Variant Markets, US/China, Social Network Stocks And More

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

Q. How do you think the Delta variant and the resurgence of Covid-19 will effect the market?

A. I spent a whole episode last week talking about this and I’ve been saying since February that Covid 19 is still being spread around to hundreds of millions of people around the world this year and that it will be mutating and trying to perfect itself as a transmitter — that the risk that the reopening is going to be underwhelming is real. Especially in other countries, the risk of more deaths and economic havoc from new waves is very large.

Q. Seems US/China relations are very tense. Plus China is clamping down on some of their big businesses. Regarding our Big Tech investments, are they at risk? AAPL seems to get a lot of revenue from China. How do you rate the risk? Thanks,

A. There sure seems to be some major societal/political/financial changes going on in China right now and it’s something I keep an eye on, but not something I lose much sleep over. Apple and Tesla and other companies who rely on China for a chunk of their revenues have potential issues from this, but I doubt China’s going to somehow kick them out of China or something.

Q. There had been an article about severe droughts in the West. Could this possibly evolve into a black swan event?

A. Probably not, but extreme weather overall is something that’s starting to get concerning.

Q. Cody, what scale of bearishness are you compared to 2008? And what percent cash are you now?

A. I’m not as bearish today as I was in late 2007 and early 2008. In fact, I’m not sure I’m outright bearish or just worried that upside gains are going to be harder to see and keep over the next year or so. As for cash, I don’t think my personal or my hedge fund’s cash levels are relevant to anybody else. You need to be adjusting your own cash position based on your own risk profile, risk tolerance, goals, inheritance potential, etc.

Q. How do you determine your price for a stock in this high p/e, p/s market? Standard numbers for these ratios don’t apply.

A. Oh my, that’s the kind of thinking that can be disastrous for investors. Being smart about valuations is always important, especially in a market like this!

Q. Any thoughts or expectations regarding TSLA earnings next week?

A. Not really. We need updates on when the Cybertruck’s going to start rolling out of the Austin Gigafactory — that could move the stock I suppose.

Q. Does firing your main test pilot (or “Test Gods” as SPCE biographer Nicholas Schmidle called them) have the same ramification as when a senior executive leaves a company, per Jim Cramer? Apparently, this is tanking SPCE after their successful launch eclipsed New Shepard’s barely reported on space flight.

A. I’m not sure executive departure has terrible ramifications either, but it’s not great to see the head of test flights at Virgin Galactic has been pushed out.

Q. Shouldn’t you send out the trade alert when you place the trade and not after you’re up over 10%? Thanks.

A. Yes, normally I send it out when I do the trade or right after, but with the eye surgery messing with my routine, I didn’t get anything written on Monday or Tuesday when I was making the trades. I did, in all fairness, tell you all the plan over the weekend before I made the trades on both SPCE and bitcoin/ether.

Q. Any thoughts on the social network stocks: TWTR, SNAP, PINS, FB? A few earnings reports tonight. In my own world of friends, I keep hearing about people using TWTR more than the others. Maybe Instagram is up there too.

A. Snap’s ability to stave off competitive impact on their business has been very impressive in the wake of the rise of Tik Tok (nee Musical.ly). Twitter’s got a lot more ads in my timeline these days, and it’s the only social network I’m on. FB/Insta/Oculus remain dominant. Pinterest’s boring to me these days, but the monetization road map for them is the best of all of them.

Q. What do you think of Apple long term? I, like you, have owned Apple stock for 20-25 years. I have been pairing it down little by little. Is this a good strategy going forward, or do you think it may be the time to unload most of the stock at these valuations?

A. I think it’s better to slowly pare your Apple than to unload it aggressively, even as I do think this current valuation is quite stretched.

Q. What about DIDI now?

A. I”m warming up to it near $10 here. I haven’t been able to read as much as usual over the last week after the eye surgery so I’ll be digging into it now. Stay tuned.

Q. I wanted to ask if you have evaluated Coursera and if it qualifies as a revolutionary company? They are one of the earliest and largest online education company. They have a great brand name. They have tie ups with many well known universities. Their current valuation is around $6B.

A. I like Coursera the concept, so we’ll dig into the business side of things. Piper, please set us up a research document.

Q. Peyton Manning invests in a company alongside Bill Gates that could change sporting events forever​. Gates and Manning are among the investors in a new Crowd-safety firm called Evolv, technology that could forever change the way fans enter sports stadiums and other large events. Evolv, whose customers include Six Flags (SIX), casino company Wynn (WYNN), New York City’s Lincoln Center and baseball’s Chicago Cubs, sells software on a subscription basis that is designed to help detect whether… Wondered if you had looked at EVLV a new SPAC?

A. Looks like a company addressing a real need out there with a clear global market potential. I’ll take a look. Piper, please get the doc going.

Q. Cody, congratulations on smooth and fast recovery from the surgery! Wells Fargo is closing all personal lines of credit. What does this mean on a larger scale of things? Why’s WF doing this? Thank you!

A. Thanks for the kind words. I don’t think it matters whether WF does lines of credit or not. The only thing it reflects is that WF is struggling to figure out how to defend itself as DeFi and Internet credit/banking/processing companies grow.

Cody: One more question.

Q. How is Amaris?

A. She’s great. I’m doing this chat from my home in Carrizozo so she’s just down the hall way and I’ll go take a picture of her to include in the transcript. She and I have a very special bond that’s full of love, joy, smiles, giggles, singing (she sings silently), and other fun stuff.

Thanks for all the great questions. Rock on!