Trade Alert: ETH, BTC + Growth Stock Pains, Blow Off Top Rubble, EV Plays, More

Here’s the transcript from this week’s Trading With Cody Live Q&A chat.

Q. Over the past year, we’ve seen breadth narrow in the number of stocks making gains. At the same time, many of our growth picks have gotten hammered as institutions rotate out of growth and into more defensive sectors. Isn’t this indicative of a late cycle bull market? And if that’s the case, might we be buying into what could soon devolve into a pretty viscous bear market?

A. I’d say that Cathy Wood and millions of retail investors who were heavily concentrated in the most speculative, high growthy names have been devolved into a viscous bear market already. And yes, the megacaps might/probably need to come down if the smaller spec stocks don’t rebound here. Maybe a little bit of both is possible, megacaps underperform while some small specs catch bottoms. Buy great companies and be careful, regardless as always.

Q. If we’re in a blow off top what happens after the blow off top?

A. I was saying that we were in a blow off top back in November when we were in a blow-off top. We are now in the part that comes after the blow-off top. And it’s not easy to navigate. Leave yourself dry powder but do some nibbling on the best companies.

Q. Cody, if I wanted to raise some cash (dry powder for opportunities) from our existing portfolio by selling some shares, which names would you recommend? Or, is holding what we have right now a better idea given this downdraft?

A. Ooh, I’d rather have raised dry power back in the blow-off top part. That said, I’ll do a Latest Positions this weekend and that will reveal what I’d trim here.

Q. What are your latest shorts in the hedge fund and personal account? Which would you add to here?

A. I’ve been covering some of the shorts today and yesterday in the hedge fund but not much. VOO, SOXX, VTWO, ARKK and DIA are my biggest shorts in the hedge fund. I don’t have any shorts in the personal account right now.

Q. Cody, the rocket stocks as a group have been trending towards Zero. Can you please explain when you will cut your losses and let them loose? If you are not going to do this, what is the current investment thesis for the likes of RDW and BKSY? Thanks.

A. I like how you capitalize Zero! I knew I was likely very early when we started buying a basket of speculative space stocks. I still very much believe that over the next five years the Space Revolution will become a trillion dollar industry and that we’ll have some big wins in the basket. I’m going to nibble a little more of each of of our space stocks at some point, but for now, I am letting them settle into this market that hates stocks that are unprofitable like these.

Q. Hi Cody, do you consider RKLB, BKSY and RDW “the best of the beatens”, and are you adding?

A. I still like RKLB much more than the others and I can think of worse ideas than nibbling on that one. The other two are probably worth nibbling at if I don’t own any of them, but keep it small.

Q. Given the new market conditions, at what price would you nibble $BTC and $ETH? And, are you buying more Ether or Bitcoin now that it is quite low? Did you buy this back for the Hedge fund, or are you still avoiding these Cryptos? What level would get you back into them? Thanks.

A. Yes, as a matter of fact, I finally stepped back in and nibbled a little bit of both BTC and ETH during their big sell-off today. Not making a big stand, but at least getting a little exposure back into crypto in the hedge fund.

Q. How closely is $COIN linked to the cryptocurrency markets? It seems to trade in sympathy with cryptos.

A. Short-term, very much. Long-term not much.

Q. Why the 180 degree change on Amazon?

A. I think the new CEO has been doing some neat things with pushing sales via the app notifications and advertisements on every Alexa device, etc. I don’t think the analysts have updated their revenue forecasts with these new incremental changes that should drive higher topline.

Q. Cody, thank you for your guidance, especially during volatile times! In your trade alert, you nibbled some Google and Amazon. Both stocks are off from their highs but not like other tech stocks that have been hammered. Is there something specific that’s driving those purchases?

A. See prior answer about AMZN. As for GOOG, I think it’s cheap and “safer” than a lot of other tech stocks right now.

Q. Any thoughts on which EV battery technologies will be used in a few years? Will TSLA still have a large lead in battery production in 5 years?

A. I’ve had a hard time figuring out how to make money on the battery industry other than just owning TSLA.

Q. Cody, any comments on Tesla’s Q4 delivery numbers? The stock’s been negative since then. Is this an opportunity?

A. Eh, it’s still so highly valued here. I like TSLA and hold it, but I can’t figure out how to trade it. Nobody can.

Q. What other manufacturing companies in the EV space are you looking at?

A. I’d consider shorting just about any other EV stock besides TSLA at their current valuations, including gas car companies masquerading and promising EV futures.

Q. With tech companies now getting into electric/autonomous cars (thinking Apple, Sony), does TSLA start to lose it’s first-to-market advantage over the next couple of years? It’s still trading at 10x Ford.

A. I don’t think Apple or Sony will release a decent car for many years.

Q. Hi Cody. I have owned AAPL for 25 years plus. It’s by far my largest holding (probably much to large). Sometimes it becomes frightening to actually stop and look at the valuation that the stock is at now.

A. Agreed and I often have to tell people who have followed me for years to be sure to sell some AAPL even as we’ve owned it since below $1 a share back in 2003. And yet the stock has always gone up. It might peak for a while at some point and then have to grow into this valuation.

Q. Howdy Cody! I bought the Oculus Quest 2 glasses and have been trying them out to connect to IMMERSED! It is difficult for me to imagine, and maybe it is my age (I’m 71 years old), that a trillion dollar industry is forming strapping these Headsets on! So you have a Holodeck Room in your office and you are playing VR golf on the most beautiful courses in the world! How can this supplant the real experience of getting out and playing golf with a friend and walking the terrain? I know VR is here and I have watched some seemingly sane people become crazily addicted to their games! I am worried can this really be our future!

A. Wow, that’s a lot of exclamation points. My short answer is that it’s not like we have to choose that we have only VR or real-life experiences. On days that I can’t get out to play real golf, having a VR golf simulator system in my office sure helps keep me in shape.

Q. Additionally, Uber was a part of the trade alert from earlier this week. Uber was one of your larger positions (mentioned on last chat) and we added this week on weakness. Where do you have Uber rated here? Seems like a great reopening play.

A. Maybe 7.5 or 8 out of 10.

Q. $INFI has been trending towards Zero but nonetheless you are a buyer. Can you please explain? $INFI is presenting at JP Morgan healthcare conference Thursday. If we liked it at $3 should we love it at $1.50? Has anything changed with the business?

A. They will have another update for the markets next week at the conference and if it’s anything that’s not terrible, the stock will likely bounce. In a year, we’ll know much more about the actual prospects of their biotech.

Q. Can you also comment on your thoughts around your BABA recommendation?

A. Alibaba is the only company more hated than FB right now. And I think it’s time to hold our nose and nibble now that everybody else is finally worried about the Chinese government cracking down on these companies. We avoided them when they were loved. Now I’m long a little BABA and TCEHY and a bit more of a long-held JD position while everybody else seems to hate the idea of investing in China (finally).

Q. I think I’m in good company here lately asking for a positions update you’ve been promising. I’m resorting to begging for one please.

A. Yes, coming this weekend.

Thanks all, have a great weekend.