San Fran Takeaways and Bubbly Bitcoin Euphoria offers bad risk/reward

Here’s Part 1: The Intro to this week’s transcript of our Trading With Cody Live Conference Call.

Part 2 and Part 3 will drop tomorrow morning.

Welcome to another edition of The Cody Show. No, wait, here’s a better one. Cody does his best Kosmo Kramer voice: “Welcome to CodyPhone. Please enter the number for the stock you would like to have more information about. I did not recognize that. Why don’t you just please tell me what stock you would like to know more about.”

Anybody out there catching my Seinfeld references here?

Well, let’s jump in. Oh boy, I guess I should just start with San Francisco and just talk a little bit about that trip. As I mentioned in the note this morning, I was running from one meeting to another while I was in San Francisco. In fact, in 72 hours and I six to eight people everyday. And I gave a talk and networked around at the Money Show.

Looking at all the meetings and with the technology startups that I had, I’ll break it down by sector, and I’ll start with the technology startups. The vibe there was hunger, confidence, and one of needing either more money but confident that they have access to money — or that they’d just having raised money. I think most of the startups out there, if they’ve got any momentum at all, they’re actively trying to raise money, or like I said actually already have.

The venture capital world is not throwing money around like it’s going out of fashion, but the talk from VC’s is also quite confident. I met with three or four venture capitalists while I was out there, and their attitude is a reflective of the startups. It’s confident. It’s not bearish. It’s not overly confident. There’s not a lot of cockiness among the VC’s. All of the VC’s that I’ve met have been quite to the contrary; very gracious.

And I also met with Dave Callaway and George Gilder and people at The Money Show. George of course, is a legend technology visionionary and one of my idols. George and I talked about Bitcoin — he’s very bullish on Bitcoin and has been like I have for many years. He is a big believer in blockchain. He’s got a book coming out next year called “Life after Google.” Life after Google, as he stated to me, is primarily about blockchain and its place in the future of many things, and underlying all of that is obviously technology.

I told him about how there is now a direct competition in developing countries between Gold and Bitcoin. If you’ve been to many developing countries, you know that especially in war-torn hardship areas from Iraq to Afghanistan to Mexico, people spend their lives trying to convert their currency into gold or dollars. And these days, they are also trying to convert it into Bitcoin. Which is a new development. I don’t think that was true two years ago.

Regardless, I believe we are seeing what I think is a Bitcoin bubble developing right now that I think will have to crack at some time. Again, I think longer-term, I expect there’s a tremendous amount of value in Bitcoin and in the blockchain technology that Bitcoin runs on. The point being, George Gilder says that he thought Bitcoin could go to $11,000. I told him, “Great but that’s just barely little more than a double from the $4500 level that it’s already at.”

When we were buying Bitcoins and I was accepting Bitcoins actively at Trading With Cody as payment, Bitcoin was a $100 or $200, maybe $300. And from $300 to $11,000, which Gilder again was predicting that Bitcoin could eventually get to, well that’s nice and huge upside. Whereas a move from $4,500 to $11,000 — as I said to the people who watched my talk, I just don’t think that’s a good risk/reward ratio on Bitcoin at this particular level. It’s not compelling to buy more Bitcoins right now as an investment. I wouldn’t necessarily sell all of mine, and I haven’t sold all of mine, but I would sell some; and I did. Unfortunately, I sold a bunch of mine at $2800 and $3000 or something like that but not at $4500.

But the point being, I might sell a little more here now that we are at $4500 and I would definitely sell a little more if it goes to $11,000. I’ll throw it out there, that it’s possible Bitcoin could be a $50,000 value — that would make its market cap equivalent to 5% of the United States’ total economy. Total market cap on Bitcoin right now is just over $100 billion or so. But Bitcoin could have a trillion dollar market cap if it is in fact becoming a de facto standard alternative currency in developing countries along with gold and dollars.

We have to separate near term long term in our vision and again there are ways to invest in Bitcoin. Probably the best way is investing in blockchain technology and the things that make blockchain technology run and the Bitcoin mining technology and blockchains, rather than investing in Bitcoin at $4500 each in August 2017, would be Nvidia. Amazon has a lot of stuff going on with blockchain underneath their AI; their artificial intelligence and what not. Apple too; Google. All of these usual suspects are probably the best ways to be in front of this chain. They will acquire the companies that drive the voice revolution.

But it’s still very early. There’s not a lot of publicly traded pure plays on blockchain and/or Bitcoin. Finally, going back to the San Francisco trip, the vibe at the money show was, as I feared, a lot of bubbly euphoria, high-fiving amongst the people who have been trading Bitcoin and blockchain currencies for the last few months. It quite frankly reminded me of wo years ago when I spoke at the San Francisco money show and the biotech stocks were all through the roof. The IBB Was at like 450 or 500, I don’t even remember. I mean it was through the roof and everybody at the conference was giddy and high-fiving about biotech. The traders were all looking at the charts of the IBB and all of the biotech stock and talking about how bullish they looked. I of course ruffled a bunch of feathers by getting up there and saying, “Hey, don’t buy biotech right now. This is as good as it gets.”

That’s a little bit of what it felt like on Bitcoin. Longer term again. I like blockchain and Bitcoin both as alternative currencies. I like the concept. I always have. But I don’t think now is the time to buy Bitcoin. We’ll have lots of opportunity and lots of pitches to invest in blockchain and Bitcoin coming in the next 2 to 3 to five years. Stick with Trading With Cody if you want to know the best ways to do it as they become public; as the opportunities arise.”

Cody: “Alright folks, if you have questions then jump in. I’m happy to talk markets, stocks, politics, geopolitics, war, crime, punishment, big brother.”