🚀 Can Anything Slow This Juggernaut?

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What’s on the Menu 🍴

One thing we’ve learned over the past 20+ years as investors:

Never underestimate how high markets can go…

Or the insanity of crowds!

Today, we’re looking at several examples of where insanity has driven prices (and people) to do wild things.

Let’s blast off:

• Nvidia: Can Anything Slow This Juggernaut? 🦾

• The Cautionary Tale of a Crypto Millionaire Gone Bust 🚫💰

• Crypto Titans Face Serious Allegations 😨

• Big Looming Trouble For Stocks & Crypto 📈

Today’s newsletter is a 5 minute read.

Nvidia: Can Anything Slow This Juggernaut? 🦾

The hottest topic in the stock market this week is Nvidia, the leading GPU manufacturer and primary beneficiary of the current AI hype cycle.

What’s happening:

• NVDA stock entered the week up more than 200% year-to-date, as demand for high end GPUs has skyrocketed and pushed Nvidia’s revenue & profit growth to record heights.

• Leading up to NVDA’s Q2 earnings release on Wednesday afternoon, expectations were through the roof. And wow did NVDA deliver!

• The company reported revenue growth of 101% and adjusted net income (profit) growth of 422% versus last year. 🤯

• In addition, the company guided to $16 Billion of revenue next quarter versus analyst expectations of just $12.5 Billion.

That level of growth at this scale is just bonkers!

NVDA stock spiked 5%+ in aftermarket trading, but ended basically FLAT during normal trading hours on Thursday.

That modest reaction surprised a lot of investors. Why didn’t the stock moon?

A combination of two major factors:

1. Valuation

2. Future Uncertainty

At current prices, NVDA’s market cap is $1.2 TRILLION, making it the 5th largest US public company.

It’s important not to focus on backward looking valuations, especially in high growth situations such as this.

On average, analysts now expect NVDA to earn $14 per share in the coming 12 months versus roughly $5 per share in the past 12 months.

That puts Nvidia’s current forward price-to-earnings ratio at roughly 34X.

For reference here are the current forward multiples for other tech behemoths:

• GOOG: 21X

• AAPL: 28X

• MSFT: 29X

So NVDA has a relatively high multiple versus peers, but it’s also growing at a much faster rate than the others. Investors could argue that NVDA deserves a larger premium.

But here’s where uncertainty comes into play:

Many investors are worried that the insane demand for Nvidia products is unsustainable and will cool off just a few quarters from now.

That’s what happened to Zoom after the pandemic shutdowns subsided.

It’s also what happened to fast growers like Cisco back in the dotcom boom:

The concern is that cloud providers and startups are frontloading demand for GPUs which will eventually result in a pullback in orders for Nvidia.

Is Nvidia’s market bigger than most people think and could NVDA sustain high growth rates for years to come?

Absolutely that’s a possibility!

This is what makes investing so tricky. We have to assess what future is currently priced in and compare to our own forecasts to decide whether a stock is undervalued or not.

In some cases this is easier than others.

Making an investment case for NVDA stock today is not easy.

If we had to take a side we’d probably be more bullish than bearish given the numbers Nvidia just put up, the lack of a parabolic blowoff chart top, and momentum in the AI field.

If this is Cisco 1999 and not Cisco 2001 then there’s more juice to squeeze.

You make your own call but we’d love to hear your thoughts!

The Cautionary Tale of a Crypto Millionaire Gone Bust 🚫💰

Crypto-Twitter was buzzing after “SlumDOGE Millionaire” plastered screenshots of his Dogecoin wallet kissing a nearly $3M, then plunging down over 98% to $50K.

Unfortunately, this is a tale as old as time, and as common as traffic in LA.

While it's easy to chow down on schadenfreude pie, it's a good time to reflect on our own investing strategies.

You don't want to be that guy or gal clutching a worthless bag of crypto tokens, waiting for the crypto gods to shine down on you again.

So, what's the secret sauce to not being a “bag holder”?

It's all about the 'no regret zone'.

Imagine, you've hit the jackpot on a trade. Now play a quick game of "What if?"

• If your shiny coin nosedived by 95%, ask yourself, “How much of this would I have wanted to cash out?”

• Then, flip the coin. “If it skyrocketed by 10x from its current value, how much would I have wanted in the game?”

• Voilà, the sweet spot between those two thoughts, that's your 'no regret zone'.

It's a place where dreams and nightmares find their balance. This zone keeps the bitter taste of regret at bay.

But here's the thing - and lean in for this nugget of wisdom - don't inhale that hopium pipe too deep.

It's one thing to be optimistic about an investment; it's another to wear rose-tinted glasses and join the 'Never Sell' cult.

That's how you end up like our Dogecoin dude, lighting candles and praying for a bull run salvation.

Bottom line? Be smart, avoid the hopium haze, and always find your 'no regret zone'.

Your future self will thank you. And maybe send you on a nice vacation with those realized profits! 🚀🐕💰

Crypto Titans Face Serious Allegations 😨

This week has been a storm of trouble for crypto companies and projects linked to money laundering allegations.

Binance is one of the largest crypto exchanges in the world…

And Tornado Cash is a crypto mixing service that allows users to obfuscate ownership of crypto tokens.

The Big Picture: While the crypto industry continually faces scrutiny over regulatory concerns, the latest allegations, if proven true, could drastically increase pressure from anti-crypto politicians.

Here’s the rundown:

• Binance is accused of facilitating Russians in moving money abroad, amidst the prevailing U.S. sanctions.

• Tornado Cash's founders face accusations of laundering over $1 billion, with potential ties to North Korea's notorious Lazarus Group.

• Despite Binance's claims of following global sanctions and maintaining no illicit banking ties, evidence points towards considerable ruble trading volumes on the platform.

The Bottom Line: The crypto landscape now faces intensified scrutiny at time when crypto projects are trying to prove their value and utility.

The outcomes of these allegations could give governments and regulators the ammo they need to vilify the crypto industry and place more restrictions on new startups.

This Week’s We Talk Money Episode 🎙️

We see some massive risks for both stocks and crypto right now…

And wanted to highlight areas that could get hammered.

But it’s not all doom-and-gloom, because we see opportunity in some under-appreciated areas as well.

In this episode, you’ll learn:

• Why altcoins have a looming black swan that could cause mass exodus

• How the economic data is pointing to a waterfall of selling

• What assets we think will boom when panic sets in

• And much more!

Delicious Bites 😋

• AirPods revenue vs large tech companies

• Can Bitcoin hit $148k by 2025?

• 20 investing lessons from 20 years of investing

• Michael Jordan Is the Richest Basketball Player Ever With $3.5 Billion

• Is sim racing the next big thing in gaming?

Food For Thought 🧠

"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
- Charles Mackay

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.