Risks of downturn, Bitcoin knockoffs, Gold spike and more
Here’s the transcript from this week’s Live Q&A Chat.
Q. Cody, I know you have said that the market is a better sell when rates are going down than a buy. But the market rallied in 1998 and 1995 when the Fed cut, and December 1999 when it eased financial conditions. My take on the rationale is that if the Fed is cutting on a real economic crisis (read 2001, 2000 than it is a good sell, but when it is cutting on an exogenous fear that the market will freak out over something it shouldn’t be freaking out about (1995 the excessive losses of 1994 rate increases, the asian crises and the LTCM crisis in 98 and Y2K in 1999), it’s a better buy…would you say that now seems more like the former (a freakout over the effects of the trade policy) than the anticipation of serious economic problems associated with the NASDAQ bubble burst (2001) and the real estate crisis of ’08?
A. I like your analysis in your question and agree with most of it. I’m worried that The Great Trade War could be creating and/or exacerbating an actual economic downturn (or even a crisis perhaps) that would take stock markets down too. I’m not ready to call an end to the Bubble-Blowing Bull Market that we’ve been riding for the last nine years, but neither am I ready to declare the next Fed rate cut the “all-clear” sign for another leg higher. Sometimes it’s best to be defensive and raise cash when the playbook gets a bit muddled. That’s basically how I feel about the set up right now.
Q. Cody – Gold on a crazy upwards spiral…..what are you thoughts on gold second half of year?
A. As I mentioned in the Latest Positions round up I sent out last night, I think gold is due for a rest here. I don’t know that I’d expect much more than another 5% or so potential upside over the next six months, but who knows.
Q. Cody, You don’t have much emphasis on chip companies in the portfolio save for TSM and reduced position on NVDA. What’s wrong with AMD? Yes, they have had a good run, but they are prepared to continue taking market share from INTC. Also, what about SWKS as a potential beneficiary of positive China talks? Thanks!
A. You’re forgetting about QCOM. I don’t really want to add any more names to the list without removing names, as I have enough positions. As for AMD, I don’t know if the market share it’s taking from INTC will be enough to offset the secular move away from generic chips to self-designed chips (TSM is the biggest beneficiary of this move). SWKS is okay, but I’d rather own QCOM.
Q. Good morning, Cody. I follow your Tesla position as well as the 3 you bought. Recently I have been trading the stock options and was interested in the car. A couple of weeks ago I was in a bad accident and my Prius was totalled. June 8th, I walked into a pop up Tesla sales event in Palm Springs and ordered a new 3, all necessary online info and transfer of money required to take delivery was done forthwith. My delivery date was June 25. I am enchanted by little gray vehicles on the screen showing me my road companions. No longer adjusting lights, strategizing service stations, oil changes. This car will always feel like a gift.
A. Did you use my referral code so you get some free Supercharger miles? Also, did you get your car today?
Subscriber followup: Thanks for your answer, Cody. Did not know about your referral code, but used another for supercharger miles. Sorry. Was not planning to buy Tesla until my car was unexpectedly totaled. Took delivery yesterday. Car makes the garage look outdated.
A. As long as you got the free miles, that’s all I was checking on. On a scale of 1 to 10, how do you feel about your Model 3 so far? Just wait a month, and you’ll love it even more by the way. I hope you’re ok from the wreck by the way.
Subscriber followup: 10 on the scale for my 3 so far. Am very lucky and ok with black and blue face for last month/thank for asking. Hit at full speed from the rear. Car spun and lifted on one side then down. Grabbed my purse and ran out of only door that opened. Owe Toyota a love letter.
Q. How does the supercharger referral work? Cody was right. Took the S for a ride Sunday so ended up buying one. Felt like I was in a rocket ship and the kids LOVED it. I am open to giving referral codes or receiving one.
A. Use this link https://ts.la/cody39884 when you go to buy your Tesla online or tell the salesperson on the phone about it (at the beginning of your purchase!). I know about 5 people who have bought at Tesla after reading/hearing me write/talk about my Model 3 but who didn’t remember to give them a referral code to get the free Supercharge miles.
Q. I noticed that you did not have WFC listed in your latest positions post. Are you out of the name? Also, I don’t remember a trade alert for CVNA. Did I miss that post? Thank you.
A. Not putting WFC in the Latest Positions was an oversight. I still like the stock and the dividend it gives here. The short hedges like CVNA are small positions and I just recently started shorting CVNA and I should have just put in there that you could consider its mention in the Latest Positions as a Trade Alert.
Q. Why sell TST and not to wait and get higher deal price? Do you expect to get higher return on the money ? Thank you!
A. I don’t expect there to be a higher deal price. TheStreet already agreed to this deal and I doubt there are any other buyers out there.
Q. Should we take some profits in SEDG after recent run?
A. I don’t have a very big position in SEDG unfortunately and am holding what I’ve got steady. But yes, I do think it’s a good idea to trim 10-20% of it, if you’ve got a decent-sized position.
Q. I can’t make the Q&A because I am in PST but what do you think about CYH? I feel like it is still a hospital company and can’t go much lower. I feel like it has a high likelihood it could hit $5 in the next year. This is just my thoughts. I am curious your thoughts.
A. I don’t know the company as it’s outside of my wheelhouse, but at a glance, it’s got $13 billion in debt and very little cash and looks like it’s in trouble, as the stock chart going from $43 to $2.50 in the last 3 years confirms. I’d probably stay away.
Q. What’s your latest take on Stellar? This one seems to be stuck in the mud while many other cryptos in the top 10-20 (market cap) have been bouncing back nicely.
A. I still see projects being built on Stellar, so I think it still looks ok. That said, I can’t say that I’ve been staying up with Stellar news lately, so I’ll do some reading.
Q. Hi, Cody: Bitcoin went up a lot recently, do you think it’s still a buy ? Thanks a lot. Just guess.
A. I think it’s still a long-term buy, but short-term it could be ripe for a pullback. I trimmed some of my bitcoin futures as noted in the Latest Positions update I sent out last night.
Q. Cody – do you think GBTC a good proxy to buy Bitcoin instead of futures or coins?
A. I don’t know much about the GBTC but here’s a link to their site and it looks ok at a glance. https://grayscale.co/bitcoin-trust/
Q. The consensus is that Bitcoin is the standard in crypto going forward. With that being said, do you believe there’s any reason to add some small hedges in alternative $hitcoins like Bitcoin Cash or Bitcoin SV (in the event something unforeseen happens with $BTC)?
A. If Bitcoin dies, I don’t expect the Bitcoin knockoffs to fare any better.
