Nvidia Nvy

..... ▷ One chat doing the rounds among investors looks back to an earlier boom that was the start of a very real thing but generated what is obvious in hindsight as a massive bubble in stock markets; The Dot.com Bubble from 1995 to March 2000, when Nasdaq rose 800% before crashing 77% and taking 15 years to regain that peak. But the brainiacs of the day decided that picking internet winners was difficult (they were right!), so why not invest in the dominant producer of its physical hardware? Sound familiar? In its day, there was something called Wintel, a combo of the Microsoft Windows operating system and Intel's xx86/Pentium chips. Into that stepped telecom networking equipment maker Cisco, making it (briefly) Wintelco. Its stock price rose from around $4 in 1995 to a peak of $82 in March 2000, with a price-to-earnings ratio (P/E) of 196.2 and a price-to-sales ratio (P/S) of 39 times. After the bubble burst, CSCO collapsed to $8 in October 2002. It's rallied since then but still has about 50% more to go before it reaches that old high. his represents a decline of around 90% from its peak. Fast forward 22 years: how do you pick winners and losers based on a nascent technology with vast potential that will, but hasn't yet delivered economically? And will picking a high-valuation hardware provider this time end how it did with Cisco?

..... ▷ So when NVDA started really shooting up, many mutual fund managers, without necessarily joining the bear camp, took profits. But if one particular stock keeps on outperforming, then the risk is that, with the portfolio underweight that name, the manager will underperform the benchmark and some of its competitors by more and more. You see where this is going. There is a market saying that "you can never lose money by taking a profit," but for a mutual fund manager, if you take profits and then underperform, you can lose assets and then your job! Many managers did, in fact, sell NVDA in the first quarter and have had to play catch up ever since. In fact, if they remained underweight vs. their peers or the benchmark (see "Magnificent Seven"), they'd still feel pressure to keep buying to not fall back further, regardless of their opinion on the stock price. This is basically a short squeeze🎓 without the short positions, and the hedge funds know it... Data from the GSAM Hedge Fund VIP Index (GVIPTR) shows Nvidia is now THE top holding among 740 large hedge funds managing $2.2 trillion of gross assets, from only 12th at the start of the year (and 7th at the end of the first quarter.) But what can the mutual fund manager do? Cave in?