Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

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Sunday, January 7, 2024

NVIDIA Revisited

 On August 26, 2023, 5 days before it a new closing hi at 493.55, I wrote a critical post about NVDA - the stock, not the company.   After that, the stock took a nose dive, falling 16.9% to 410.17 on 9/26/23.  That would have been a good buying opportunity of you were an agile trader or had a strong stomach.  After rising to 469 on 10/12/23, it fell to a new lo at 405 on 10/27/23.  But it bounced quickly, reaching a marginal new high at 496.56 on 11/14/23.  In the 2 months since, it's wobbled a bit, going nowhere, to close at 490.97 on 1/05/24.  Actually, the stock has been in the doldrums for 4 1/2 months, and pays no dividend.  See Graph 1.  

Graph 1

Per Yahoo finance, the current P/E is a wildly unsustainable 64.94.  But never underestimate the irrationality of the market.

Over a 24 month span the stock is up 80%, while the NASDAQ is off almost 3%.  This, I believe emphasizes the unsustainability of the stock price.  See graph 2.

Graph 2 - source: Yahoo Finance

The difficulty in this kind of a situation is that the stock might have peaked, or it might just be building a base for a new advance.  If I owned this stock [I do not] I wouldn't be in a big hurry to sell it all, but I would be watching carefully for the signs of a likely, possibly even inevitable, collapse.  It's happened before - in 2022 it dropped 66%.  Since August of 2023 it's been distressingly volatile, while not advancing.  So I might consider selling some to lock in a hefty profit. But if the 5 day EMA drops below 162, and keeps heading down, I'd dump it.  See Graph 3.

Graph 3

Disclaimer - I am not a financial or investment advisor.  I do these mental speculations for my own amusement and edification.  Make your own decisions and chose wisely.  Which is pretty damned difficult.

Note: Graphs 1 and 3 are from my files.

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