Revolutions > The Fed, Burry’s Big Semi Short, Sam Altman Drama, And Much More

Revolutions > The Fed, Burry’s Big Semi Short, Sam Altman Drama, And Much More

Here’s the transcript from today’s live Q&A chat:

Q. With the latest economic data released, where do you see the general market headed into the new year, and what catalysts (FOMC, interest rates, etc) do you think we need to watch out for, both good and bad?

A. I’m not sure that the Fed will be able to control interest rates and I’m not sure that interest rates are going to be the catalyst to drive the broader stock market moves. The AI Revolution could help major companies and small businesses become ever more profitable and the spending on AI will top a trillion dollars over the next three years and all of that will drive the economy and will help move stocks. Likewise, The Space Revolution is going to change the world in the next five years. The Robotics Revolution is going to be ever more important too.

Q. In general, the market has been rocking the last few weeks; especially in our names. Feels like the playbook is to trim some given the rally and the risks of the recession deepening. Do you agree?

A. 100% agreed and we have been doing so as noted.

Q. Feet to fire, the rally continues into the new year, or is a major pullback incoming?

A. Feet-to-fire, the markets slowly grind around these levels for a few weeks.

Q. What is the state of the market now? With yields going down, and almost certain end of Fed rate hikes and earlier rate cuts, do you think this spike up is sustainable? Your thoughts.

A. See my earlier comments about how the markets might just churn around these levels for a while regardless of what rates/Fed do.

Q. A week or two ago you said we still had room to run for our longs, and you nailed it. How did you come to that decision? When you zoomed out on the charts, what did you look at that made you confident (P/E, earnings, etc}?

A. Wow, tough to answer that easily. Years of experience and the setup for a good earnings season along with all the bearishness I saw at the time came together.

Q. Thanks for the heads up on the call buys for Tesla (TSLA), Google (GOOG), Netflix (NFLX), Shopify (SHOP), and STMicroelectronics (STM) in recent weeks. I did very well on all of them. Actually sold some of the GOOG/SHOP a bit early, but still did very very well. Thank you! And Happy Thanksgiving!

A. Rock on and back to you!

Q: What do you like right now besides our Revolution longs? Do you see trades in sectors like oil, banking, retail, or tech for the next 2 months?

A. I’d rather sell than buy oil and oil stocks. I’d rather buy banks than sell them. Retail is too full of big winners and big losers to put it in one basket. Tech will largely be fine, IMHO, but as always there will be ups and downs and panics and euphoria and winners and losers.

Q. Do you have thoughts on Michael Burry shorting the iShares Semiconductor ETF (SOXX)?

A. Burry’s had a terrible past year or so. That said, I too am long SOXX puts and I think the semiconductor sector is way overcrowded and full of too much hype and momo-lovers right now.

Q. Huge selloff in Tesla (TSLA) today, are you still holding calls or buying more?

A. Not sure we can call a 3% move in Tesla a huge selloff, especially when it was up 3% yesterday in a down tech market. In the hedge fund, we still own a few TSLA calls but we are also short a few TSLA calls as a hedge. To be clear, we are mostly sitting tight on TSLA right now though.

Q. I snagged some 12/15/23 Tesla (TSLA) $240 calls today on the big selloff. Thoughts on TSLA here and are you still in your TSLA 240 calls?

A. Tesla’s got too many cross currents to try to game it near-term right now. Elon’s tweets, Cybertruck release, macroeconomic/interest-rate pressures, failing competitors, etc. Long-term, I very much believe that Tesla will be a multi-trillion-dollar company. We still have a tiny bit of TSLA Jan $240 calls in the hedge fund but we sold some recently.

Q. Thanks for the write-up on our stocks so far. Looking forward to the others. On Uber Technologies (UBER), I read some notes that Warren Buffet likes the company because it’s a verb (you’ve said similar) and that inclusion in the S&P may be around the corner. Neither of these items impacts our thesis on UBER, but could be positives for the stock long term.

A. Yes, agreed.

Q. On your note on Intel (INTC), you mentioned a quote about making money on stocks in year 3 and 4 of an investment. Can’t we apply that same logic to Rocket Lab (RKLB)? If we believe in the space economy, shouldn’t we be patient with RKLB like we have been with INTC and let it all play out?

A. Perhaps. But there are obviously lots of big differences between RocketLab and Intel. RocketLab is a start-up and not profitable and never has been. Intel is a 50+ year-old company and has been the 800-pound gorilla in its industry for most of its existence. I’m still holding onto some of my RKLB because it very well could end up being a winner in The Space Revolution in the coming years. But competing against SpaceX is not easy and Space is not easy in general.

Q. Great run in Intel (INTC) lately. Hopefully, they can ride this momentum into the new year. We bought initially bought INTC at higher levels and bought some more INTC at much lower levels than where it is currently trading. At what point would you trim some INTC? Or is it too early in the comeback story for INTC to sell some?

A. I’ve trimmed a little bit of INTC in the hedge fund but it’s still a Top 3 Position. If everything works out for Intel like the CEO has planned, it will be a $200+ stock. If not, it might still be a $50+ stock. After a huge run like this when everybody who’s hated INTC is now warming up to it, it’s probably not a bad idea to trim a little bit.

Q. Now that Sam Altman is back at OpenAI, and I know you said you bought Microsoft (MSFT) puts on the AI call, are you still bearish on MSFT?

A. I think this whole Sam Altman being fired for basically being told he was a liar is a bad thing for Softee. Sam’s SPAC deal (link to WSJ here) is not kosher. He’s been accused of horrific things by his sister on Twitter. He’s had a history of leaving companies in questionable circumstances. I’m not a fan of Sam Altman and I think OpenAI is going to suffer some competitive losses because of this “You’re Fired…Wait, no, You’re Hired Back with MORE power” thing that has happened at OpenAI/Microsoft over the last five days. I think The AI Revolution is going to be better off without Sam as its poster boy. I would bet that there’s more drama around OpenAI and Microsoft’s AI businesses in coming months. I’m not making any big bet against MSFT but in the hedge fund I did buy us a few near-the-money puts dated out over the next few weeks.

Q. Do we have price targets for some of the new names that have moved considerably? STMicroelectronics (STM), Cloudflare (NET), etc. Some guidance would be appreciated.

A. Hmm, I don’t really do price targets. I think STM can get to the $60s if the next couple of quarters are good. Cloudflare has had a hell of a run and is probably pretty fully valued right now but it’s so well-positioned to benefit from increased AI spend that its estimates for next year could keep climbing.

Q. Robinhood Markets (Hood) vs. Coinbase (COIN). Why do you think HOOD hasn’t taken off like COIN has? What do you rate HOOD now?

A. Robinhood is a much more diversified company than Coinbase. But the fact that it looks like Coinbase will end up being the custodian for the major bitcoin ETFs that are probably coming soon has helped it get some momentum back here. I’d rate HOOD at 7 right now.

Q. Did you have the meeting with DallasNews Corporation (DALN) officers yet?

A. Bryce and I will be visiting them at their HQ in Dallas on the first week of December.

Q. Happy Thanksgiving to you and the family. What made you buy some Pfizer (PFE) calls? Why calls vs. common?

A. The call premiums were very cheap and if the stock drops another 10% or more, our losses will be capped at a tolerable level. Pfizer is a leading pharma company, has a good chance of getting some approvals for weight-loss and other Revolutionary drugs, and has long been a very profitable company. The stock has been absolutely crushed and the valuation is very compelling at these levels.

Q. What are your thoughts on Cisco (CSCO) after the recent earnings report and drop in stock price?

A. Haven’t worked on Cisco in years. We’ll run it through our P/P WiNR algo’s and see how it comes out and let you know if we do anything with it.

Q. What do you think happened with MP Materials (MP)? That was a big winner for sure for a while and we gave a good chunk back (despite some trimming at higher levels). Not asking for a mea culpa but more so your assessment on this one.

A. The MP stock never recovered from about six months ago when Elon said Tesla (TSLA) is going to try to not use any rare earths in their cars anymore. That, along with the fact that the price of the NdPr dropped dramatically over the last year has put MP in a tough spot. Also, I was never comfortable with the fact that it was a Chamath Palipatlya SPAC.

Q. What exactly did you not like in NuScale Energy (SMR) earnings call? Thank you!

A. The company lost its main customer and is going to have to reimburse that former customer. I am embarrassed that I ever owned that stock.

Q. Short NetGear (NTGR)? Their new flagship product drops internet connection over and over. People are returning it.

A. Hmm, we’ll take a look and if we see anything, we’ll let you know.

Q. Any thoughts on the Binance situation? Do you think it fails? Any implications on the likelihood of near-term approval for a bitcoin ETF?

A. Good riddance to CZ. That said, I do think Binance will probably still exist in a year from now. Bitcoin is bigger than any exchange and certainly bigger than any chump CEO. Not sure Binance matters to the potential for a bitcoin ETF being approved in the US.

Q. Last week or earlier Cody sent an alert selling ProShares Bitcoin Strategy ETF (BITO). I don’t own any BITO but own bitcoins in Robinhood. Do we need to apply the BITO alerts to the BTC-USD as well? If the answer is NO, then would you please send alerts for the USD-BTC whenever an action is expected?

A. I consider my BITO in the hedge fund to be my best way to get exposure to bitcoin/BTC, so yeah, I do mean bitcoin/BTC/BITO whenever I use “BITO”. I’ll try to be clearer about that in the future. Thank you.

Q. And lastly, do you know what the current value is of our SKTLs Space Cryptocurrency? I know we’re longer-term holders of those tokens but curious about the current value.

A. Just Google: “SKTLs Crypto Price” and click around on some of the links you get. It’s trading at about $0.006 right now which is just about where it’s been for months.

Q. Happy Thanksgiving! Markets have been tough for the last year or two and thankful for your guidance. Hope you both have a great weekend with your families.

A. Thank you for the kind words and thanks for being part of the Trading With Cody family!

Q. Do you bake or fry your turkey?

A. We bake it but I do love a fried turkey.

Q. Will Victor Wembamyama be the best ever?

A. Can’t imagine he’ll be better than Jordan. I do watch Wem every time I see he’s on TV though and the last time I was like that about any player in the NBA was….when Jordan was on the Bulls.

I leave you all with a picture of Lyncoln singing to Amaris. Have a wonderful and safe Thanksgiving!