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 Gainers📈 & Losers📉

Our Biggest Gainers & Losers of the Day in the $100,000 Build Portfolio

For the 28th August 2024:

• When A+ Just Isn't Good Enough 😬

• Did I Catch A Knife?!🩸🗡️

When A+ Just Isn't Good Enough 😬 

Not the biggest loser today (I’ll get to that).

It’s definitely one of them & as it is now, it looks like it might take the number one spot tomorrow. But you know what?

I’m not even mad. In fact, I’m quite excited about it.

If you haven’t guessed it by now, I’m talking about Nvidia. AI’s golden child. They reported earnings today after market hours. They were down over 2% during market hours today which I’d imagine was from investors taking some profits off the table in case they missed expectations.

Nvidia were never going to do that. The queues for their AI chips & computer systems are out the door.

So if they beat revenue & earnings expectations how is the stock down over 8% after hours?!

Well it sounds like they’ve become a victim of their own success. Like the kid that always get’s an A+ so his parents are disappointed when it’s only an A.

For context, Nvidia’s earnings & revenue have showed triple-digit growth for 5 straight quarters now. Triple digits. Over 100%. Doubled!

That’s insane. When this beat come in a little more modest than prior quarters, it looks like it’s caused a bit of a sell off. And their beats are consistently getting lower & lower but still super impressive.

There’s also no signs of them having a major fall off soon. They gave us Q3 revenue guidance slightly higher than analysts expected so they’re not playing it safe & backing themselves.

Speaking of backing themselves, they’ve also announced a new $50 billion stock buyback in addition to the $7.5 billion they already had authorisation for.

The only cloud over this earnings was the delays to the Blackwell next-generation chip which we’ll need some confirmation on & guidance on whether their customers are doubling down on current generation AI chips.

Now what should we be doing? How can we make money from this?

Well, I’m debating a few options.

The obvious answer is “Buy the Dip”. To be honest, I’ll be doing this at market open tomorrow. I’d be surprised if we don’t see a double digit drop when the market opens so it’ll be a nice, healthy discount. Especially if Nvidia can keep growing & performing even close to how they have been.

We’ve seen it before with companies like Meta that beat earnings then have huge drops in stock price only to be sky high in a few months time.

There’s another path I’ve been thinking about too so stay with me here.

Nvidia makes up about 8% of the Nasdaq & about 5% of the S&P 500. That’s a pretty sizable chunk.

If Nvdia’s huge drop holds until market open tomorrow, it’s going to drag on the indexes. It might cause similar stocks in the same industry to fall too. It could even cause negative sentiment all around & make a real dent in the market.

In fact, Nasdaq futures dropped 1.3% after Nvidia reported earnings. Coincidence? I think not!

Do you see where I’m going with this?

Rather than buying the dip on a single stock we can spread or reduce the risk & buy the dip on the indexes!

Depending on your risk tolerance, there’s a few ways you can approach that, too.

If you just want a better price to buy & hold for the long term, QQQ or VOO is perfect.

If you’re like me & happy to risk a little more to make a little more, you can look at TQQQ which gives you 3x the returns of the Nasdaq. There’s also SPYU that gives you 4x the returns of the S&P500.

And if you’re looking for even more risk & higher returns, you can try & get in on Nasdaq futures. I would advise against this if you’re new to investing & finding you’re feet.

For 99% of people, buying the dip on Nvidia and/or buy the dip on the indexes will be perfect.

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Did I Catch A Knife?!🩸🗡️

My biggest loser for today is a repeat offender this week.

I’m talking about PDD. 😭 

I said I’d be happy if I could get an average buy price under $100. I’m learning why people say “Be careful what you wish for”

So why are they down again?

Well, after their slight miss on revenue all the big banks have jumped on the bandwagon with their downgrades.

Citibank dropped them from a “Buy” to a “Neutral”. Barclay’s reduced their price target from $224 to $158. 

I mean, to be honest, that doesn’t even sound too bad to me if their revised price target is still just shy of 80% from current price.

My sentiment on PDD hasn’t changed so I won’t go over it again. If you missed my full deep dive onto their earnings & what happened you find it here.  

I’ll continue to average in for that average buy price under $100 like I’ve been wishing for & link you back to this post when we’re up over 80%. 😅

That’s all! See you same time tomorrow 👋 

P.S Hit reply & let me know what you thought of today’s newsletter. All feedback is welcomed ❤️