Cutting Wood For ARKK, Oh No Sonos! & Hecklin’ Hydrogen
Wood You Burry The Hatchet?
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SpongeBob into The Band … Great Ones, we’re rollin’. Let’s see what today’s featured presentation has in store for us:
Biggest Fan, here! I know, I know. It’s been another minute for me but had some family stuff to deal with. Been reading! Trust me. It’s what keeps me sane. Lol. I wanted to just throw in my 2 cents on the quasi-shorting of queen Cathie and her Ark.
I say quasi-shorting because this guy Burry only purchased puts and didn’t really grab his balls shorting it outright. Kind of a (another name for cat here) play, don’t you think? To even call her out with that trade to me is humorous … Playing options, of course, is a smarter decision, but you and I both know that ain’t real skin in the game when it comes to shorting.
Biggest Fan — Jamey
James! Jamey! Jimorino! Sup, brother? Good to know you’re still alive and kickin’.
Forgive me, but I had to trim your email down a bit.
Nearly 600 words? You tryna steal my job? I kid … mostly.
Also, I’m not sure how serious to take the AP college football poll, man. They’ve got the UC Bearcats ranked eighth? I ain’t buyin’ it. Still, Roll Tide man. Good luck this year!
Anyway … so, Michael Burry versus Cathie Wood got more than a few of you all riled up. I saw you out there too, Susan M., siding with Burry on this one.
Here’s the thing. Burry isn’t wrong for shorting ARK Innovation ETF (NYSE: ARKK). I believe I said as much on Tuesday. The market is riding an easy-money high (still), and tech stocks are leading the way. It stands to reason that when Wall Street has that easy money taken away, tech is gonna have a bad day. Fed tapering … it’s what’s for dinner.
However, Cathie Wood is also 100% correct.
Tech like green energy, electric vehicles, hydrogen power, artificial intelligence, space and robotics are literally the future of our global economy. While some of the more speculative stocks here will take a hit, they’ll also recover quickly.
I tell this to people all … the … time. Two market analysts or economists can both be right, and both could be wrong. It all depends on your investing timeframe and methodology.
For instance, I often recommend trading services that own stocks I don’t like. It doesn’t mean either of us is wrong or right. What it means is that we’re looking at different timeframes and different investing goals.
Your best bet is to pick one you trust that aligns with your investing goals … and stick with it.
Now, as for the whole “Burry traded options; he’s not serious, lol!” angle … Burry is smart. Sure, buying put options here gives the impression that he lacks conviction in shorting ARKK, but let’s not kid ourselves. You don’t get to where Burry is by worrying about impressions.
Would actually shorting ARKK be more direct and ballsy? Yes. But it would also be stupid financially.
By using put options, Burry can control more ARKK shares with the same money than he would by shorting the ETF directly. He can also reap a much, much bigger profit due to the leverage that options offer. It’s hard to beat that 1-to-100 ratio that options give you.
In the end, Burry is probably gonna make a boatload of money — you are correct, Susan. The easy-money situation on Wall Street has to end sooner or later. However, Cathie Wood’s ARK Innovation ETF is also going to make a boatload of money — you are correct, Jamey. Tech is the future, and it ain’t going away anytime soon.
Remember, Great Ones: All the world’s indeed a stage, and we are merely players. The important thing is to not get played along the way.
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If the important thing is to not get played along the way, the second most important thing about Reader Feedback is the friends we’ve made … right? Right!!??
Here’s what else is crackalackin’ in the inbox this week! Remember, if anything you see gets you ranting along at home, drop me a line with your thoughts. I’d love to read what you have to say — yes, you. Now let’s dive in.
I Ain’t Afraid Of No Feedback!
That’s a lot of good info, but I’m just here for the pop culture references.
A question for you: Were you intending to reference Iron Man 2 with the “it’s always been COVID” line? ‘Cause after I read it, I heard Tony Stark give the company to Pepper.
Next, I’m a bit disappointed you added the link to the Ghostbusters quote. Totally unnecessary for those of us who are … old. About 10 years ago, I started singing that line while walking through my office. Before I could get to, “Woah…” the receptionist stopped me and said: “Wow, Christmas music already?”
Until that moment, I hadn’t realized that Peter Venkman was really just singing Bing Crosby. Mind blown. Mind also humiliated, because HOW DID I NOT KNOW THAT?
Take care, and keep the decent Great Stuff coming! — Ryan P.
Oh, Ryan … you nut.
I’m mainly here for the pop culture references, too. But that secret stays with us and the, well, the great wide public, I guess.
And … erm, of course I was referencing Iron Man 2! Who could forget such a tender moment from one of Marvel’s worst movies … second only to the complete garbage that was Iron Man 3. (Seriously, don’t even get me started on the third movie … like, really guys, The Mandarin?!)
Anywho. Back to Ghostbusters. I feel your pain, Ryan. I really do. But unfortunately, not everyone is as hip as we are. Not everyone has seen Ghostbusters … can you believe it? It’s true. But someone’s gotta educate them. It’s a heavy burden, but one I’m willing to carry.
And now because you’ve got what’s arguably one of the greatest theme songs of all time stuck in my head, let’s all take a second to do the Ghostbusters boogaloo. You’re welcome.
Case In Point
Oh, Rich. Can you have it both ways? Well, I’m not allowed to answer that publicly, so…
You seem to forget Newton’s first law of online shopping! For every “free” transaction, there’s an equal and opposite transaction where someone gets stiffed.
For instance … your fellow Great One, John, told me about how Wish sent him some fugazi SD cards with nary a customer service contact number in sight. As per usual, I personally find pleasure in the fact both of you wrote in back to back with your tales of Wish woe and winning, but you may find that less amusing than me.
Still, judging from the sheer amount of “what the heck, Wish?” memes online, I’d say the company’s uhhh “brilliant business model” is rather ubiquitous. Don’t believe me? Just search on YouTube for “PC parts” and “Wish.” Be warned, though … that’s one heck of a rabbit hole to go down. Don’t say I didn’t tell you.
As for investing in Wish? You’re just as likely to get a Rich experience as you are a John experience. Good luck with that … I’m sitting this one out for now.
I Beat Your Trade, Not To Brag…
Love reading your daily newsletter. Made a nice chunk of change on the AMD options information you passed along. I actually waited about five days from your recommendation and bought in lower, and I wasn’t disappointed with the return. Thank you again.
I was wondering if you thought SONOS was a good options play leading up to the official decision in mid-December. Thank you for your thoughts again. — Serg G.
Thanks for tuning in, Serg! Options ideas? That’s all you had to say! Let’s take a look at the situation…
For those of you out of the loop, Sonos (Nasdaq: SONO) makes smart speakers. Alphabet’s (Nasdaq: GOOGL) Google also makes smart speakers … using Sonos’ tech. Without permission. This patent-infringement case will get an official ruling in mid-December, like Serg alludes to.
We know how this will go down. The International Trade Commission already sided with Sonos. For this situation, options could work … but they’re not your best option. Ha … get it? Options not your best option? I have to amuse myself somehow…
With options, we need volatility caused by unknown variables in the mix. Here, the case’s decision is known, and the date is known. There’s no unknown to drive volatility. In other words, the Sonos decision is already priced in. There’s no juice to squeeze out of this sucker.
Any bullish play is at a massive disadvantage here unless a new unknown occurs during the announcement, which is unlikely. The “best” options play here — and I use that loosely — would be to buy puts surrounding the event to get that sell-on-the-news effect.
Would I personally recommend it? Not really — there’s not enough potential payoff here to warrant the risk. But I applaud you keeping an eye out for new options setups, Serg. Keep me in the loop!
I’m glad you brought this article up, Mike! Seriously. I suggest other Great Ones check out this piece on hydrogen power’s eco-friendliness if you’re interested in the sector — not for the fear, but just to witness the kind of pointed, willful ignorance you see in energy sector coverage.
Let’s take a look at not just what the article posits … but why it’s pushing this train of thought. Especially before making any drastic moves, such as, I don’t know, pulling out of an entirely new trend in energy production. The article’s crux is thus:
Let me stop right there…
I’ve said before that using natural gas is a way to get us started on hydrogen. It’s a way for Big Oil to easily transition to greener fuels without their behinds handed to them. A way for us to wean off of carbons instead of going cold turkey in a green new world.
Hydrogen is only as green as the energy used to make it. This much is true. But with most energy sources already transitioning to solar, wind, geothermal and so on, this isn’t that big of a concern.
Natural gas will eventually be replaced with better, greener sources of energy as technology advances. And once we are able to cheaply convert water to hydrogen, it won’t matter how much Big Oil drags its feet. The technology is coming. Mark my words.
Then there’s this from Cornell Biogeochemist and Ecosystem Scientist Robert Howarth: “To call it a zero-emissions fuel is totally wrong. What we found is that it’s not even a low-emissions fuel, either.”
Oh, Robert, you ignorant… To call it “not even a low-emissions fuel” is what’s totally wrong. It’s willful denial of hydrogen’s potential at best … and shilling for Big Oil at the worst.
Why? Because the article holds blue hydrogen up to this “emissions-free” claim while completely glossing over the fact that blue hydrogen isn’t the most emissions-friendly type of hydrogen energy. That’s green hydrogen.
Remember that whole color wheel of hydrogen power we talked about back in February? How there are different “flavors” of hydrogen power based on how it’s developed? Green hydrogen, for example, is created by electrolysis — using electricity to separate water into hydrogen and oxygen.
That’s the end goal. And no natural gas in sight. But because we’re not at that level of efficiency yet … ol’ Robert Howarth thinks we should lump current hydrogen power techniques in with the rest of “dirty energy,” forgetting about its true potential.
Let me ask: Do lithium batteries get the same hate from Howarth? Battery-powered vehicles are far from having “low emissions” if you consider all the strip mining, hazardous chemicals and battery disposal waste.
I want y’all to know that I like hydrogen because it’s a transitional fuel. In other words, it can help our current energy system transition to greener energy. By using current production methods, more of Big Oil can get in on it and build out hydrogen’s distribution chains. Then, we could transition more easily to green hydrogen production — sans natural gas.
Isn’t this competition-fueled development how capitalism works?
Should we be further along in developing totally green energy by now? Of freaking course, we should. But the problem that green energy advocates have faced for decades is that their plans completely excluded all the traditional energy companies from participating … and those big energy companies have a ton of money (and senators in their pockets) to fight you over that.
And so, class, we find ourselves where we are today: We’re arguing against a green fuel that would transition away from carbon fuels … while Big Oil energy people are onboard … just because the entire system isn’t green.
And you want to be my hydrogen fuel cell salesman…
Fake Plastic Emails
Hold on, this wasn’t supposed to make the cut…
I guess when we specifically said to stop with the sponsor emails and salesy spam, we summoned the very thing we wanted to avoid — like an inbox Bloody Mary (the mirror one, not the tomato juice monstrosity).
How about you fill our inbox with something a little more refreshing? A question here, a little market insight there — whatever floats your boat, write to us!
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Editor, Great Stuff