Stock To Flow, Cryptos, Gold, Semi’s, Tesla And More

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

Q. Hi Cody, about what percentage allocation are space stocks in your whole portfolio, and what’s the approximate weighting of RKLB, BKSY, RDW, SPCE to each other? Thanks.

A. I don’t think it’s wise for me to tell you all how I personally allocate percentages in the hedge fund or my personal account. Each of you has to decide how to balance risk/reward for yourselves. I’ve mentioned before that I’d want to own much more RKLB than BKSY and much more of those two than RWD or SPCE.

Q. Would you be supportive of adding to RKLB and BKSY after the recent pullback? Thank you!

A. If it isn’t Space, it’s probably a waste of time…but those two are my favorite space stocks, so maybe they’re not a waste of time! LOL. Yea, I like both here, but wouldn’t go crazy on either.

Q. What stocks have you been adding on this dip? Also, can you list your top 5 positions or your favorite positions at the moment? Thanks.

A. I haven’t done any trading in the personal account lately, but in the hedge fund I did nibble some QCOM earlier this week. I’ve shorted a few calls and puts in the hedge fund lately too, as the premiums are quite high even the action has been a bit muted. Favorite stocks right now are probably RKLB and BKSY. I’m not finding much in the stock market that I think looks wildly compelling on a risk/reward basis right now.

Q. Since Bitcoin’s supply is capped at 21 million coins and the stock to flow (STF) model has worked seemingly well to date, why aren’t you more bullish on BTC than your recent ~55k high call for the next 6 months? I think we could see 6-figure BTC before the next major pullback.

A. First let’s define stock to flow for people, at least in regards to bitcoin: “SF = Stock / Flow Stock is the existing supply of Bitcoin in circulation. Flow refers to the number of tokens mined in a year. Instead of the SF ratio, the supply growth rate is also used. SF = 1 / supply growth rate. As BTC has its max supply limited to 21 million tokens and mining a new token is a time and energy-intensive process, the supply influx of Bitcoin is limited to a certain amount that can come into circulation within a given timeframe. This model takes this scarcity and supply limitation into account while predicting the price of BTC. The calculation for the price the model predicts is based on a formula that uses variables like the monthly stock to flow value and price data. PlanB’s model also reveals that there is an indication of a power law relationship. This is a relationship between 2 variables of a linear regression function, which depicts that the relative change in 1 quantity gives rise to s proportional change in the other quantity. This relationship exists irrespective of the initial size of those quantities. Essentially, it shows the effect of the periodic Bitcoin halving events where the SF doubles and the market value supposedly increases 10x, and this is constant for every halving event.” https://www.benzinga.com/money/bitcoin-stock-to-flow-model/ So having done that, I will say that I don’t put much if any faith into such indicators with most commodities and I don’t do so with bitcoin either….the emotional spirit animals inside of the many millions of new crypto investors is going to be the primary driver of the price of bitcoin for the next few months or year or so I’d guess. Bitcoin might go to $100,000 before it’s next major pull back and I’l be happy if it does, but I’d suggested buying bitcoin at $28,000 a few weeks ago right before it got there and I’d rather trim the bitcoin at $57,000 than buy more here right now.

Q. In the Q&A you posted from your Rotary Club presentation you applied your crypto idea to other areas such as cleaning the ocean. In that discussion you write: “…early investors who get in who buy and hold….” Do you contemplate that there will be “early investors” in your space crypto who “buy in”? Is it too early to ask how that will work, i.e., what form of payment you will accept?

A. There won’t be a way to “buy in” to the sktls space crypto until after it gets airdropped FOR FREE into anybody’s wallet who registers to receive the airdrop. I personally plan to buy some sktls tokens after it starts trading on some of the exchanges although I’m worried it might have a first week pop and then drop after it first starts trading. And yes, the people who get into the sktls space token early enough will be the ones who receive new sktls tokens for every single “Space Action” that happens after that. The payouts for each “Space Action” get cut in half each successive year and they cap out when the total number of sktls issued hits 300 million.

Q. How do we give you our ETH address (or where do I paste my ETH address?) to get in on this token and how will we be one of the first to buy in? How do we get in on the first airdrop tokens for free? Thanks so much for all you do!

A. Sktls cryptocurrency is not running any of those scams where you’re forced to trade your valuable ETH for an unproven token. We’ll airdrop 200 million sktl tokens to anybody who registers for the airdrop. We don’t keep their contact info or anything. Then people will be able to start buying more sktl tokens on the exchanges that we put it on initially after the airdrop. But we are not at the point where we know what exchanges we are going to work with or anything like that. You all know that I will be repeatedly pointing you to the place to sign up to receive the initial sktls airdrop along with how/where to buy the sktls too.

Q. “Piper and I are working 12 hours a day right now, trying to figure out how to make a Space crypto work. And we’re not going to make any money off of it, not selling it.” Cody, please leave some time to devote to the non crypto stocks and your trade alerts in the broader markets. Not all of us are comfortable enough yet to invest in crypto and are paying for your analysis and insight into stocks and the market outside of crypto too. Thanks so much for the consideration.

A. Hmm, I’m not sure you understand how this service works. I tell subscribers whenever I buy or sell something personally and I share pretty much all my markets/economic/stock analysis with you along the way. I’ve also been repeatedly explaining to you all that our biggest winners, the many investments that we’ve had over the years that have gone up 100x or even 500x after our initial purchase, have come from me doing hard deep dive analysis on new trends before they go mainstream. Thus, my focus on space right now and on cryptos for the last eight years.

Q. Cody, what are your current thoughts about gold? Given the current market and the excess spending, I would really like to know!

A. Yea, all this spending on Trump’s targeted tax tricks for corporations, billionaires and real estate developers along with Biden’s infrastructure tricks for corporations, billionaires and green energy developers are continuing to drive this endless spending that every Republican and Democrat apparently loves to do when in office. I like gold just fine here because I don’t know many other professionals willing to buy gold right now. If nobody wants it, I’ll take it. That said, I trimmed some GLD from the hedge fund this week.

Q. 1. Do you see a flat or down market for semiconductor stocks over the next year? I am long NVDA,QCOM,MU,SWKS,QRVO,ASML,AMD,APPL,TSM. I am asking because of your comment on cloud stocks (overvalued). ASML and NVDA have crazy valuations. I cannot explain the movements of these stocks lately. 2. Has the time to stop buying the dip arrived? I like your take on space.

A. Semi stocks seem boring to me for the next few years, but I’ll stick with my QCOM, TSM and NVDA long-held homeruns. I wouldn’t rush to buy dips right now.

Q. Cody, thoughts on MRVL? It’s one that you’ve traded in the past.

A. Boring, overvalued, problems with supply constraints. LOL.

Q. I asked this question a long time ago and am repeating it.. The premise for electric cars rests on our ability to charge them, i.e. that we produce enough electricity. Our regime (short for GOP/Dem regime) will not permit nuclear power plants and is getting rid of coal and oil. Natural gas is not on the horizon. Hydro power means dams-enough said. Also it is dirty. States mandating electric vehicles (e.g. my state of NY) by a certain date does not supply enough electricity-take a look at California’s rolling blackouts. Solar power is to0 inefficient. The means to produce enough electricity is not there and it is not clear to me that it is even clean. Are electric vehicles a niche product?

A. Centralized energy solutions aren’t going to handle all the electric car demands, but I and millions of other people will be adding solar panel solutions to our houses to power our cars completely off grid, just as hundreds of thousands of people have already. I was at Bob Weir’s house a few years ago and after dinner at Sammy Hagar’s restaurant we walked over to his Tesla roadster to drive back to his house’s garage where he has charged it completely with the sun for as long as he’s had it. There is no alternative to moving away from fossil fuel car at this point, IMHO. The battery cars are way too much of a better product to lose anyway.

Q. For chat today: TSLA feels to me like it wants to go higher – good news on deliveries and increases in production capacity, and earnings are due next week. How are you managing your position(s) – hedge fund and personal? Still hedging? Hedging more/less? Selling any?

A. Tesla’s valuation at almost $900 billion is hard to justify without making a lot of optimistic assumptions but it’s still my largest position and it’s still hedged in the hedge fund. I’m mostly sitting tight on it though and letting it do its thing.

Q. Cody, what rating would you give TSLA currently at $800+?

A. Hmm, right now I’d call TSLA a 7-.

Q. Hello Cody, Do u think it’s a good idea to invest Chinese EV cars now? If yes, among NIO/LI/XPEV which do u like the most and why?

A. I can think of worse ideas than buying some Chinese EV stocks.

Q. Cody, what do you think of ROKU both at this price and for the future?

A. Roku is a great company and I will hold onto the shares I’ve got. But it’s sort of boring and over valued like most things that aren’t space related. Haha.

Q. With NDAA/Safe Banking and the Moore Act working along with 12 straight positive quarters, do you think now is a good time to invest in Trulieve (TCNNF)? Appreciate any insight you might provide. Thanks!

A. Trulieve seems like a good company and a name I might one day buy in the cannabis sector. But I’d rather work on space than pot.

Q. Hi Cody, What are your thoughts on $ionq? Or if it’s not space it’s a waste of time… Thanks and have a great weekend!

A. IONQ is in the quantum computing business, something that will indeed be huge in coming decades. I’ll take a deeper look. Piper, please do the magic.

Q. FB has that good forward P/E. Can you give measure to the risks ahead for us like the Iphone privacy, whistleblower, international scrutiny?

A. Oh, I think the earnings will be fine for the foreseeable future but that’s not what will drive the stock for the near-term. FB’s stock might be stuck below it’s $384 all-time high for the next year or two.

Q. Cody, been a subscriber for only a few months so I don’t have a full position in TSLA as you and others do. For someone like me where would you recommend adding?

A. I always suggest nibbling a little bit whenever somebody asks me this. Maybe 1/5 as much as you want to own eventually. And then buy another tranche if/when the stock pulls back 5-10% for no reason and/or wait a month and buy a little more. No easy scientific answer to this….just ebb and flow a little bit here and there as the markets and time pass.

Q. Any thoughts on DOCN. Cloud for Small/Medium Businesses.

A. Terrific topline growth, margins are pretty good, but trading at 20x next year’s sales estimates — yet another stock that’s fine except for the valuation part.

Q. Hi Cody, your thoughts on INFI?

A. Actually, I nibbled a tiny bit of INFI yesterday too.

Q. Anything you’d recommend to trim now? Thank you!

A. Yes, I’d probably trim a little bit of everything if you haven’t already.

Q. Can you research about $PATH and let us know whether it’s a buy?

A. Wonderful gross margins, terrific industry to be in — robotics platform — but growth isn’t fast enough to justify the 25x next year’s sales estimates.

Q. Awhile back, you did a “reversal” on NKLA And recommended “ but I’ve actually nibbled on a few call options in NKLA dated out to January, with strike prices that are maybe 30-40% out of the money..” I am now a believer, but didn’t act then. Would you recommend the same specs for calls now? Or how would you change them?

A. Hmm, I’d probably just not do the trade if I had to do it over again. But a little bit of bet on some NKLA Dec $13ish calls or a tiny bit of NKLA common might be okay.

Q. Will $SHOP ever be like $AMZN?

A. Not sure what you really mean by this question, but I’d say by most metrics, no. Shop’s not ever going to offer their own proprietary video subscription service, their own proprietary voice engagement service, their own logistics/delivery service, etc. SHOP’s amazing though!

Have a great weekend and I’ll leave you with this picture from my front yard the other night.