Mega cap tech stocks lead stocks higher. One online person from Investor’s Business Daily waxed poetically about a golden goose, flapping her wings and blowing money all over the place. It was that way this month for those long calls on certain stocks. As almost always, I tend to be cautious, and my meal was more along the lines of lean chicken. I was up about 4% for the trading month, about 14.9% for calendar 2023.
Here are some etfs year-to-date:
QQQ Nasdaq 100 38.2%
SPY
SP500 14.9%
EEM
emerging mkt 7.9%
GLD
gold 7.1%
IWM
Russell 2000 6.6%
TLT US20 yr 3.1%
SLV
silver 0.7%
I am pacing SPY which is decent. I feel like I have less risk than all in buy and hold, so matching market returns with less risk is a good outcome. At the start of 2023, almost everyone would take +15% for the first half of the year.
With all that, another Investor’s Business Daily online commentator talked about making money but feeling miserable because they were under-invested. I won’t go that far on the feelings, but certainly there were home runs that I did not take advantage of. I was long NVDA. One position was a NVDA bull call spread, long the 300 strike, short the 320. That spread tripled in value, which sounds great, and is great. However, straight call buying returned 10x to 20x+, depending on the strike.
An old tiger can’t change it’s stripes. It was a stretch for me to buy premium at all. Almost all cautious investors are lagging QQQ, which is up an incredible 38% for calendar 2023. I talked to a relative and despite a huge position in NVDA, that person says they are not near their all time account highs. I am in a similar boat, but suffered a near catastrophic margin call in 2020.
The AI revolution is the real deal. Society changing technology, perhaps as big as the invention of the steam-engine or the widespread adoption of electricity. It may spawn dozens of new companies that are not even public yet. That said, trees do not grow to the sky, moon shot stock chart often explode like sky rockets.
I told someone else that NVDA is likely in a range between 300 and 500 for the next year. Rough plan is to sell calls above 500, sell puts below 300. Captain Obvious will tell you there isn’t much premium at 300 when the stock is near 430. Why 300? Because Cathy Wood (ARKK manager) sold her NVDA around 300. She would love to get back in near those prices. Why 500? Because after the news, two analyst with years of training gave 500 as their one-year price target.
Again, it is a rough outline. The golden goose of NVDA is no where near done, but overly aggressive option buyers are unlikely to be rewarded so well going forward. Reddit gamblers are still buying puts on NVDA—that’s a big bull. Fundamental amateurs are saying it is way over valued. All good news for the bull case.
