with data and creativity suggestions? I remember seeing IBM WATSON coming up with crazy recipes that nobody had thought of. Is this where Intel’s wafer R&D is going?
A. I just think that a US-based company with US-based engineers (may from all over the world of course) is going to be able to compete against a company that’s based on an island with 23 million people on it right next to a growing military/communist threat. US-based and -built companies almost always beat the rest of the world and I think Intel will figure it out.
Q. Cody, would you add to QCOM here after the news about them moving back into the server market to decrease reliance on mobile chips?
A. No, but I’ll mostly sit tight with the shares I own. Qualcomm’s got a high bar to pull this off and they failed just four years ago the last time they tried to get into server chips. https://www.bloomberg.com/news/articles/2022-08-18/qualcomm-is-plotting-a-return-to-server-market-with-new-chip
Q. Cody what’s your opinion of MTTR’s buy point and what is your opinion and rating of the company.
A. Matterhorn’s operating expense line is 3x their trailing twelve months of revenue. I’m not sure how the company is going to get profitable before it runs out of cash.
Q. what are your notable recent trades on your HF?
A. I’d mentioned that I’ve been building up shorts and adding puts in the hedge fund as the market has rallied and many of those are paying off big today so I’m doing a good bit of short covering and locking in profits on puts today. Not much outright buying of anything right now. I’m looking to add a new name or two as we have lots of room in the portfolio for new names and more buying, but I’m not in a rush today to do add more.
Q. Can you take a look at CPSH. Their products are being tested and or used in electric cars/ wind turbines/ high speed rail/ electric cars and on ships. They suggest that there are many irons in the fire but the entities they deal with take many years to go from testing to purchase contracts, but once they get the contracts they are very long term.
A. I just looked a little bit at the financials they’re not great. The company didn’t grow revenues for the last three years and is finally growing a little bit the last 12 months. But gross margins are just 20% and that’s no bueno. Operating expense is only 20% of revenues, unlike MTTR’s which was 300% of revenues, so there’s that, at least!
Q. Hey Cody, what are your top 5 favs right now? Any you’d rate 8++ ?
A. Nothing above an 8 right now. Top 5 favorites in alphabetical order are probably: INTC, META, RKLB, ROK, TSLA.
Q. Cody another random question. Is Netflix’s earnings from say…England included as US exports or how is it accounted in the US’s GDP? I can’t find a straight answer on that. It would be a big shocker to me on how I view the GDP if companies like Microsoft’s overseas software sale and Netflix’s overseas steaming sales are not accounted.
A. Most of it is accounted for.
Q. Cody it doesn’t look like cryptos can protect itself from a quantum computer cracking its codes. Do you think a future code upgrade can solve this problem for the crypto we are investing(BTC, HNT, Skytl)? Also are you still recommending Helium HNT?
A. Probably. And I don’t really “recommend” anything, ever…I just tell you what I’m doing personally. I still own HNT but I’m worried about it being hit as I still think crypto’s got more downside in general and most cryptos are still headed to $0 (probably not Helium HNT tho).
Q. Hey Cody, at what level might you add a bit more BTC long exposure in the Hedge Fund?
A. I’m more heavily weighted in my bet against ETH (I’m short ETH futures in the hedge fund) than I am long BTC (I’m long a tiny bit of BTC futures in the hedge fund), so I’m likely to either nibble a little BTC futures here or to cover some of my ETH futures short, sooner rather than later with this huge drop in ETH and BTC today.
Q. At what price do you buy Uber?
A. I was nibbling some at the bottom, as noted. Not in a rush anytime soon to add more.
Q. Cody do you know how legit is shadowstatistic.com’s data on inflation, unemployment rate and etc.?
A. No, sorry.
Q. What might be the next “buy under” area for ROK? 240? Lower?
A. I like what you’re thinking.
Q. Do you still own U(nity)? How would you rate the stock at this time?
A. Yes, I’d rate it a 7-/10 right now.
Q. Sheryl Sandberg is a very smart and well-respected woman from all that I’ve read. Does her stepping down as COO of META affect your thinking as to what’s going on there?
A. Nah, not really.
Q. What do you think of this, Cody? “Be one of the first to invest in SpaceX, even before the company goes public! Invest in SpaceX with a tap! Take advantage of this offer with the help of Dizraptor – a simple app for investing in private companies. SpaceX is a long-term investment with a minimum entry threshold of $1,000. The offer is only available to accredited investors. The investment will be processed through Dizraptor app with subsequent registration with the SEC.”
A. See that last line there: “The investment will be processed through Dizraptor app with subsequent registration with the SEC.” I don’t think the SEC usually is okay with after-the-fact registration of a publicly-marketed security via an email list like this apparently came from. I’d love for their to be a viable way for retail investors to put $1000 into SpaceX before it starts spinning off Starlink as a public company, but that’s not the way it’s probably going to work, at least not with the kind of safety margin I’d want.
Q. What’s the point of buying private company stock like SpaceX if they’re never going to go public? Fees associated with buying private company stock like SpaceX has outrageous markups.
A. SpaceX plans to spin out Starlink as a public company in the next year or three and existing shareholders will get some of that equity. I expect it won’t be the last spin off from SpaceX in the next fifteen years. And being an owner of SpaceX is probably a bit like having helped finance the discovery of the new world. Those people didn’t have publicly-traded vehicles to exit their ownership positions for many years or even many generations, but there’s certainly a lot of wealth in those people’s descendants’ bank accounts to this day.
Have a great weekend.
