Jim Cramer's Dog's Name Spells Trouble for NVDA Investors

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Market News and Short-Term Predictions

I know I have been talking about AI a lot over the past couple of weeks, but that isn't going to change after what happened with NVDA after earnings. The stock added $250 billion in market cap overnight. That is like the entire market cap of McDonald's in a day. Mcdonald's better start mentioning AI on their earnings calls.

The reason it jumped +25% is that they called out an increase in revenue of 50% growth quarter over quarter. That is an insane amount of growth year over year, let alone over 3 months. I do want to point out though that at this point the valuation is getting hefty and that is why I ended up trimming some profits from them as well as other stocks that rode the coattails of the move (AMD and TSM).

If there is any indication it may be overvalued it's the fact that Cathie Wood said In February when Nvidia traded for $234 per share, the valuation was "very high."

The hype train definitely helped the overall stock market stave off the continued down momentum as the Nasdaq which is predominantly tech ended the day up 1.71% while the S&P 500 was up 0.88%.

Speaking of SPY, we are right back to the $410-$415 area after flirting around $420. I still don't have a high conviction for a move in either direction so I continue to be slightly short delta but have short vega and long theta in the options portfolio to neutralize some small up move back to $420-$425.

Lessons to Be Learned

Some of my best investments have been made investing in sectors that are looked down on at a specific time period. If energy stocks are hated in 2020 because the world shut down, it turns out that if you were an optimist that thought the world would go back to normal there was an opportunity.

In 2022 when everyone was panic selling tech names across the board because of an impending mega recession and you decided to buy some growth in the face of a downturn, you are already reaping the rewards in 2023.

In 2023 it feels like so far this year, financials have been hated on the most and real estate stocks have been hit harder with interest rates going much higher. Something tells me in a couple of years those sectors may rebound due to the cyclicality of rates and that the entire banking system isn't going to fail.

Options Trading Portfolio

Closing Trades

No closing trades this week as we let theta decay do its thing.

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