What’s interesting to me right now is that we all here (and in TMF in general) spend a lot of time discussing how to identify break-out stocks. What we don’t discuss nearly enough is how to handle them when the break-out occurs. We have all sorts of strategies for buying in thirds, buying more on better value points, identifying trends and moats, etc. But, what we don’t have is how to not sell too soon nor too late. And rarely do we discuss how to protect profits we have made.
It’s like we spend all our time talking about how to get down the field to inside the 20 yard line, but don’t discuss red-zone strategies to actually make the touchdown. And ironically, due to defense compression, it’s actually sometimes easier to get a big 50 yard play from your own territory than it is to get those last 10 yards to the goal line.
Couple small thoughts - just to share views:
*this isn’t football. You don’t need to get that last 10 years, especially is the risk.reward is skewed.
*you strike me as a person who knows what they are doing, and you seem like you know the NVDA story well. You invested early and have held it and you have a strong opinion on what it did and why it did it and why it might or might not be too high or not. If I owned NVDA, I’d want to ask you what to do, and you just described a situation where you ought to pair it down significantly, right? Not sell all of it, but pair it down.
you said this:
The danger here is that these sexy new markets for GPU intensive applications won’t grow quickly enough to satisfy the recent run-up in the stock price. I feel that Mr Market was behind the curve and now is way in front. NVDA was too low in 2012-2014, but seems too high right now. I could be wrong. In Silicon Valley you see Nvidia’s self driving test cars on Hwy 280, because the vision processing necessary to support autonomous driving is right up Nvidia’s chipset alley. But, is that really going to translate into big profits in time to satisfy Mr. Market? NVDA is a momo stock right now, but can reality sustain that?
Stocks fluctuate, and we in a bull market, and NVDA could go higher (of course - already has) and higher, but you are laying a case for caution. I have zero idea if you are right (you aren’t sure either), but you’ve been right so far. If you sell here and what you think happens happens, would you feel you made the right decision? If you sell and what you think happens doesn’t happen and the stock does well, would you feel you made the right decision? You seem to know the company, so staying around for 10 yards - why bother? If you have a strong conviction this is an overshoot, then that’s a logical reason to pair it. How much is up to you - you know best.
Money can find a home elsewhere. The same skillset that you used to buy this stock can be used to buy another stock, or buy NVDA when it fluctuates (and if you are wrong you can buy it higher - the stock doesn’t take offense at this).
You are the sum of your investment decisions. You’ve made a great one.
And rarely do we discuss how to protect profits we have made.
you just did…
I ALWAYS sell too early - it is a fault, but money can find a home elsewhere. There are lots and lots and lots and lots of stocks. The trick is to get done right with what you own. You’ve done that.
(I know zip about NVADA - just reading your note)