So Nvidia is shooting up like crazy … when people (and I) thought $900 was expensive, now it’s $1200 and the upward momentum seems unstoppable.

I almost bought 1 share at $1100 and back of my mind a little bit beating myself up for missing out the $100 increase.

But logically it’s the right decision … so I want to write the post to re-assure myself.

Not understanding the company and the industry

There are many many stocks that are shooting up crazy all the time that I’ve never heard of and don’t know about.

Just because NVDA is the center of attention and I know about it, doesn’t mean missing out is losing on its profit.

At the end of the day, the purchase decision should be based on:

• knowledge of the company and what it does
• clarity about its future and growth, vision, etc.
• reasonable valuation – based on perhaps online tools and basic P/E etc.

So I basically don’t know anything about the semiconductor space, what Nvidia sells (except like, chips to big tech companies), and also what is happening with the company.

And buying it would just be kind of a crap shoot or “follow the herd” mentality.

Versus for example Tesla. I really identify with their FSD software story and it seems to be at a reasonable (although not undervalued) valuation.

Then say Apple, Facebook, Google – I use their products, I know for the most part what these companies do, their MOATs etc.

Not being OK with a huge drop

Let’s say Tesla drops 50% – I’m actually okay with that given the position I have at the moment, and I would probably move in to buy some more.

I’d have lost HK$15k but unless some huge fundamental shift happens there, I am happy to keep sticking with it.

But if I imagine I buy 1 share of NVDA for $1100 and it drops 50%. I’d have lost HK$4k and I am actually not quite happy with that.

I wouldn’t really know what hit me and the back of my mind I’d tell myself, see you shouldn’t have bought.

So just not having to regret no matter how things go is the key to being happy as an investor and sticking with it for the long term I think.

That’s why I canceled the order for 1 share of NVDA after all. And I need to reassure myself that I have not lost out on $100 potential profit.

Not having an exit point

So it’s $1200 – do I sell? but it can go to $1500, $2000. And there is a 10-1 split coming. It’ll probably keep going up.

I wouldn’t know where to exit anyways as the exit point is long past if I refer to valuation methods.

Compare to say Tesla or Apple – I might exit around $220, or $240 … I don’t know (although I really should).

Having a clear exit point is important and profits can be realized, and it’s a good way to keep yourself from going too deep.

Also selling covered calls can be a nice way to add some profits there too.

Conclusion

Anyways the overall conclusion is, don’t fuss over missed opportunities and stay focused on things that I know about, and just go with ETFs for the rest.