I was WRONG about Nvidia’s stock: What’s my investing strategy now? #NVDA

Back in November 2023, I warned that #Nvidia’s (#NVDA) #stock could sell off 40% or more if they missed on earnings. Nvidia ended up meeting expectations, and after the stock consolidated for a few months, it finally broke through to new all-time highs in January 2024.

I was wrong. In this game, there’s no being “early.” If I make a call and it doesn’t happen in the timeframe I thought, that’s WRONG… even if Nvidia sells off 40% from its new all-time high in the future.

However, even though I made that bear call, I’ve still made an absolute fortune in my Nvidia #investment since November. How is that possible??

In this video, I go over how critical it is for long-term investors to be able to be long and bearish. Also, I share my strategies for how to manage risk for each of my investments in my portfolios.

Learn more about stocks, Bitcoin, and investing strategies from my YouTube channel here: https://www.youtube.com/@GetIrked/videos

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0:00 Why did predict Nvidia’s stock could sell off significantly?
0:33 Why in the stock market is there no such thing as being “early?”
0:53 How can long-term investors be both own an investment and still be bearish?
1:42 Why did Irk take profits in Nvidia and what happened afterward?
2:17 Why did Nvidia’s stock rally huge last week?
3:07 Why does Irk still believe Nvidia’s stock could sell off anywhere from -16% to -70%?
3:44 Why did cryptocurrency mining cause Nvidia’s stock in 2018?
4:36 How did Nvidia’s stock selloff during March 2020 compare to the rest of the stock market’s pullback?
5:05 How bad was Nvidia’s selloff from its last all-time high in 2021 to the bottom in 2022?
5:33 How can long-term investors make buying plans for potential selloffs in Nvidia’s stock?
6:33 What is “Gap-Fill Theory” in the stock market?
7:00 What will make Irk become more bullish on Nvidia headed forward?
7:43 What’s the next big potential catalyst facing Nvidia’s stock?

Back before Nvidia reported earnings in November  – the third quarter earnings report – I came out   on YouTube and said that I was worried that it  might sell off 40% from its then all-time high.  

Nvidia has a tendency to go through cycles: it  makes a new product, it gets a lot of demand for   that product, the demand gets overstated,  and, then, Nvidia sells off significantly   from that point. And, given how much of the hype  bubble we’ve had around artificial intelligence,  

I still feel like that might be the case. However,  this is a good time for me to revisit a couple of   things. First off, I was early and, therefore,  I was wrong. I don’t agree with anyone who says  

They were just “early.” In this game, when you’re  talking about the stock market – if you’re early,   you’ll be off-sides and you are simply wrong.  However, that doesn’t mean I don’t think a 40%   selloff in Nvidia could be coming, and I felt  like this was a good time to talk about what  

It means to be a long-term investor and bearish.  In other words, you can be both bearish and long.   When it comes to any of my investments,  if I feel like it’s getting too frothy,   I don’t short the markets and I don’t short  individual positions. One of the biggest dangers  

That comes from shorting – or selling short –  is that you’re borrowing shares and then selling   them to the market with the idea that you’ll buy  them at lower levels. However, there’s no limit on   how high a stock or the index could go. In other  words, when you’re shorting something your risk  

Is limitless. What I do instead is I’ll sell some  of my own position; consider it shorting yourself.   I’ll trim a little bit of my own position and take  profits in order to reduce the amount of exposure  

I have to an asset. I did this myself going into  Nvidia’s earnings report back on November 14th of   2023, I sold 7.07% of my position at $ 496.42.  Obviously, I still kept the vast majority of   my position – nearly 93% – and it still exceeded  the maximum target allocation size for my flagship  

Portfolio; it was in excess of 7.17%. However,  by taking those shares off the table, I freed up   that capital to buy if Nvidia sold off and it did  pull back a little bit. However, this week Nvidia   really broke out. In the Consumer Entertainment  Expo, they talked about their new graphics cards  

That would be able to do artificial intelligence:  the 4090 Super, the 4080 Super and the 4070   Super. The reaction to these cards – which are  consumer-grade graphics cards – was huge, and,   as you can see, we now have a new all-time high  for Nvidia up here at $553.46. I’ve been using  

Nvidia’s products since the 1990s, and, although I  do love their graphics cards, I kind of feel like   this move is still overdone. Now, does that mean  I’m going to take more profits? Not yet. I do have   a target to take profits around $585, a price that  I calculated using Fibonacci Retracement, however,  

Unless it gets that high, I won’t take any more  profits. Now, why do I keep saying that I can   expect a 40% pullback in Nvidia? Well, I’ve been  in Nvidia since 2016, and I’ve seen it pull back  

More than 40% several times. You can see that  just from 2017 to 2018, Nvidia had two pretty   significant pullbacks. Back in, 2017 it pulled  back nearly 17% in a matter of 2 months. Then,   in 2018, within about a month, Nvidia pulled  back significantly again, dropping more than  

18% in a month. And, these sell-offs were just  based on market moves – the S&P 500 pulled back   and Nvidia pulled back even further. However, if  you look at 2018 going into 2019, you can see that   Nvidia disappointed and pulled back nearly 60% –  57.49%. What happened here? In October of 2018,  

Nvidia announced that the demand for its graphics  cards was mostly based on cryptocurrency mining,   and, up until that point, Nvidia had been saying  that the demands for its graphic cards were not   based on cryptocurrency mining. However, it came  out that they were wrong. Therefore it sold off  

57.49% just in a matter of 3 months. Fast-forward  into April of 2019, and you can see that it pulled   back again – Nvidia sold off more than 30% in 2  months and this really wasn’t based on any news,   either, this was general market fluctuations  and demand for Nvidia stock that caused the  

Pullback. During the pandemic selloff in 2020,  you can see that Nvidia pulled back nearly 43%,   just like the rest of the market. However, the  S&P 500 only pulled back 35% – Nvidia pulled   back even more even though as a company it wasn’t  as affected by the pandemic. It’s not like people  

Were going to stop buying their graphics units  and it’s not like they would have gone out of   business – they were generating a lot of cash  flow, but it still oversells in comparison with   the rest of the market. Most recently, when  we look at Nvidia’s selloff from its high in  

2021 to its low in 2022, you can see that it  sold off 68.79%. In other words, a selloff of   anywhere from 18% to 70% happens on a regular  basis in Nvidia, and, as long-term investors,  

It’s up to us to be aware of those pullbacks and  be careful when it comes to how to manage risk in   such a volatile stock. Regardless of whether you  agree with me that Nvidia could pull back that  

Much, if you’re long Nvidia, you need to prepare  for that kind of pullback. Now, that doesn’t mean   selling your entire position today. Instead,  what that means is consider making a buying   plan. Look over the past and find key levels  of support that Nvidia has made over the years,  

And consider using them as places where you would  buy more. For example, just a few months ago,   you can see that Nvidia pulled back to $392.30.  And, then, we’ve got the top of the gap-fill down   here at $366.35 where it recently broke out  last year. At this point, with its all-time  

High at $553.46, if we were looking at a 40%  pullback, that would give us a price target   of $332.07. And, as you can see, that conveniently  fills the gap that Nvidia saw when it leapt in its  

May quarterly report back in 2023. You may have  heard of “Gap Fill Theory.” The idea is that no   stock or index will ever leave a gap in its chart.  It might take years for the stock or index to go  

Back and fill the gap, but whether it gaps up  or gaps down, the theory is that the stock will   always go back and fill up that gap. This would  work perfectly with the idea that it could pull  

Back 40% from its all-time high. If Nvidia did so,  it would perfect fill the gap. When will I start   getting bullish on Nvidia? I really do believe  that it’s incredibly frothy, and a lot of the   Bears out there are thinking that there were  triple orders – people putting in three times  

As many orders for the chips that they needed  than they actually did. Once Nvidia can start   meeting the demand with the supply that it needs,  the question is – is that going to still maintain   the demand? In other words, even if they’re  meeting the demand, will there still be that  

Many people who want to buy their chips? If Nvidia  is like it has been in the past, it will continue   growing in the future. Don’t get me wrong! This  is an excellent long-term investment which is   why it’s the biggest position in my portfolio,  but I always need to be prepared for those epic  

Sell-offs. The next big catalyst for Nvidia comes  on February 21st when they report earnings, and   if they come out and announce that they’ve either  met or exceeded the demand that everyone expects,   that’s great news and I will stop being as bearish  as I have been. However, right now in January,  

We’re seeing a lot of semiconductor companies  come out and report that their demand isn’t as   high as they previously thought and this is  causing them to sell off significantly. If   Nvidia falls in line with the rest of its cohort,  then its February earnings report could be quite  

Disappointing and it might signal the beginning  of a significant pullback in Nvidia. Now,   does that mean it’s coming back 40%? There’s  no guarantee on any of that, and I probably   won’t make a price target guess like that again  in the future. But, I’m always aware of any of  

My investments pulling back. To learn more about  long-term investing, check out this video I made   about Boeing and how investors can prepare for  negative news catalysts that no one sees coming.