Trade Alert: Tencent, More Predictions, Top 5 Positions, Buys, and Trims + More
Here’s the transcript from this week’s live Q&A chat. Also, don’t forget to follow us on X (f/k/a Twitter) @TradingWithCody and on Facebook. You’ll notice below that we bought some Tencent Holdings ADR (TCEHY) today as well.
Q. Feet to fire where do treasuries & mortgage rates go in 2024?
A. Treasury rates will probably climb slowly for most of the first half of 2024, getting the 10-year back to about 4.5% and then probably vacillate around those levels into year-end. Mortgage rates will be about 2-3% higher than that.
Q. You’ve said before that you love our longs but are you concerned about the broader economy? If the Fed cuts rates too soon, we could see inflation flare back up again and stocks would pull back significantly. The market is cheering the Fed cutting rates and a more easy money policy but I’m feeling pretty cautious/conservative here. Feel strongly about our holdings but if the broader markets pull back, we’ll be vulnerable. What do you think?
A. I think it’s a good idea to lock in some profits and raise a little cash heading into 2024. The consensus has gotten wildly bullish about the markets, the economy and the Fed. I’m pretty sure the consensus will be wrong as almost always. Not sure I’d freak out and I wouldn’t go crazy selling everything, but trimming some names here is not a bad idea.
Q. I recently trimmed most of my positions 10-20% at lower prices than today’s. Since the market has risen so quickly and with seemingly an increase in bullishness in sentiment, would it make sense to trim again? After reading your 2024 predictions, it seems this would be a prudent action to take while maintaining smaller positions looking to add back if/ when our stocks correct.
A. I’d rather trim than buy most stocks right now but I wouldn’t go crazy selling either. Ebb when the markets flow and vice versa. There is certainly a lot of greed and optimism and euphoria in the stock, bond and crypto markets right now.
Q. Along those lines, what are your top 5 trims?
A. Everything.
Q. What are your top 5 positions right now?
A. In alphabetical order: Intel (INTC), Netflix (NFLX), Rockwell (ROK), Tesla (TSLA), and Uber (UBER).
Q. What are your top 5 buys right now?
A. In alphabetical order: Autodesk (ADSK), Amazon (AMZN), Disney (DIS), STMicroelectronics (STM), Pfizer (PFE), Tencent (TCEHY). To be clear, I’m not buying any of those right now except for the TCEHY which we just bought this week.
Q. What do you think of some around the money puts a month or so out for Invesco QQQ Trust Series 1 (QQQ), VanEck Semiconductor ETF (SMH), or iShares Russell 2000 ETF (IWM) for some downside protection?
A. I can think of worse ideas but if the markets are stable and then slowly fade lower, the puts won’t help much. But I’d rather buy puts than calls on the indices today, that’s for sure.
Q. What a run by Intel Corporation (INTC)! Great to see but feels like lots of folks are piling into this name. What do you see as the main driver of this run in the stock? Feels a little uneasy with lots of people loving the name. Are you trimming INTC a bit here?
A. Wild momentum in Intel now as few money managers are in it and many need to get into it to even be equal weight this name. The momentum has taken on a bit of life of its own for now but the main reason the stock has been rallying hard is because the company has been executing well, rolling out compelling advanced chips with good energy metrics along with the fact that the company is quickly advancing its move to become the only viable Western-based competitor to the TSM and Samsung chip foundries. Yes, I trimmed a few of our call options in INTC just today.
Q. What is your update on Autodesk (ADSK) (great call)… how far out are you purchasing options?
A. Thanks for the kind words. I’m almost out of my ADSK call options, as we exercised some that were far in the money and have a few more that I’m holding for now.
Q. Speaking of predictions, can you please give predictions for Rocket Lab USA (RKLB), Uber (UBER) and Intel (INTC)?
A. Rocket Lab will launch successfully 13 times in 2024. The company gets another contract from the US government for another $500 million by the end of 2024. The stock goes to $7 or $8 if all that happens. Uber plugs along and goes up 10% next year. Intel reaches $60 and then cools off for a while. These are feet-to-fire guesses as much as predictions.
Q. Merry Christmas and happy new year was a good one. Do you think Rocket Lab USA (RKLB) could move up back to $8ish with the new contract? Also, Nuscale Power Corp (SMR) seems to be getting some big contracts as well. Have kept them both as small positions and also Blacksky Technology Inc (BKSY) as well.
A. RKLB might need another good contract to get to $8 soon but it could happen. SMR is off my screens. I’m not a fan of management there at all anymore.
Q. Can we please get a refresh on the Rocket Lab USA (RKLB) analysis? This contract seems like a big game-changer. Will the company be able to gain some traction/positive momentum? Is this a sign the space economy will start to take off? Folks here have been patient with RKLB and could possibly see light at the end of the tunnel?
A. I have Bryce redoing our Rocket Lab model and analysis and we’ll send out an update on it the first part of next week.
Q. One more prediction – can you please share which of our holdings you think can outperform in 2024 and which holdings can potentially underperform in 2024? Thank you again!
A. Feet-to-fire, I’d rather just own most of our names as I expect our names to outperform anyway. Best stock to own in 2024 might be Tesla but it might be a rough first half of the year as the Model 3 loses its subsidies. Nvidia might have a hard time getting much oomph next year.
Q. I need to buy some stock for my Grandkids any names i should buy? Thanks for your help this year Happy New Year.
A. HNY2U2! I’d consider Tesla (TSLA) and Disney (DIS) and/or any other name we own already.
Q. Does Alibaba Group Holding Ltd (BABA) ever become interesting again or is it untouchable cuz (Trump voice) “JYNAH”?
A. JYNAH = China, I suppose? I’m not buying BABA here but we did sneak in and buy a little Tencent (TCEHY) today after the stock hit a new low earlier this week. WeChat and gaming and cloud at TCEHY look quite compelling at these prices.
Q. Update on Rockwell Automation (ROK) for 2024?
A. There’s been a bit of a slowdown in the last few months in the industrial automation build-out from The Onshoring Revolution but I think ROK is a very well-positioned company and while it’s not terribly cheap right now, I continue to hold it mostly steady here.
Q. Not sure if this has been asked already, your thoughts on Qualcomm (QCOM)?
A. Great company, probably fully valued right now given that their biggest customers are trying to design Qualcomm out of their products.
Q. What rating would you give to DallasNews Corporation (DALN)?
A. Hmm, maybe a 7+ right now. The company has to get some things turned around to get this stock juicing.
Q.Have been reading more positive articles lately on Blade Air Mobility (BLDE). Where do you see it in 2024? Happy New Year!
A. I like Blade’s business and their management but they have got to get more airports and cities on their platform and they’ve got to get margins going higher in coming years.
Q. Also, I’ve held onto Virgin Galactic Holdings Inc (SPCE). Small position there. Any new thoughts on that name?
A. Since they refused to do a secondary at $50 or $60 or $70 when the stock was there and then they waited til the stock was a $7 to do a secondary and raised 1/10th as much money at onerous terms I don’t see how they ever get to profitability.
Q. Any updated thoughts on Palantir Technologies Inc (PLTR) going into 2024 (aside from it being pricey)?
A. Not sure why the company thinks it’s a good idea to buy back stock at a higher price than they went public at when they aren’t quite/are barely profitable. They’ve got some issues and are very hype-ish about their AI and I’m concerned the company is as much a consultancy as an AI software company. We currently have a small short in PLTR in the hedge fund right now.
Q. I’ve been looking into the ARK Venture Fund (ARKVX) by ARK Invest and wanted to get your take on it. The fund invests in a mix of private and public companies. Their top 3 holdings are Databricks (7.54%), SpaceX (7.35%) and Replit (4.02%). The fund’s fee is 2.90% I’m particularly interested in SpaceX and exploring more venture capital investment opportunities.
A. I think owning some SpaceX is great but I’ve not been a big fan of Cathy Wood’s overall stock-picking prowess. The fact that she can’t buy/sell those privately-held companies’ equity is probably a good thing though. I can neither vouch for nor bash the ARK Venture Fund idea.
Q. Do you think Bitcoin ETFs will draw in an enormous amount of institutional $? Or is there too much hype? How high do you see Bitcoin going at the end of this halving cycle (by mid-2025)?
A. There is definitely a LOT of hype and greed in the crypto arena right now but bitcoin is the best of them all. I do think over time that a bitcoin ETF will help institutions get into bitcoin and that will help drive the price higher but I’m not sure it will happen when the ETF comes out. I’d guess that bitcoin is close to $50,000 by mid-2025.
Q. Amazing predictions! hope you are right about the Celtics making the finals, just hope they win!
A. Thanks for the kind words. The fans in Boston are almost as overtly proud of their pro sports teams as Texans are of their whole state.
Q. Not really a question but a comment inspired by the pic in your 2024 predictions. Detroit football team looks good but can things get any more bearish for the basketball team?? They’ve lost 27 in a row! Interestingly, herein lies a missed opportunity from 80 years ago. An example of how the perfect setups don’t always materialize. Baseball was first in Detroit. – Tigers go back to 1894ish. Then in the era known as the roaring 20’s they get the football team and fittingly name them the Lions. Opportunity is knocking… and then comes the misfire. It’s 1937…the Great Depression era; bears in full force. City gets a new basketball team. It looks like the perfect setup…. everyone can see it coming… and then they name the team the Pistons. Just like the markets, it doesn’t always go the way you expect it will. Ha!
A. That’s funny and a good anecdote. Thank you! Go Lions (if only because I always root for underdogs).
Q. Your predictions post was a great read as usual Cody!! All the best for a Happy and Healthy New Year! God bless you and your beautiful Family!
A. Thank you and back to you!
I leave you all with a selfie that Bryce and I just took in front of our 10,000 Days Dojo flag wishing you all a Happy New Year. Thanks for being a part of the Trading With Cody community.
