Stagflation, Wall Of Anecdote, Trade Alert, Da Bears And More

Here’s the transcript from this week’s Live Q&A Chat.

Q. Cody, what do you think of states continuing unemployment benefits? There are many businesses in Florida that have ‘We Are Hiring’ signs out but cannot get enough workers. Are there any companies we should short due to the labor shortage?

A. I think businesses, especially giant global corporations that make tens of billions of dollars per year in profits, are going to have to pay people a living wage with health care at some point with or without the short-term effects of the extra unemployment benefits that sure seemed to help a lot of people (and the stock markets). All government spending is a target for further lobbying and corruption AND I’ll add unintended consequences to the list. This applies to unemployment benefits. I’d rather send people who might need help getting food and warmth and shoes and dental care for their children money than sending billions to Intel’s shareholders, that’s for sure!

Q. Why shouldn’t the gov support key industries that are important for our global competitiveness?

A. Again , all government spending is a target for further lobbying and corruption. Intel has plenty of money, access to money and incentive from the free market to invest tens of billions of its shareholders’ capital in trying to catch up with TSM. I can’t fathom that people think we should send billions of dollars in welfare to companies who make billions of dollars every year already.

Q. With inflation rising and wages down, is this stagflation? How do feel about the dollar longer term and what should we do?

A. The economy is not quite stagnating, so for most people it’s probably not quite stagflation. For millions of unemployed, underemployed and/or kids, the US has been in a stagflation phase since about 1980. As for the dollar, as always, it’s the cleanest shirt in the fiat currency laundry basket, so it will do continue to do better than most fiat currencies. But it’s a fiat currency, so it will always be devalued by its issuer (the US government in this case).

Q. Regarding your article about Bearish Anecdotes, I agree overall. My question is, what makes this moment different? Usually when everybody is bearish (do anecdotes count?) shouldn’t we be short term bullish? What the youngsters are doing is just what we did at their age. Wall Street “experts” are warning about bubbles. Seems similar to 1995. Steve Always wishing you and yours well.

A. Everybody is BULLISH, that’s what makes me bearish. You could very well be right that I’m way early on calling the top in the 13 year Bubble-Blowing Bull Market. In 2000, every college kid was a daytrader of dot com stocks. In 2003, daytrading was literally the butt of jokes in cartoons. I wrote about this dynamic before: Buy AMZN next time it’s the butt of a Futurama joke Hermes: “Here, Dwight. The boots only cost 299 dollars and 99 cents. You invest this penny like you wanted.” Dwight: “Thanks, dad. I’m gonna take this and buy 5 shares of Amazon dot com!” Hermes: “A risk taker! That’s my boy.” Futurama cartoon episode from July 2003 (which was probably written at least a few months before that, say early 2003) Cody back in real-time chat, 2021. These days, buying stocks ain’t no joke — it’s like deadly serious for people at home. Cycles matter.

Q. Bearish anecdotes, is this an example of “wall of worry”? Also, I live about 6 miles from that deli in NJ. It did about $5k in business last month.

A. How are the sandwiches? My worrying about bearish anecdotes could be part of a wall of worry — but I seem to be the only one I know out there right now who is worried, as I sure don’t see a wall of worry among most analysts, traders and investors right now.

Q. Do you feel like your picks are getting stale?

A. Maybe they “feel” that way right now. Maybe your question is another bearish anecdote.

Q. Is there always a Bull Market someplace?

A. Yes, probably. But always is a big word.

Q. True or False: billionaires shouldn’t exist?

A. I think a better question might be “True or false: Billionaires wouldn’t exist if governments didn’t prop them up with welfare, subsidies, protections, free stadiums, and other targeted tax tricks and gimmicks?”

Q. What are your thoughts on Cardano as an additional blockchain play like ETH?

A. I’m pretty bearish on all cryptos not named ETH or BTC and I’m not terribly bullish on those near-term either.

Q. Cody, what are your current nibble and trim prices for BTC and ETH?

A. I’d be a trimmer of bitcoin and ether on rallies and I’d be patient about nibbling them if you already own ’em.

Q. How likely will the Space SPACs drop below their $9 starting price in a bear market?

A. After they complete their SPAC, there’s no stopping their stocks from going to $0 if that’s fair market value after they are around for a while if they don’t start generating cash. Gotta be careful out there!

Q. Do you still expect small caps to underperform the market in the short term? Is a short hedge using IWM prudent at this stage of the market?

A. Small cap tech stocks, yes, I expect they will underperform the markets. Maybe a small cap tech index would be better. Gotta be careful with shorts at home though, and make sure you’re not overpaying for the shares or something.

Q. Cody. which index hedge would you recommend?

A. I’d probably try to spread the short exposure around using several indices along with a few very small select shorts in individual stocks.

Q. Which stock, if any, is your highest conviction short for now?

A. Like I said, I try to spread my short exposure around.

Q. At what price are you a buyer of gold?

A. I’m probably a buyer of gold around these levels. In fact, consider this a Trade Alert, I’m buying back a little GLD for the hedge fund and I’m going to buy a few new gold coins for my family soon too.

Q. Cody, what are your thoughts on MP , VACQ, and JMIA? Specifically, will MP be held down by California in being able to produce a finished product? Will VACQ and JMIA get going in the next year or two?

A. I’ll do a Latest Positions write up this week or next and will fully up my analysis on each of them then.

Q. Google VS Amazon, feet to fire which company does a stock split first?

A. Neither.

Q. Unity over RBLX?

A. Both are great, both are still too expensive for me right now.

Q. Cody what are your thoughts on BLDP?

A. I’m not a fan of this business in a world where EV is likely to rule: “proton exchange membrane fuel cell products for markets such as heavy-duty motive, portable power, material handling as well as engineering services”

Q. Please take look at LPX. They are opening siding plants with cash flow. The future looks bright. I think they will and should dump one division of there company that under performs. Your thoughts?

A. I know nothing about it. “American building materials manufacturer” doesn’t sound Revolutionary enough for me.

Q. Time to revisit AXGN?

A. I’ll take a look.

Q. Generally speaking, your mode of operation when wanting to initiate a position in one of your recommendations is to always buy around 1/5th of the position. Would you be hesitant to even suggest that at this point in time?

A. I usually start with buying 1/5 or up to 1/3 or even a little more than that sometimes. Right now, I’m not sure I’d change that strategy, I’m just being very selective in my analysis.

Thanks everybody. Happy trading. Rock on!