Elnora H. and William B. Quarton Professor of Business Administration and Economics, Coe College, Iowa
Nvidia Did It Again, 8/24/2023
Nvidia delivered another huge beat of earnings expectations. You don't often see a large cap company grow over 100% quarter over quarter. Shorts are burned. Again!
I am sticking to my position in Nvidia. The valuation is crazy, I know. Its forward P/E ratio, the most generous take on valuation, is near 100. I am very convinced that it has gone from a good growth stock to a Cisco-like bubble in the late 1990s. But you don't sell your star on the way up. You sell it on the way down because you could never know how high it will go. Nvidia has all the tales of a classic trend-following play in the coming months.
Nevertheless, I take advice from Ed Seykota. The legendary trend follower said, “I take profits when a market gets wild. This usually doesn't get me out any better than waiting for my stops to close in, but it does cut down on the volatility of the portfolio, which helps calm my nerves. Losing a position is aggravating, whereas losing your nerve is devastating.” I just moved a small portion of Nvidia winnings to buy some Apple, Costco, and Tesla.
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