Calm, Cool, Collected, and Prepared
Always stick to your plan.
Nvidia $NVIDIA surged in the last hour of trading to close up 0.25 percent on Wednesday, mirroring intraday the up-and-down action of the previous four trading sessions.The world’s favorite AI chip maker is back in the $3 trillion market cap club after a wild stretch where it shed several hundred billion dollars of value.
And all of the S&P 500, the Nasdaq Composite, and the Dow Jones Industrial Average closed in the green.
Nvidia hosted its annual shareholder meeting Wednesday, drawing a lot of interest from the retail investors who’ve piled into the AI play in recent weeks.
The 30-minute session included a brief question-and-answer session with CEO Jensen Huang, who had little substance to share.
NVDA dipped as much as 2.77 percent during the day but rebounded after the meeting. Perhaps some other investors, traders, and speculators were watching too, hard to say…
Easy to say that NVDA is going to be volatile for a while, if only based on the most recent five days of evidence, even as everything else is basically copacetic.
According to Ben’s data, there’s been a drawdown of 10 percent or worse in 65 percent of all years since 1928. And corrections of 5 percent or worse have occurred 96 percent of the time.
“It would be more surprising if we didn't have some sort of correction this year,” Ben notes. So far, the 5.4 percent drawdown in April was as bad as it’s gotten.
We should be prepared for the calm to break, is the point. What could do it, is the question.
Yesterday we discussed “a status quo supported by easing inflation, rate-cut expectations, AI enthusiasm, and earnings growth” and the importance of incoming employment data.
And the CBOE Volatility Index $VIX dipped another 2.26 percent on Wednesday.
The wild card could be presidential politics, and we’ll have an opportunity to collect some data beginning with tonight’s first and perhaps only debate before the November election.
Perhaps the candidates will discuss consequential policy. Perhaps they’ll ramble incoherently. Probably both.
It’s a terrible idea to introduce partisanship to your portfolio – and the release of Personal Consumption Expenditure Price Index data for May on Friday 8:30 a.m. ET is still way more material in the short and medium terms.
But we should pay attention to these things.
It’s important to note that much of the major “up and to the right” price action of the last century-plus is supported by a healthy respect for the rule of law and the reliability of US institutions.
Anyway, stick to your investing plan. If you don’t have one, get one.
(And leave your politics out of it.)
