Potentially Rising Interest Rates, Cybertruck Sightings, BTC v ETH, And Much More
Here’s the transcript from this week’s Live Q&A Chat:
Q. What is it going to take for the Fed to raise rates again?
A. I like this question as it Flips It on the Fed’s head. Nobody is thinking that the Fed might have to actually raise rates further and not just leave them here and/or start cutting rates. And frankly, it’s not terribly unlikely that the Fed ends up having to raise rates a little bit more before it starts cutting as inflation has indeed been slowly creeping back up lately. If inflation readings were to get back over 4% annualized for a quarter or two and/or even spike to 5% annualized at some point in the next few months, the Fed might indeed raise rates a bit. I think that’s unlikely, but not terribly unlikely, if you know what I mean.
Q. Worth putting on any market hedges here, post-Fed?
A. Yes, probably. I’m finally getting closer to bearish instead of just cautious. The greed and lack of fear in the crypto and the small cap stock markets right now are getting extreme and there’s a lot of complacency in the overall stock market too I think. The broader economy and many stocks are likely going to be fine here but I am worried that there’s a crypto wash out and maybe a small cap correction coming. Even some of the questions in today’s chat have me a bit concerned as there’s a lack of fear and quite of bit of euphoria out there.
Q. I liked your AI stack. So many names, I think you should create an AI stack ETF!
A. Ha, that’s not a bad idea. The fact is though that many of the names in the AI stack that we sent out are on the wrong side of the innovation and many of new AI companies are yet to come public. We created that stack and put the names that go into it there so that we can sort through them and find the biggest potential winners. Having all AI stack-related names in one visual is important to get our heads around this accelerating Revolution. By the way, here is a link to the graphical version of The AI Tech Stack with most of the names included.
Q. Hope all is well with you and the family. Do you ever recommend or use LEAP (Long-term Equity Anticipation Securities) options? For example with Tesla (TSLA).
A. Not often do I recommend leaps. But I can think of worse ideas than buying a tiny bit of Tesla 2025 or 2026 calls with strikes around $260 to $300. The premiums on them are a bit cheap right now. By the way, LEAPS are simply options with expirations that are longer than one year. More info here.
Q. I was a bit star-struck yesterday. On the way out to an anniversary dinner with my wife and as we passed by my son’s elementary school on the way out of the neighborhood, my wife points to something and what the heck… a Cybertruck rolls by!! Whhhaat? Now I have to find out who the heck in the neighborhood owns it and maybe how they already got it! Crazy.
A. The Cybertruck is a beautiful vehicle and it’s not as big in person as it looks in the videos and pictures you see. I still think it is going to be a huge hit for Tesla (TSLA) over the next ten years.
Q. Wondering when Rocket Lab (RKLB) will test fire new rocket? You said the other day you would buy more below $4. Are you a buyer today?
A. We bought a little more RKLB at $3.99 and have bids to buy more if it sells off further. But we are not in a rush and it’s not a big position right now. They’re supposed to test fire Neutron by the end of the year, but we’ll see. Hopefully in 2025, we’ll all be doing The Neutron Dance.
Q. Any thoughts on TransMedics (so far) one-way street? Are we adding 10 points down or sitting chilly?
A. Yes, I think it goes without saying but I suppose we should always say it anyway — when we start buying a stock, we typically prefer that it goes down at first so we can scale into more at lower prices slowly but surely. And yes, we’ve been nibbling on TMDX in the low $70s.
Q. Could you check your strike price for Rockwell Automation (ROK) calls, please? It’s well below the current price. Do you mean $280?
A. We bought slightly in-the-money calls, not out-of-the-money calls. The stock got hit nearly 5% intraday when the company was speaking at a conference somewhere so we snuck in and bought a few calls at that moment and put in an order lower for a few more. Easy does it.
Q. Any revised view on Advanced Micro Devices (AMD)?
A. Not really. Watching that Nvidia GTC conference this week and seeing Nvidia’s continued accelerating innovations makes me think AMD is falling further behind. The market wants an Nvidia competitor and AMD is the most obvious potential competitor but there’s been no real traction for AMD’s AI chips so far.
Q. What’s your opinion of Super Micro Computer (SMCI) for the next 5 years?
A. I think that Dell (DELL) and Hewlett Packard Enterprises (HPE) and others are going to bring plenty of competition to SMCI and that SMCI will have trouble maintaining their growth and margins in coming months and years. The stock should probably trade at at 12-20 P/E. That would put the current fair value for the stock at $360 to $600 or so.
Q. Thoughts on the MongoDB (MDB)? And…worth putting on any market hedges here post-Fed?
A. MDB had a bad quarter and terrible guidance in an environment that should be perfect for their business as The AI Revolution is driving IT spending on data and cloud. Oracle (ORCL) sure has benefitted and it might actually be the better growth stock than MDB here.
Q. Would love an updated view on Roku (ROKU) and MP Materials (MP), both old TWC portfolio companies that have been beaten down. Both seemingly are executing on their long-term plans, but have been hammered by macro market dynamics (i.e. ad budgets haven’t bounced back and metal prices have been depressed).
A. Roku is a fine company but it’s hard to argue that it’s Revolutionary when The AI Revolution is disrupting every industry on the planet, The Robotics Revolution is accelerating so fast that we’ll soon have droids running around our houses, The Blockchain Revolution is changing finance and so on. MP’s probably not a bad buy here either but I would rather own Tesla (TSLA) or Taiwan Semiconductor (TSM) than this mining company.
Q. Can you analyze NetApp (NTAP) please?
A. I’ve known NTAP for 25 years. It’s a good company but it’s sort of an old school data networking company. If the stock can rally another 50%, it will finally be at the same level it was at back in the year 2000. The company shrank last year and is supposed to grow a tiny bit this year and it’s not cheap enough for me to think it’s even a good value here. Sorry.
Q. Feet to fire, what do you think Bitcoin does up to the halving?
A. At this point, I expect to see bitcoin bounce around $55k to $65k into the halving event in a few weeks and then probably selling off to below $50k after the halving event and then resuming its upward climb towards $100,000 which it could hit in 2025.
Q. Your $100k bitcoin target for this cycle is one of the lower targets out there. Is it just being conservative or do you see reasons for why it won’t go to $150k-175k+?
A. With no underlying earnings stream or assets, any target for bitcoin is wholly dependent upon other factors including crypto people’s greed and fear, what the Fed is doing, what other central banks are doing, what wars are going on, etc. And the fact that my expectation (not a target — I don’t do price targets) that bitcoin could go up 60% or more in the next 12-20 months somehow seems “conservative” is a reflection of the unbridled and unfounded greed that runs rampant in the crypto industry and amongst crypto investors right now. I’d be very careful in the crypto world right now. I am outright bearish on just about every crypto not named bitcoin. If I had said eleven years ago when I was pounding the table and teaching all of you how to buy bitcoin at $100 each that I thought bitcoin could go up 1000x from that levels in eleven years, I don’t think anybody would have called that “conservative”. Just sayin’.
Q. What was the reason you prefer bitcoin over ethereum? I remember a few years ago you were long on both of them but it seems like you only like bitcoin now. Will you buy ether (ETH) ETFs when they are approved by the SEC?
A. A few of the reasons I like bitcoin better than ethereum: 1) No founder tokens in bitcoin. 2) Don’t know who created bitcoin so there’s nobody for the regulators to go after. 3) Nobody runs bitcoin but Vitalik Buterin runs ethereum and I don’t trust him at all. 4) Bitcoin’s got much more critical mass as an actual currency. I’ll consider buying some ETH ETFs if/when they are approved but I don’t think I will end up buying them.
Q. You said you’re bearish on all tokens except bitcoin. So you are bearish on your former recommendations of Ripple (XRP) and Helium (HNT) cryptocurrencies too? They are scams?
A. Just to clarify, I wrote earlier that “I am outright bearish on just about every crypto not named bitcoin”. I’m not bearish on EVERY SINGLE crypto out there not named bitcoin, just almost all of them. I still like HNT but I am certainly worried that it’s caught up in a crypto bubble right now and could also fall near-term. I don’t like XRP as much but I haven’t worked on it in a while. Bryce and I are actually digging through the crypto industry and random cryptos right now.
Q. God bless your daughter. Ty for everything you do. You are a great man.
A. Thank you for the kind words! Very kind of you. That kid and her older sister are amazing!
I leave you all with a picture of me doing Amaris’s favorite game right now — WWE (Willard Wrestling Entertainment). She can’t stop laughing when I tell her I’m going to body slam her and I pretend to jump into the air and then I lightly lay down on top of her but I am still yelling out like Hulk Hogan. When I pin her down and count to three she laughs about as hard as she can. I’m undefeated against her in one-on-one WWE match ups so far and I am sure to tell her about it too.
