AMA - Meme Stocks Are Back, Google I/O Thoughts, Elon's Pay Package, And Much More

Here is the transcript from this week's Live Q&A Chat.
Also, be sure and Follow us on our new LinkedIn Page and Connect and follow Cody here.

Q. Doesn’t it feel very toppy at the moment? I see a lot more downside than upside. Inflation is sticky, consumers are feeling the pain from inflation, debt delinquencies are starting to rise, economic output is slowing, government spending, fewer buyers of UST, debt balance continues to rise, Reddit (RDDT) users buying of Gamestop (GME)/ AMC Entertainment (AMC) stock. It all feels a bit off. There are going to be better opportunities later in the year than now to buy IMO.

A. It does indeed feel a little bit blow-off toppish again, especially with the action in the meme/Reddit stocks like GME and AMC this week. Lots of retail investors just got crushed to the tune of millions of dollars on those in the last two days. The move those stocks made this week, all because some YouTuber dude who lost them billions in those meme stocks over the last two years, tweeted a picture of a dude leaning forward in a gaming chair, is a reflection of the greed and lack of fear in the crypto markets and, to a lesser extent, in the speculative small caps and even the broader stock markets right now. On the other hand, The AI Revolution is driving hundreds of billions of dollars of incremental spending on data centers and the highest-end chips, and is likely to help profit margins in many industries in the next two to three years. That's going to help the broader economy stay steadyish here even if the consumer, especially the consumer at the low end of the income spectrum, is getting tapped out here with bills and inflation.

It's possible that the topline GDP and topline revenue numbers for the S&P 500 slow here or even contract a little bit in the next 12 to 24 months but that the earnings power of the S&P 500 actually stays steady and/or grows as margins expand courtesy of AI. It's possible the markets dip and/or just churn here for a year and then start to realize that earnings power is actually growing and could accelerate if/when the topline GDP and revenue numbers start growing again and that the market doesn't tank 20-30% in a relative recession over the next year. I think we want to focus on buying the companies that are about to generate tens of trillions of dollars of value for investors via The Humanoid Robotics Revolution and scale into more of them regardless of what the broader markets do in the next few months and the next year or two. If the market does actually finally go into a major correction, I'd be happy to load up aggressively on Tesla (TSLA), NVIDIA (NVDA), Amazon (AMZN) and whatever other Robotics Revolution companies we end up liking over the next year or two.

Q. What are your top 5 buys and top 5 sells today?

A. Let's be clear that most of the time when I answer this question that we actually mean what are our top 5 buys and TRIMS, not SELLS. That said, I do have two outright SELLS today, as noted in the Trade Alert we sent out earlier today, ie, Disney (DIS) and Cloudflare (NET). My top three TRIMS today are, in alphabetical order, Apple (AAPL), Bitcoin (IBIT) and Uber (UBER).

My top 5 buys today are, in alphabetical order: Amazon (AMZN), Google (GOOG), Meta (META), Tesla (TSLA) and I guess to get to five, I'd add Nvidia (NVDA). The fact that I have two outright SELLS and could easily pick out three other TRIMS and I had a hard time naming five stocks I'd want to buy right now makes me think about how I am quite cautious right now.

Q. I recall in the past, you often would say to yourself something like - "this is a $5bn market cap that has the potential to 10x in 3-5 years with a $50bn market cap. Now we are dealing with a few of those but also the giants that now have market caps of trillions (I know you got them when they were minnows...). A thought in the back of my mind is where are future returns going to come from? Is a combination of companies staying as private unicorns and winner-take-all economics with scale going to big a major factor? Or do we buy baskets of say 5 companies in a theme and let the winners emerge over time

A. Great question. Let's take Apple (AAPL) for example. Apple's current market cap is almost $3 trillion (when I bought it in 2003, it was a $7 billion market cap or so). Apple's ecosystem is going to keep billions of people locked into their system for many years to come and the hardware, apps and services they consume will drive Apple's primary growth. That said, the as yet silly-looking Vision Pro and it's dongle-hanging battery is going to eventually become a real viable Virtual Reality tool/toy and will create an entirely new multi-trillion dollar business in coming years if Apple executes (and if Meta/Google don't end up winning the VR wars). So Apple could still 10 bag from here in the next ten to fifteen years, which ain't too shabby. But yes, we should also have some smaller and much riskier companies like TransMedics Group (TMDX) and Rocket Lab (RKLB) to provide the potential 50 to 100 baggers that can add juice (and diversification) to the portfolio. I should repeat that Tesla (TSLA), despite already being a 1/2 trillion market cap, could 60-bag from here if the Optimus Robot and Robotaxi revenue streams develop as I think they might.

Q. How much of a long-term portfolio should be in the AI space? Either direct in the BigTech ones, or in the smaller guys that are chasing the market?

A. The answer is different to each person reading this, depending upon their own personal risk-tolerance, goals, fears, demands on money, etc. I'm not focused on AI per se, but we have plenty of AI exposure via our long-time investments in the companies that have recently become the most AI-viable companies on the planet, including Google (GOOG), Tesla (TSLA), Nvidia (NVDA), Amazon (AMZN), Meta Platforms (META). I want to have a lot of our portfolio exposed to The Humanoid Robot Revolution by the end of next year or so.

Q. How much is a nibble or a trim, if you have a position?

A. Again, it's unique to each person reading this and it depends also upon how aggressive I might want to be in either nibbling or trimming. A minimum of 5% of the position is the least I'd consider as a nibble or trim, but it can be as much as 30% as I did with Uber Technologies (UBER) today.

Q. Thank you so much for all the hard work and dedication both of you put in! Your AI webcast was fantastic and your continued faith in Tesla (TSLA) is reassuring in the face a barrage of haters. Many misconceive Tesla (TSLA) as an auto company when it is an AI company.

A. Thanks for the kind words. We enjoy doing those AI webcasts most Mondays at 5 pm ET. As for Tesla, Tesla is still mostly a car company, but ten years from now, the vast majority of its earnings and most of its revenues will likely come from AI Dojo Services, Robotaxis and Humanoid Robots.

Q. How likely is it that Elon's compensation plan is not approved and the stock sells off substantially?

A. I think that's quite unlikely. Every shareholder I know believes that Elon deserves what we gave him last time and that they voted for it. We'll see though.

Q. What were your thoughts on Google (GOOG) I/O 2024 yesterday? Were there any surprises either way good/bad?

A. Google offers essentially everything OpenAI does and a lot more, because Gemini is built into the entire Google ecosystem as we mentioned last week. You don’t have to open a Google app or website to access Gemini if you use other Google services. We think this is a big advantage for Google. We were very excited about the Google AI vision capacities and the potential glasses that are clearly in the works.

Q. Blessings to you and your family. I heard that Robinhood Markets (HOOD) will be offering futures trading. How will this affect its value?

A. Thank you for the kind words. I don't know anyone who's desperately waiting for futures trading on Robin Hood, but offering more services is almost always a good thing. More ways for people to trade on Robin Hood's app is likely to generate more revenue and earnings over time.

Q. Hi, should I sell some of Transmedics (TMDX) and buy some more Apple (AAPL)?

A. We have trimmed a little bit of the TMDX here but mostly riding it for now. I am not wanting to chase AAPL right now at $190 but would be a buyer at $160s again.

Q. Any new thoughts on Intel (INTC) down here? I have some old $35 Jan 2025 calls and am wondering if I should sell them or buy more or just wait.

A. I can only tell you what I did -- and that is that we sold all of it and any remaining calls we had too. I wanted to move on from INTC for a bit and clear my head. I might end up buying it back at some point in the future, but not right now.

Q. Any thoughts on a Carvana (CVNA) short now that's it has ballooned up to $120? Looks like insiders are selling too at this point.

A. I think the guys who run Carvana are grifters at best and scam artists at worst. I could see buying some puts on it but I've no position on it right now.

Q. This chat room is asymmetric - we only get 500 characters and Cody gets unlimited! Seriously, can we get an upgrade as a good question can take time to craft (as Twitter shows) and text only loses nuance. It is why I rarely come in here live to be honest.

A. We're working on a new chat system for the new Trading With Cody app we are beta-testing right now with a few of you users (if you'd like to become a beta-tester of our new mobile app, search Trading With Cody on the iPhone app store or use this link but please be patient with us as we develop it. If you have ideas for us, PLEASE send them to us.

I leave you all with a picture of our two new puppies at my house. I told my wife and daughters that we didn't need two more dogs, but I lost the vote and apparently, I don't have the veto power I thought I did!

They are both so darn cute and fun though, I guess I'll just go with the flow. One is a golden retriever and the other is a mutt's mutt.