NVDA pulls the bull train, grade B+

Stocks start the year with a minor dip. Then the bulls take the wheel, with record highs in many major US indexes. Other investments such as bonds, gold lag. I make decent gains, self-grade B+. About half my gains are from Nvida. I have a small position in shares, and lean long with options. Tesla is a laggard. I maintain large cash reserves, waiting and watching for clearer opportunities.

Here a few ETFs 2024 year-to-date:

QQQ Nasdaq 100 2.8%
SPY SP500 1.5%

GLD gold -1.7%
IWM Russell 2000 -4.1%

TLT US20 yr -4.8%
EEM emerging mkt -4.5%
SLV silver -5.1%

My trading account +2.5%, so better than SPY. I remain over weight big tech. I believe the AI revolution is only in the second inning. There will be any number of small or new companies that become large companies, that aren’t even on my radar yet. With this in mind, the strategy of buying QQQ on dips. SPY might be good too. American companies are more likely to embrace the new changes. 

European governments may try in vain to save human jobs, with the unintended result of their big companies lagging those that embrace AI. It isn’t all puppies and rainbows. There have already been and will continue to be significant disruptions. People on the short end of the stick will need to adapt or suffer. 

There is a dark side. Dictatorships will have no qualms about weaponizing AI. This is down the road, but will almost inevitably come. Hopefully, the ethical side will prevail, but there are no guarantees. Think about big inventions such as the steam engine, or electricity, and how much those changed the world. AI is on the same scale. Unlike industrial inventions, AI is mostly about ideas and processes. Any changes are potentially much quicker.

It is always prudent to have some emergency supplies, food, water, meds, barter goods on hand. I’m not talking about massive stock piles, but two weeks worth, cost near nothing and will get a person through average disruptions.

Year in Review, grade B+

A very good year for the bulls. SPY +24%, QQQ up over 53%. My trading account a little bit better than SPY. I feel like I’m taking less risk than buy and hold SPY, so coming out ahead is a good result. My self grade is B+. Almost everything worked. Winning tickers were everywhere, led by NVDA, BRKB, AMZN, META, AAPL. 

As I often write, I am older than most, and my account is not some small throw away account. I have to be deliberate, because I can’t earn enough from wages to make up for big losses. After the margin call during the Covid year, I am especially careful. In my retirement account, I picked several value stocks using a fundamental screener. Those did poorly. 

In my trading account, I leaned heavy towards mega cap tech, and BRKB. That worked well, so my limited equity exposure turned into a good return. 

I remember telling some others to buy on dips, that a 20% percent dip would be a golden buying opportunity. QQQ touched 11 percent then went up. Hard to be so precise.

Going forward, I lean bullish, but will keep huge reserves until more is revealed. A five percent correction can happen at any time for little apparent reason. Last year’s strategy of buying the laggards for the year probably won’t work so well. For now, I lean cautiously bullish. I am grateful for the good year. I know a lot of people are hurting financially. Some of that is choices made. Some of that is disposition. Some are the cards you are dealt.

Some new year questions: Highlights, lowlights of 2023. What did you learn? What do you want more of, less of? What new activities would you like to start or perhaps resume? These are more life questions, than trading oriented, but still can be useful.

Highlights, a good solid year, low drawdowns. Low lights? Missed opportunity because huge gains were out there for those willing to take on the risk. What did I learn? I am an old dog trader, so not much new material to learn. Perhaps, learning to be happy with the half a loaf that I get. I'm never going to be an all in, all out, or all short kind of trader, not at my age and life situation.

Whatever your situation, I wish everyone of you, peace in the new year.