Space Revolutions, Hedging The New Year, Dream Stocks, Etc

Here’s the transcript from this week’s Live Q&A Chat. Merry Xmas, happy holidays, etc etc! Thanks for being a part of Trading With Cody this year. Let’s rock.

Q. $AJRD. speaking of space revolution, and missed opportunity. Is this the “space revolution” decade? A. Yea, we had this one nailed. But this is an old school rocket supplier to the old school rocket/space companies like Boeing and Lockheed. The fact that SpaceX and Revolution Space and Virgin Galactic and other companies are kicking Boeing and Lockheed’s butts is the main reason I’d given up on AJRD and looking at the almost meaningless premium at which it is getting bought out by Lockheed and at the price at which the stock was trading just last year, I might be onto something. I think we do want to be in The Space Revolution for the next decade, but just in the same way that owning Skype or Yahoo did nothing for people who right understood that the Internet Revolution was going to create trillion dollar companies, we have to focus on the next gen Revolutionary companies, not the old school goverment-largesse-dependent companies like Boeing and Lockheed.Q. Thoughts on QS? A. OMG? I guess that’s my first answer. This is a company that has a promise of a technology that might one day be able to mass produce a battery that might be more efficient than Tesla’s batteries. And in this environment, because the company was able to get JB Straubel (the former head engineer and total badass motor and battery designer and co-founder of a little company called, why, Tesla) on the board — well come on, this is like the dream stock for this market of greed and hype. I think $40 billion for a company of promise with a board like that sounds quite….well, horrible! I mean, think about all the crap that has to go right for this company to make itself worth billions of dollars based on cash flows. $40 billion. That’s like what GM and F are worth. $40 billion for a promise and a board. Like I said a few weeks ago, Theranos and Elizabeth Holmes would be, maybe trillionaires in this market?

Q. Cody, Sandy Munro said Solid State Battery could be a reality in two years. What is your opinion on QS and how it would affect TSLA if QS could ramp up production? A. Can’t say I’m terribly surprised that my subscribers are asking me about a company that has ties to Tesla’s badass cofounder (the other actual founders of Tesla were not ready for prime time (we still don’t consider Elon one of the dudes in the room when the company was founded, do we? I digress…). But valuations matter. $40 billion for a company that’s just promised stuff? No! Not for me. Also, I have to admit that I have no idea who Sandy Munro is. Look guys, one other thing about QS while I’m at it. Why are a bunch of guys from telecom equipment suppliers that trade at 10x earnings with low margin commodity businesses (ie, Infinera and Ciena) starting a battery company again? Anyway, have I been clear that I don’t want to invest in QS at this valuation? Frankly, I wouldn’t short it either. But I’d think a $3-5 billion valuation on this company would be stretching it, even though I think it’s a good idea and could end up being a valuable company. Like maybe worth $40 billion some day.Q. Cody, do you like the NPA deal for satellite internet company AST? 5G internet from space? Since we can’t get into SpaceX Starlink is it a good alternative? A. There is NO alternative to SpaceX. I mean, that’s like saying there’s an alternative to Google or to Apple. SpaceX dominates, it’s already established that it can do the impossible. The others are all dreams, including NPA. That said, it doesn’t have to be an outright “alternative” to SpaceX to be a great idea for The Space Revolution.Q. There is just a ton of speculation going on. The naz being down is the cover. I have 12 stocks up over 5% today. with a few over 10%…its wild and frankly, I am not sure we are that close to a top. I guess if it goes like this for a couple of days we could have some set up for a hard hit, after Xmas. but the relative tameness of the indices provides the perfect environment for continued speculation. A. Frankly, it’s exhausting and insane, this endless rally in crappy stocks, many of which are frauds and will be headed to $0 in coming months and years. Please be careful with speculating in this market. Yes, it’s great to make money now in this rush to greed, but let’s remember how painful it is to lose big money in the stock market and how often all of you tell me that you wish you’d have sold/gotten defensive/trimmed/something back before the market crashed in 2008 or in 2000. This current speculative frenzy WILL NOT END WELL and some day lots of people will tell me how they wish they had some/gotten defensive/trimmed/something back before it all went south in the year 202(X?).Q. One reason that CRSP has been going parabolic is that it is on the top 100 ideas on Robinhood. AND What is the link for top 100 on Robinhood AND https://robinhood.com/collections/100-most-popular AND They should turn that into an index fund. A. Does anybody else remember Jim Cramer’s old Red Hot stocks? I’ve been thinking of it lately when I look at the vertical stock charts of so many Red Hot stocks in this Bubble-Blowing Bull Market Blow-Off Top phase we are living in right now. Eventually, most of the companies in the Red Hot stocks that he and Todd Harrison worked together on went to $0. Really. And every single one of them were down 70% or so from their highs (even AMZN!). So, look, a lot of the Robin Hood 100 stocks will be fine, most will be. Many will drop 70-90% at some point. A handful of them will turn out to be frauds and will go to $0. Be careful out there.Q. Anybody hedging before the new years? AND Hedging- nope! Hoping for that Santa Claus Rally! AND Q. Every hedge I have made since March 2020 has gone to zero. I would much rather raise cash/trim big gains than hedge in an up market. If the market crashes, then I can (1) buy puts like in February/March 2020 or (2) have cash to buy stocks much lower. Hedges have been too risky for me and they have eaten up my capital. Hedge. No. Buy puts in a big downdraft. Yes. A. This is easier said than done. As I mentioned yesterday, “Shortselling has been painful and hedging hasn’t been helpful for the last few months. That will change.” I agree with you and would say that most people should not mess with put hedges and should just stick with trimming/getting defensive with cash. One of these days, the markets will drop hard and it won’t be easy to just start buying puts at that point. So, no easy answers. Investing/hedging/building wealth long-term is hard.Q. AAPL, it’s that time of year where we hear about their battery and EV plans. Anything there, or sell the rumour? Cody, worth a mention that your friend Gene Munster is a big AAPL bull and recently mentioned cars. A. For the last seven years, whenever somebody has asked about when Apple is going to launch their car business, my answer has been something like, “Apple would rather supply the car industry [than be in the car business itself]” http://tradingwithcody.com/2014/12/04/trade-alert-trimming-a-big-winner-and-try-to-imagine-a-very-different-apple/ Nowadays, I do think Apple is still working on driverless and other smart car technologies, but I am not thinking Apple wants to actually build an Apple-branded car anytime soon.Q. Happy Holidays for you, your family and TWC community! Thank you for all you do. Besides great stock picks I personally always liked and valued educational component of the subscription. For the Q&A: How much should we worry about possible JD delisting? A. I am no worried about the Republicans and Democrats somehow doing something to harm a company that trades for hundreds of billions of dollars in the US stock markets and collectively which spend millions making sure that the Republicans and Democrats do what the companies like JD and its ilk all want them to do. Trump was faking the China Trade Battle.Q. Cody, have you seen a decent attempt to value DELL on a sum of parts software spinoff valuation? A. Not really, but I did one and it was like, DELL’s software spinoff co could trade at 15-20x next year’s revenue estimates which might make the spinoff worth as much as DELL’s entire Enterprise Value ($100B is right now).Q. Cody, thoughts on VXX, the S&P 500 ETN, as a hedge, or simple volatility bet? A. Nah, I have a hard enough time trying to game stock markets and individual stocks that I think trying to game what the trends of the premiums that traders are paying on call and put options is probably either above or below my paygrade.Q. Any opinion about some plays on the crypto revolution like MSTR, SI, RIOT, or nah ? A. I’ll go with nah. Or I might even go with “run for the hills”.Q. Hi Cody and TWC famaily. Merry Christmas! I am still holding my WORK. I see its consistently trading 3-4% below the final CRM purchase price. Should I hold onto it until the eventual sales? Any risks? A. There are always risks. If you want to own CRM when the deal gets done, I’d say maybe hold on. But I’m out of WORK and have moved on, so I can’t tell you much more than what I do, which is what Trading With Cody is actually all about.Q. With the Disney recent investor day, do you have new thoughts about DIS? A. The calculus on Disney remains the same: Can the future of streaming and licensing the greatest children characters in the world be enough to overcome the hotels and other low margin businesses and the related debt that goes with them? The answer is still probably yes, and I probably should still own some DIS.Q. I don’t understand why you’re walking away from Disney. They own all the content on Disney+ and it seems to me that they are about to make a billion a month just on that service. Do the numbers just not work out? A. See prior answer.Q. Does that mean you don’t like AST or you do? A. Yes.Q. Q. Does that mean you don’t like AST or you do? A. Was just kidding with the “Yes” answer. I’m doing HOMEWORK!Q. Cody – Great year (agian), good job! Any thoughts on revisiting BlackBerry as a cybersecurity play / beneficiary? They recently launched BlackBerry Cyber Suite, an artificial intelligence (AI) powered solution that includes continuous authentication and mobile threat defense capabilities. Also, shoring up its prospects in the federal marketplace, BlackBerry during the November quarter earned its National Security Agency (NSA) Commercial Solutions for Classified Program approval. (continued)In addition, BlackBerry during the quarter partnered with Zoom Video Communications to provide a BlackBerry secure version of Zoom with increased protection from corporate data leakage and cyber threats as well as other solutions with Verizon, Microsoft and ServiceNow. Wishing you and the family a Merry Christmas and healthy and happy 2021! A. The fact that Zoom partnered with Blackberry for a secure version of Zoom is interesting. I’ll take a look, but it’s a high bar for me to get over Blackberry’s seemingly endless irrelevance.Q. Cody G0D Bless you and your family sir what a wonderful service you have here . I only wish I had found you 10 years ago but so grateful. A. Thank you and you too. How long have you been a subscriber, btw?All rightie folks. That’s a wrap!