Just wanted to make a quick post here about a pretty significant move on the stock market yesterday/today.

So there was a huge sell-off especially in the chip and energy section – NVDA, TSM, VST, CEG.

Took a big hit and the portfolio lost HK$60k in a day.

I think this is a great buying opportunity though and I’d like to look back in a week to this post.

Overblown concerns

First of all, is the chinese AI company even correctly reporting their costs, and are they really as efficient as they say they are?

Also, I am thinking in my mind, even if the AI buildout is more efficient, that would just actually benefit those who are building them out, but not necessarily hurt those who are providing the infrastructure.

In any case, I think the market is also trying to find an excuse to sell-off after the hype from the Stargate announcement last week.

Buying the dip

I am underweight US equities at this point anyways and I purposely held off some investment $ for a dip.

This is the perfect dip for me to get in, especially since I really liked the energy and chip sectors but never had the chance to last year.

I did buy some at the top especially for NVDA and VST. CEG and TSM I still have unrealized profit but of course those were hit hard as well.

In any case, now that the valuation have gotten so much more reasonable, with a 10-20%+ drop in a single day yesterday, I already bought some and have set targets to buy up-or-down.

My outlook for this week

This drop is on Monday US time, so only the first day of the week.

4 of the Mag7 are reporting this week, and I am expecting mostly positive surprises for 4th quarter 2024. (increased money supply, strong economy)

Also a Fed meeting this week, and they were already pretty hawkish last month and the CPI data has come down since, so I think a slight dovish surprise would be more likely than any more hawkish surprises.

If rate comes down a bit more, and the earnings have positive surprises overall, it will correct like crazy from today’s fall and this “dip buying opportunity” would be gone in a blink of an eye.

I already bought USD$10k yesterday and today as of writing this, and will be buying at least another $7-10k in the next few days up-or-down.

Let’s review this post again in a week and see how it goes.

20240131 Friday update

So it’s been 3 days and writing an update now.

CEG and VST recovered more than 50% of the loss from the ATH, and I was able to buy a lot of the dip which was awesome. TSM also recovered quite alright.

I am back in the positive return territory for all 3 and it was nice to be able to get more shares during the correction. Will be buying just a bit more CEG and VST if/until it goes back to ATH again.

NVDA not so good. It tried to recover a bit but more news came out about US possibly limiting even more NVDA chips to china.

All in all I think the overall sentiment is, NVDA is still great but it has been overblown. Costs will come down, companies will innovate fast, and competition will come which will limit their growth to not as crazy as people are estimating.

I am also thinking I will take a pause in NVDA dip buying. I might buy some more on the way down, but $125 can still feel expensive for NVDA at this point. $100 would probably be a bargain.

In any case they are still contributing largely to the AI development, especially physical AI probably in the next few years, so I will be taking a “hold” stance for now at ~5.6% of stock portfolio, and have the expectation to take even a little more loss on it.

Will let it slide to 5% or maybe even 4%, then if it gets depressed too much I might buy in again.

They are still a big player in the AI development and demand for their chips won’t disappear. Profit margins might decrease though and that will hurt their profitability as well as multiples, so let’s see how it goes.