February 22, 2024

Chart of the Week – Movin’ On Up

By Nathan Sweeney

Welcome to the Chart of the Week.

 

The Chart of the Week highlights Nvidia’s earnings from Q4. Everybody is talking about Nvidia, due to their role providing microchips used in processing lots of data for AI companies. Nvidia didn’t disappoint, and reported fourth-quarter revenue of $22.10 billion, beating estimates of $20.62 billion.

Given the hype leading up to Nvidia’s earnings release this week, investors wondered how to play the news. Instead of trying to predict the instant reaction to the numbers, it may be wiser to react to the volatility afterwards. If there is a significant selloff, buy more, if you still have conviction in the investment. If the stock takes off, pare back the position to bank some profit. Investors are better served to ignore short-term noise and focus on long-term potential. Some basic rules help to put things into perspective and rationalise how you perceive risk, which reminds me of my weekend:

 

My sister and her family were visiting over the weekend, which meant mayhem around the house, as there were now four kids to entertain, so there was only one thing for it – Legoland.

Most of the rides at Legoland require a minimum height of 90 cm. My youngest is almost three and is 89 cm tall! We decided to go on the Merlin ride, which spins round and round and up and down.

The attendant agonised over trying to measure a wriggly toddler, but finally said sorry, she’s not tall enough and suggested a couple of other options. The rest of us piled on!

Rightly so, as there is a difference between the level of risk you are willing to take and the level of risk you are able to take.

 

When it comes to investing, most people know what to expect, but every so often, someone doesn’t fully appreciate the risk warning, only to question if they have the stomach for it.

Like a roller coaster, there will be ups and downs and dips along the way, along with highs and higher highs.

After all is said and done, most people come away with a different perspective of risk, having experienced something genuinely worthwhile.

In investing, if you overreact to the perceived risks you will inevitably miss out on the higher highs, as the chart above demonstrates.

 

Takeaway: To benefit from investing you need to rationalise risk.

Did you know: Elon Musk says Neuralink’s first human patient can control a mouse using the brain implantClick here.

Marlborough Podcast: This week we discuss inflation, UK economic data and earnings surprisesClick here.

 


 

Source: Marlborough Multi-Asset Investment Team, App Economy, Schroders (Duncan Lamont), BBC news.

Important Information: This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Clever to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. You should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with your own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.

All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Clever Adviser Technology Ltd (Clever), a company registered in England and Wales (company number: 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF.

Meet the Author

Nathan Sweeney

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