Wars, Crypto Regs, The Space Revolution, Amaris Update, And More

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

First off, let me mention that I didn’t end up going to NYC. My flight was canceled last minute and it was going to cost me a full 25% of my time in NYC, so I just decided to reschedule the whole trip. Then Amaris had seizures one night this week and broke her leg. She’s in Albuquerque at the UNM hospital getting casted up and should be home tonight.

Secondly, here’s the video of a space CEO and a retired general and me discussing the space revolution. Full transcript here.

Q. How much do you think the market has priced in for the war to continue for the next year?

A. I don’t think it’s quite as clean cut as your question implies. What do we mean by “war”? Is there any way that Russia and Ukraine aren’t at odds for the next year at least? Will it be as active with strikes as it appears to be right now? I have no idea. I do remember that the US government and both “sides” of the media lied to us repeatedly about Weapons of Mass Destruction before and the the Russians and Chinese and other governments always lie during war times too, so I know that I don’t know much about what’s really happening on the ground in Ukraine or in Russia for that matter. More to the point, globalization as we knew is over and that isn’t going to come back even if Ukraine and Russia shake hands next week and end all violence/war between themselves. And that’s something I’m still trying to figure out how to best invest for and what that means for Revolution Investing and how we can continue to find 10-1000 baggers right now and for the next year or two as the geopolitical economies re-develop and shift and morph.

Q. Is it the beginning of a bear market? If yup, what is our strategy if you don’t recommend short selling for retail investors? Should we outright sell, hold 100% cash and wait for the bottom to come?

A. Harken back to February last year when I tried to get all of us to do a Great Reset and to prepare for a potential bear market and then again to last November when I wrote several articles talking about getting more defensive because the market was going through a major Blow-Off Top….and that was me trying to do my best to prepare and position us for a bear market. With ARKK and most other tech investors and their stocks being down 70-90% from those February and/or November levels, I hope we’ve avoided a large part of The Bear Market already. I don’t know when this market will bottom but I do expect that some of our favorite names and some we don’t own yet are probably putting in lows right now that they’ll never see again.

Q. What do you think would it take to avoid a longer period of stagflation now and how large do you judge the probability of avoiding a recession?

A. Not sure stagflation is the problem, but it might be. The economy is a mess with the unwinding of the SPAC/Crappy Stock Bubbles and the Fed tamping brakes and inflation running hot and the war in Europe changing the dynamics of the entire globalized economic paradigm that we’ve spent our lives investing in. The chances of avoiding a recession are low, maybe 20-30%. But the market might have already priced a lot of this in, of course.

Q. Cody, given your new globalization thesis are you more bullish or bearish now vs during the height of the bubble last year? Thanks.

A. I was pretty bearish back in February and again in November when the market bubbles were at their peak and I’m probably at about that same level of bearishness right now. I’m a buyer of some of our favorite stocks when they get hit like this, but I’m far from being wildly bullish like I was back in March 2019 at that bottom or at other times in the last 12 years as we were riding what I’ve long-called the Bubble-Blowing Bull Market which is now over I do believe.

Q. Cody with all that is going on, and many of our stocks (along with the market) down quite a bit, how do you look past this and see what the future can bring for our investments? For example, UBER. Yes, gas prices will hurt but I don’t think people will not call an UBER; if there is another round of COVID, people will continue to order food delivery. I’m just trying to learn to look ahead and take advantage of good opportunities.

A. UBER’s a good example to use to answer your question. Like, who cares if UBER’s got gas price issues for the near-term. If the company can end up growing the way they expect to and to dominate food delivery and to have a large logistics/delivery business, the company and the stock will look nothing like they do today. Five years is a long-time and will allow for this company to either dominate its competition or we’ll have to move on at some point.

Q. Hmmm… down 70-90% was nothing in the dot com crash. Many stocks went down another 90% after being down 90%. Remember PCLN and AMZN?

A. Hmm, I just looked and it appears that PLCN went down about 99% from its year 2000 high to its year 2002 low and then went up about 100,000% off the very low. AMZN “only” went down about 90% from its high to low over that bubble and crash 2000-2002 time frame. At any rate, I do think many stocks will go down another 90% and many will go to zero, but many are already bottoming here. The bubble and crash dynamics of 2000 to 2002 won’t repeat exactly, but they will rhyme.

Q. Good morning Cody. With the government’s movement toward deeper regulation of crypto, will there be a heightened shift (again) toward gold and silver as a refuge for a portion of our assets? Is it a good time to add to one’s holdings in GLD and SLV?

A. I have no SLV but I do like GLD. I don’t think the government making crypto more legit by helping make it mainstream and pretending to help protect investors from getting scammed is going to change anything for GLD or SLV though.

Q. What do you think of ASTS in light of its new agreement with SpaceX?

A. “An SEC filing made around the same time states that AST SpaceMobile will pay SpaceX at least $22.75 million to “adjust” its upcoming BlueWalker 3 launch contract, cover an “initial payment” for the launch of BlueBird 1, and pay the reservation fee for a second launch for BlueBird 2. While only representing three probably ‘launch service agreements,’ the decision sets SpaceX up to be the company’s primary launch provider for a constellation of as many as 243 large communications satellites.” There’s absolutely nothing surprising or bullish about this for ASTS, in my opinion. SpaceX will agree to launch satellites for you too if you will pay them their going rate, just as ASTS is here. In the hedge fund, I shorted some ASTS calls and bought some ASTS puts yesterday when it spiked and am trying to do some more betting against this company today, but I wouldn’t recommend doing that for most people at home. In my personal account, I just stay away from ASTS.

Q. Is it better to avoid BKSY now that it has become a penny stock? How large do you see the probability of raising additional money (once needed) as long as it trades below 2$ and how do you interpret the many SEC filings about “acquisition of beneficial ownership of 5% or more?”

A. BSKY’s been a mess since it came public and I’m definitely disgusted at myself and at this company. I’m sitting on what’s become a very small position as I do think there’s a business here.

Q. Can you expand upon your optimism with Amazon and where you see it going from here?

A. New CEO is doing a good job and there’s lots of potential for him to grow AWS and especially to grow Amazon’s advertising business. And even with a run rate of more than 1/2 trillion dollars per year, the topline is still growing faster than ZM for example.

Q. I would love to hear your take on $SHOP, especially with the news today.

A. The news about partnering with a shipping company? Not sure that moves the needle. Nibbling slowly but surely on this name, bought a little more earlier this week but still have room for more.

Q. Jahmon said, “The whole eCommerce world is moving to API based SaaS solutions and headless architecture. SHOP is a walled garden with significant limitations. …I do believe the future is MACH (Microservices, API first, Cloud native, Headless).” How does $SHOP compete in this new retail Environment? Are they making the right technical advances and pivoting, or are they truly worth $300-400? Thanks.

A. As a long-time website and app builder, I can tell you that most of SHOPs customers don’t care about much but simplicity, ease-of-use and scalability. SHOP provides all these. I’m not making SHOP a large position at these levels but I do think there’s some nice long-term upside potential from these levels.

Q. JD and most china related stocks keep falling. What is your perspective on JD and Chinese stocks in general?

A. JD and BABA are cheap, but the markets hate Chinese stocks and don’t trust them right now. Which is why they are cheap. I nibbled a little BABA today and will probably nibble some JD soon too.

Q. Do you still think intel could be a 5 or 10 bagger from here. How does the geopolitical situation shape the odds?

A. Maybe a 5 bagger, 10 is stretching it, but isn’t impossible in ten years from now. Please see my recent write ups on INTC as I’ve spent thousands of words explaining how geopolitics is a large part of the bullish fundamental set up here.

Q. Cody, would you recommend selling TSM and replacing it with INTC?

A. No, but I did trim TSM repeatedly over the last three years since we first bought it at a fraction of today’s quote and I have much more exposure to INTC than TSM right now.

Q. How big of a position are you planning on making PYPL? Can you please provide your thesis on it going forward?

A. It’s an Internet utility if there ever was one. I’ve been nibbling some below $100 and its getting to be a mid-sized position that I’d make a large position if it drops closer to $80.

Q. I hope that Amaris is doing okay, sorry to hear how the week went. What are your thoughts on RIVN being able to stay relevant with it’s disappointing production numbers?

A. I’m pretty sure RIVN can stay relevant and will end up selling millions of EVs in coming years and nobody will remember the last 90 days. Problem is that RIVN’s still trading at a very high valuation and it does have to actually build and deliver cars for profits at some point.

Q. Quick healing and happiness to Amaris! Any updated thoughts on INFI? Should we be adding at these lower levels?

A. I do think biotech could end up being a the leader if and when these markets do bottom as new leadership is probably warranted and it probably won’t be FAANNG or cloud or EV stocks that lead us back up. INFI’s a very speculative penny stock and I’m holding it steady for now.

Q. What do you think of CRWD and DDOG?

A. Great companies, very expensive valuations that could come down another 30-50% and then I’d be a buyer I do think.

Q. In the past, you have listed your overall positions with your cost basis. Is this something you would be open to doing again with all the wild moves in the market? Thank you.

A. Yes, I’ll to do that next week.

That’s a wrap. Thank you all for the kind words and and positive vibes and prayers for Amaris too!