Nvidia and AMD: Regret and Luck vs. Skill

[investingforbank]

Hey guys. Back in around March 2019 I was building my first PC and looking for parts. After researching, I realized that Nvidia and AMD had superior products in terms of GPU and CPU technology. I was about to invest in them at that time, but decided to stick to index funds. Since then, these stocks have both risen about 250%. I obviously regret not buying them at the time, but it wouldn't have been too significant as I only had about $10,000 and wouldn't have gone all in on them. I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

[CyclingDuo]

Hey guys. Back in around March 2019 I was building my first PC and looking for parts. After researching, I realized that Nvidia and AMD had superior products in terms of GPU and CPU technology. I was about to invest in them at that time, but decided to stick to index funds. Since then, these stocks have both risen about 250%. I obviously regret not buying them at the time, but it wouldn't have been too significant as I only had about $10,000 and wouldn't have gone all in on them. I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

Both companies have been around and well known by investors long before March of 2019.

The good news is that you own both of them in your index funds.

CyclingDuo

[Boglegrappler]

Its not as easy as it seems in hindsight.

I bought some Nvidia after it slumped a bit after an earnings report apparently disappointed the market. Of course, it slumped further and I ended up down nearly 50% from my purchase price. But I didn't have an excessive amount in it, so I've held and now it's up 100% plus from my cost basis.

You have to realize that these moves that happen over even an two or three year term are not what you are trying to do in investing. You want to buy stocks that you can hold with confidence over periods in excess of ten years or more.

Don't regret your inaction. But if you get into individual stocks, you're playing a different game than indexing. It's harder to manage your risk, and it's hard to ignore news that applies to individual stocks. Indexing is much less nerve wracking and time consuming.

[Wiggums]

I purchased into telecom and it immediately tanked big time. This was back in the day when I connected to the internet via modem to get to Vanguard. LOL. It took more than ten years to make a profit. I was lucky. Many people sold and took a loss. I thought about buying more telecom stock at the low, but its not that easy in reality. The market can go up and then take another leg lower.

Now I buy index funds and hold them. That works best for me.

[runninginvestor]

You also have to think about the fact that even if you did buy shares you would still be wishing you had bought more.... I timed a stock expecting it would double in a few months. It did in a few days (I was right, but for the wrong reasons). Fortunately I sold a quarter at 50% profit, another quarter and 100% profit.* Then it kept going up currently at >300% gain from original purchase. I'm looking at it thinking, I wish I didn't sell half my shares at 50% and 100% gain...

Moral: When it comes to money in investing, mainly stock picking, it's hard to be satisfied but it's really easy to be disappointed.

* I went in with a predefined risk tolerance. -20% full stop. Sell 25% at 50% gain, another 25% at 100%, ride the rest for LT gains or sell the rest at 20% stopped loss. Point is, if you are going to use play money, don't enter a position without writing out how you're going to get out. So I'm glad it has worked out, but this is just play money that I got lucky on.

[investingforbank]

Hey guys. Back in around March 2019 I was building my first PC and looking for parts. After researching, I realized that Nvidia and AMD had superior products in terms of GPU and CPU technology. I was about to invest in them at that time, but decided to stick to index funds. Since then, these stocks have both risen about 250%. I obviously regret not buying them at the time, but it wouldn't have been too significant as I only had about $10,000 and wouldn't have gone all in on them. I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

Both companies have been around and well known by investors long before March of 2019.

The good news is that you own both of them in your index funds.

CyclingDuo

I know that they were well known, but did they exceed expectations or something? Why has their stock soared in the last 2 years?

[CyclingDuo]

Hey guys. Back in around March 2019 I was building my first PC and looking for parts. After researching, I realized that Nvidia and AMD had superior products in terms of GPU and CPU technology. I was about to invest in them at that time, but decided to stick to index funds. Since then, these stocks have both risen about 250%. I obviously regret not buying them at the time, but it wouldn't have been too significant as I only had about $10,000 and wouldn't have gone all in on them. I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

Both companies have been around and well known by investors long before March of 2019.

The good news is that you own both of them in your index funds.

CyclingDuo

I know that they were well known, but did they exceed expectations or something? Why has their stock soared in the last 2 years?

Did they exceed expectations?

Yes.

Pretty amazing growth and demand for their products - so it all boiled down to sales growth, multiple expansion, excellent management, etc... .

CyclingDuo

[dukeblue219]

Hey guys. Back in around March 2019 I was building my first PC and looking for parts. After researching, I realized that Nvidia and AMD had superior products in terms of GPU and CPU technology. I was about to invest in them at that time, but decided to stick to index funds. Since then, these stocks have both risen about 250%. I obviously regret not buying them at the time, but it wouldn't have been too significant as I only had about $10,000 and wouldn't have gone all in on them. I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

Both companies have been around and well known by investors long before March of 2019.

The good news is that you own both of them in your index funds.

CyclingDuo

I know that they were well known, but did they exceed expectations or something? Why has their stock soared in the last 2 years?

Bitcoin drove a lot of their profitability over that span and slightly before. It's no longer profitable to mine crypto with an off-the-shelf GPU and hasn't been for some time, but for a while you couldn't find a top-notch GPU anywhere (and nvidia and amd are of course the Pepsi and Coke of that industry). They were killing it selling $1000 GPUs in bulk for large mining operations.

There are still a lot of cool applications for GPUs and similar tech that extend beyond bitcoin (AI comes to mind), but some of that free revenue is gone now.

[arcticpineapplecorp.]

I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

http://www.forbes.com/2010/06/23/mutual ... -luck.html

The original French and Fama paper (Luck vs. Skill...)
http://papers.ssrn.com/sol3/papers.cfm? ... id=1356021

UK mutual fund performance: skill or luck?
http://web.ist.utl.pt/adriano.simoes/te ... 20luck.pdf

"From a 2010 Forbes article (above, first link), we're reminded by a relatively new study (link above "French and Fama paper") that luck is the key to success for all actively managed index funds. And since luck is generally ephemeral, the success doesn't usually last long."

Quote:
"Why doesn't strong past performance continue? The primary reason is that luck is a major factor in fund returns, and luck generally does not persist. Investors tend to overlook the role of luck in fund returns. There are thousands of actively managed equity funds, so even if all fund managers were randomly picking their portfolios by throwing darts at a stock page, a large number of funds would still soundly beat market averages. . . . . .

In a new study [from 1984-2006 of actively managed funds that invest primarily in U.S. common stocks] finance professors Eugene Fama of the University of Chicago Booth School of Business and Kenneth French at Dartmouth's Tuck School of Business quantify the role of luck in fund returns. They find that the strong returns of actively managed funds are almost always due to luck, not the stock-picking skill of fund managers. . . . . .

Think about that for a minute: Investors pay well over $10 billion annually in fees to managers of actively managed funds who, as a group, have only enough skill to cover their trading costs. Because funds have other costs, such as management fees, which are included in fund expense ratios, active funds' returns actually trail their passive benchmarks by approximately the level of the funds' expense ratios (around one percentage point per year). . . . . .

Furthermore, even in this small number of managers who, as a group, have more than enough skill to cover their costs, the amount of skill was unimpressive. Fama and French found that these managers are unlikely to noticeably outperform a large, efficiently managed index fund in the future.

The case against active management is even stronger when one realizes that Fama and French's analysis doesn't take into account all the costs of investing in actively managed funds."

if you think it was skill, why not set up your own hedge fund?

[arcticpineapplecorp.]

by the way I like how you're touting both nvidia and amd...yet only one of them did well if we look at the earliest date we can compare them to (1/22/1999):

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

AMD only did well over the last year. Would you have really had held on to a stock that underperformed the market for the prior 20 years?

be honest.

so while nvidia did well over the past 21 years, amd did not.

see how some picks might do well, others not so well?

how's the overall portfolio going to do?

likely average over time...before costs and taxes.

this is why most underperform the market over time.

prepare to hear the chorus of "No. You only need one Nvidia to more than make up for all the losers in your portfolio".

Sure.

If it were that easy to pick them (beforehand, not after. you're dealing with hindsight now), then why wouldn't everyone?

And why didn't you?

[SmallSaver]

It's always easy looking back. What keeps me honest is the thought exercise "ok, I should have bought TSLA a year ago. What am I willing to gamble significant money on today?" I never have a good answer, so I stick with my indexes.

[Samosa22]

If I had a nickel every time I thought of investing in a stock (but never did) and then its price went up an up....

[sschullo]

Your story is soooo common but then there are stories from some lucky investors who did it. In my last local Boglehead meeting a fellow said a friend sold one of his ten homes and bought thousands of Tesla stock 3 years ago. Okay, we all know what happened. But we will never know what losses this investor took already, and the tesla stock just made up for them.

But I said that I am very happy I got a 9.34% return on my boring and low-cost portfolio in 2020! A couple of people gave me a thumbs up.

I never have regrets because we don't hear "the rest of the story." These kinds of stories are 100% distractions and 100% worthless from building genuine wealth over a lifetime that we will preserve for ourselves and our families.

[sailaway]

And there aren't any stocks you thought about investing in that went down, rather than up?

If we had held onto RSUs from years ago, we would really be in the money right now. If we hadn't sold the RSUs as soon as they vested last time, we would be in the red right now. This is why we stick to the plan: good enough is good enough.

[investingforbank]

Hey guys. Back in around March 2019 I was building my first PC and looking for parts. After researching, I realized that Nvidia and AMD had superior products in terms of GPU and CPU technology. I was about to invest in them at that time, but decided to stick to index funds. Since then, these stocks have both risen about 250%. I obviously regret not buying them at the time, but it wouldn't have been too significant as I only had about $10,000 and wouldn't have gone all in on them. I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

Both companies have been around and well known by investors long before March of 2019.

The good news is that you own both of them in your index funds.

CyclingDuo

I know that they were well known, but did they exceed expectations or something? Why has their stock soared in the last 2 years?

Bitcoin drove a lot of their profitability over that span and slightly before. It's no longer profitable to mine crypto with an off-the-shelf GPU and hasn't been for some time, but for a while you couldn't find a top-notch GPU anywhere (and nvidia and amd are of course the Pepsi and Coke of that industry). They were killing it selling $1000 GPUs in bulk for large mining operations.

There are still a lot of cool applications for GPUs and similar tech that extend beyond bitcoin (AI comes to mind), but some of that free revenue is gone now.

GPUs are still extremely hard to come buy, especially the 3090s

[investingforbank]

And there aren't any stocks you thought about investing in that went down, rather than up?

If we had held onto RSUs from years ago, we would really be in the money right now. If we hadn't sold the RSUs as soon as they vested last time, we would be in the red right now. This is why we stick to the plan: good enough is good enough.

These are the only 2 that I have seriously considered investing in

[investingforbank]

by the way I like how you're touting both nvidia and amd...yet only one of them did well if we look at the earliest date we can compare them to (1/22/1999):

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

AMD only did well over the last year. Would you have really had held on to a stock that underperformed the market for the prior 20 years?

be honest.

so while nvidia did well over the past 21 years, amd did not.

see how some picks might do well, others not so well?

how's the overall portfolio going to do?

likely average over time...before costs and taxes.

this is why most underperform the market over time.

prepare to hear the chorus of "No. You only need one Nvidia to more than make up for all the losers in your portfolio".

Sure.

If it were that easy to pick them (beforehand, not after. you're dealing with hindsight now), then why wouldn't everyone?

And why didn't you?

This isn't hindsight. I almost bought them but decided not to because of things that are said here.

[sailaway]

This isn't hindsight. I almost bought them but decided not to because of things that are said here.

It is hindsight: if they had gone down or matched your index fund, we wouldn't be having this conversation.

[investingforbank]

This isn't hindsight. I almost bought them but decided not to because of things that are said here.

It is hindsight: if they had gone down or matched your index fund, we wouldn't be having this conversation.

I mean yes we are looking at them in hindsight, but at the time I almost bought them it wasn't. Almost buying a stock and then looking at what happened to it is different to not even considering buying another.

[1789]

Hey guys. Back in around March 2019 I was building my first PC and looking for parts. After researching, I realized that Nvidia and AMD had superior products in terms of GPU and CPU technology. I was about to invest in them at that time, but decided to stick to index funds. Since then, these stocks have both risen about 250%. I obviously regret not buying them at the time, but it wouldn't have been too significant as I only had about $10,000 and wouldn't have gone all in on them. I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

They can go much higher later on. So, if you want to buy do you think it is too late? I am in the camp to gamble big if i do. Gambling with 5% of portfolio never made any sense to me. Just waste of time.

[Samosa22]

And there aren't any stocks you thought about investing in that went down, rather than up?

If we had held onto RSUs from years ago, we would really be in the money right now. If we hadn't sold the RSUs as soon as they vested last time, we would be in the red right now. This is why we stick to the plan: good enough is good enough.

These are the only 2 that I have seriously considered investing in

apparently not seriously enough! Otherwise you would have invested in them.

I almost bought them but decided not to because of things that are said here.

Sorry, but this sounds like blaming an online forum for your own "inaction".

[sailaway]

This isn't hindsight. I almost bought them but decided not to because of things that are said here.

It is hindsight: if they had gone down or matched your index fund, we wouldn't be having this conversation.

I mean yes we are looking at them in hindsight, but at the time I almost bought them it wasn't. Almost buying a stock and then looking at what happened to it is different to not even considering buying another.

And my point is that you made a logical decision at the time. No need for regrets now. AMD stock has been all over the place in the last decade, no telling what will happen next time it drops or when it will spike again You happen to be looking at a good time frame. I spend zero efforts worrying about what if my husband had kept his last AMD RSUs instead of cashing them in at ~$3 a share when he left.

When things go in my favor, I might spend a second thinking "gosh darn boring plan." Then I get on with my life. Mostly, up or down, I think "Thank goodness for the plan that means I am not constantly second guessing myself. Win some, lose some, but at least I am not wasting my energy chasing the market."

[SlowMovingInvestor]

AMD has been in the business for a long, long time. It's duel with Intel goes back 40+ years (in fact, there may be no longer lasting rivalry in computers).

There are many times that it's had better products than Intel and lost out. Really, it doesn't take great skill and a Phd in Electronics/Computers to fiture that out. But simply knowing that AMD has better products than Intel isn't enough. Going by historical record, one would be far better off putting $$ into INTC.

[dziuniek]

It's not really superior technology, more like the only game in town for GPUs. (atleast relevant GPUs)

If you said you could foresee a chip shortage globally then yes, by all means, you would've been right.

[jarjarM]

These are the only 2 that I have seriously considered investing in

apparently not seriously enough! Otherwise you would have invested in them.

I almost bought them but decided not to because of things that are said here.

Sorry, but this sounds like blaming an online forum for your own "inaction".

Yup, if you're easily influence by online forum or some "famous" analyst/investor, then I think index is the better way to go. Remember, those who made a substantial return are buying when blood is in the water and naysayers everywhere. You need to have to mentality to stand against criticisms or negative news. See BTC/TSLA/LETF/ARK.... Of course, know when to get out too

[averagedude]

I've seen alot of companies that I didn't invest in, and I was ahead of the curve on how creative these companies were. I don't know how I missed the boat on these great companies. Here is a short list.
1. Nokia. The first company in the world to create a cellular network.
2. Xerox. The first company to invent the personal computer.
3. Blockbuster. A video rental company that American's flocked to before the weekend.
4. Yahoo. One of the main players in the online advertising market.
5. Blackberry. One of the first companies to offer a smartphone and were a smashing success.
6. Myspace. A website that dominated social networking. This company had the chance to buy Facebook for 75 million, but the CEO declined Mark Zuckerberg's offer.
7. Circuit City. This company was a massive electronic store that sold TV's, stereo's, and boomboxes.

Actually, I'm glad I didn't buy and hold any of these companies, but in their heyday they were popular, innovated, and successful. Nobody knows nothing. Hindsight is 20/20.

[SlowMovingInvestor]

Remember, those who made a substantial return are buying when blood is in the water and naysayers everywhere. You need to have to mentality to stand against criticisms or negative news.

I invested in Third Avenue Value Focused Credit Fund in 2009-10 or so, it was investing in debt of companies hit by the 2008-09 crisis. And while I'm not a big fan of actively managed funds in general, this particular area was one in which I could not reasonably invest by myself.

Plenty of blood in the water then in the high yield market ! And Third Avenue had an impeccable pedigree.

The result: Focused Credit went into liquidation, redemptions were halted, and the fund was slowly wound down by a receiver. Turned out the only blood in the water was that of investors ! (I had only a very small amount in it, but still ..)

[jarjarM]

Remember, those who made a substantial return are buying when blood is in the water and naysayers everywhere. You need to have to mentality to stand against criticisms or negative news.

I invested in Third Avenue Value Focused Credit Fund in 2009-10 or so, it was investing in debt of companies hit by the 2008-09 crisis. And while I'm not a big fan of actively managed funds in general, this particular area was one in which I could not reasonably invest by myself.

Plenty of blood in the water then in the high yield market ! And Third Avenue had an impeccable pedigree.

The result: Focused Credit went into liquidation, redemptions were halted, and the fund was slowly wound down by a receiver. Turned out the only blood in the water was that of investors ! (I had only a very small amount in it, but still ..)

Thanks for sharing. You're right, having conviction doesn't always turn out the way you want, either due to timing or otherwise. I was convinced that the market was going to fall even more in March/April 2020 but it didn't happen. It was an expensive lesson but at least I got lots of TLH opportunities

[CyclingDuo]

This isn't hindsight. I almost bought them but decided not to because of things that are said here.

You may want to read the Wiki which includes this section on passively managing individual stocks:

In Common Sense on Mutual Funds, Jack Bogle suggests that a reasonable alternative to an index fund for some investors would be to hold a well-diversified portfolio of individual stocks, as long as they are held long-term, with a minimum of trading costs incurred.
https://www.bogleheads.org/wiki/Passive ... ual_stocks

Not sure investing in only two stocks would get an endorsement here at Bogleheads. Having a portfolio made up of a larger number of individual company stocks with a more diverse profile, and one that is also passively managed would probably receive at least some endorsements from a few of us.

CyclingDuo

[euphonious]

It's not the boglehead thing to do, but I use a small play money account to scratch this itch.

Just be sure not to let it go to your head when you see your play account outperforming the index.

[Cyanide123]

Hey guys. Back in around March 2019 I was building my first PC and looking for parts. After researching, I realized that Nvidia and AMD had superior products in terms of GPU and CPU technology. I was about to invest in them at that time, but decided to stick to index funds. Since then, these stocks have both risen about 250%. I obviously regret not buying them at the time, but it wouldn't have been too significant as I only had about $10,000 and wouldn't have gone all in on them. I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

Oh well... Life goes on. It's always easier to look back and think what if. Always a much harder decision in the moment.

I owned FB at $26, Tesla at $80 pre stock split, Amazon at $220.

Didn't hold life moves on. Hindsight is 20/20.

[stimulacra]

I’ll do you one better...

A year out of college I bought myself a second generation iPod (10 GB) model. It served me well for many years till FireWire was eventually phased out. It’s now an antiquated paperweight in my office.

Maybe a couple of years ago I started calculating what if I invested that purchase price ($500) in AAPL instead back in 2002...

Long story short; I’m ok with index funds for my retirement but do maintain a small (grown to not so small) play portfolio for “considered” individual holdings. No regrets either way.

[pseudoiterative]

Any thoughts?

Console yourself with philosophy and probability theory: read through a copy of Annie Duke's 'thinking in bets' or Nassim Taleb's 'fooled by randomness' .

Here's Duke, recounting a time of acting as dealer during a charity poker tournament:

When players have put all their chips in the pot, there is no more betting on the hand. After an all-in situation, the players in the hand turn their cards faceup on the table so that everyone can see them before I deal the remaining cards. This makes it fun for the audience, because they get to see each player's position in the hands and the drama mounts. With the cards faceup, I can determine the likelihood each player will win the hand, and announce the percentage of the time each hand will win in the long run.

At one such tournament, I told the audience that one player would win 76% of the time and the other would win 24% of the time. I dealt the remaining cards, the last of which turned the 24% hand into the winner. Amid the cheers and groans, someone in the audience called out, "Annie, you were wrong!"

In the same spirit that he said it, I explained that I wasn't. "I said that would happen 24% of the time. That's not zero. You got to see part of the 24%!".

[...]

When we think in advance about the chances of alternative outcomes and make a decision based on those chances, it doesn't automatically make us wrong when things don't work out. It just means that one set of possible futures occurred.

Look at how quickly you can begin to redefine what it means to be wrong. Once we start thinking like this, it becomes easier to resist the temptation to make snap judgements after results or say things like "I knew it" or "I should have known". Better decision-making and more self-compassion follow.

Here's Taleb, with a memorable thought experiment about russian roulette:

One can illustrate the strange concept of alternative histories as follows. Imagine an eccentric (and bored) tycoon offering you $ 10 million to play Russian roulette, i.e., to put a revolver containing one bullet in the six available chambers to your head and pull the trigger. Each realization would count as one history, for a total of six possible histories of equal probabilities. Five out of these six histories would lead to enrichment; one would lead to a statistic, that is, an obituary with an embarrassing (but certainly original) cause of death. The problem is that only one of the histories is observed in reality; and the winner of $ 10 million would elicit the admiration and praise of some fatuous journalist (the very same ones who unconditionally admire the Forbes 500 billionaires). Like almost every executive I have encountered during an eighteen-year career on Wall Street (the role of such executives in my view being no more than a judge of results delivered in a random manner), the public observes the external signs of wealth without even having a glimpse at the source (we call such source the generator.) Consider the possibility that the Russian roulette winner would be used as a role model by his family, friends, and neighbors.

While the remaining five histories are not observable, the wise and thoughtful person could easily make a guess as to their attributes. It requires some thoughtfulness and personal courage. In addition, in time, if the roulette-betting fool keeps playing the game, the bad histories will tend to catch up with him. Thus, if a twenty-five-year-old played Russian roulette, say, once a year, there would be a very slim possibility of his surviving until his fiftieth birthday— but, if there are enough players, say thousands of twenty-five-year-old players, we can expect to see a handful of (extremely rich) survivors (and a very large cemetery).

[...]

The reader can see my unusual notion of alternative accounting: $ 10 million earned through Russian roulette does not have the same value as $ 10 million earned through the diligent and artful practice of dentistry. They are the same, can buy the same goods, except that one’s dependence on randomness is greater than the other.

[EdNorton]

I bought 1,000 shares of NVDA @ $30 in early 2016, sold last shares in 2020, made $250k, was feeling smart. Turns out I wasn't that smart. I'd be up $575k if I just held. Let your winners run.

[random_walker_77]

AMD's been around a long time, and I don't think it's made an overall net profit yet. In 2011, over the cumulative life of the company, they had earned a cumulative profit of negative 2.5 billion dollars. https://www.forbes.com/sites/michaelkan ... cfff8ddd05

The 2010 decade wasn't especially profitable either. https://www.macrotrends.net/stocks/char ... net-income

2020 was the first really profitable year in a while for them. They've always been outgunned -- Intel is huge, and Nvidia has grown to be formidably large, and AMD is fighting both of them. Intel shot itself in the foot, and AMD is doing really well now. Are they going to continue making cash, to justify their high valuation? Their corporate history is not especially inspiring.

Nvidia is trading at such a high multiple... I have a friend who works there. They've told stories about really senior engineers around the office who've sold most of their RSUs when it went from $10 to $30. That it seems completely unpredictable -- good earnings regularly lead to the stock dropping, poor quarters sometimes leading to the stock rising. It sounds like, even with access to massive information about roadmaps, and upcoming products (but not "material insider information"), there's no sense that they have any real edge on where the stock will be in a month, a quarter, or a year.

[Taxapalooza]

The skill of investing in individual stocks differs from the skill it takes to be a Boglehead.

Bogleheads encourages load and hold 3-fund portfolios because they're simple, effective, tried and true wealth generators; the flipside is they're boring and require patience.

To get 250% return on your investment in a short period of time goes beyond the skills of this forum; you are in day trading territory where you need to understand charts, Level 2, Level 3, volume, MACD, Ichimoku clouds, MA Ribbons, PSAR, RSI, Bollinger Bands, convertible financing, margin trading, etc. If you don't know what any of these are and how they interplay all at once, do not expect a 250% return. You are just as likely to lose all your capital (or even more if you trade on margin) thinking you can make 250% quickly (1-2 yrs. or less). The risk/reward ratio is in the stratosphere compared to the Boglehead's 3-fund portfolio.

[JonnyDVM]

Hey guys. Back in around March 2019 I was building my first PC and looking for parts. After researching, I realized that Nvidia and AMD had superior products in terms of GPU and CPU technology. I was about to invest in them at that time, but decided to stick to index funds. Since then, these stocks have both risen about 250%. I obviously regret not buying them at the time, but it wouldn't have been too significant as I only had about $10,000 and wouldn't have gone all in on them. I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

Next time you have a feeling pop a little in. It doesn't hurt anything. Just don't get carried away. Plenty of us are far from being three-fund purists. We just don't go too crazy with our fun money.

[AAA]

I'm reminded of what Will Rogers said. Paraphrasing - Buy a good stock and sell it when it goes up. If it doesn't go up, don't buy it.

[radR investing]

I'm not trying to change anybody's mind, but I would like to offer a different perspective. Most of the comments and reasoning for the 3-fund portfolio revolves around behavioral finance - long term stability and sleep well at night while building a solid retirement. And it works for sure.
But there are alternatives:

1- the first concept is Direct Indexing. You consider the top 10 stocks in the various sectors and pick 1-3 of them based on business model, financial metrics, and performance metrics. You are 'investing in businesses, not stocks.' You then let them run unless there is a significant change in their business model. Most studies on diversification state that most of the risk is systematic risk (market) and cannot be diversified away. And, 12-20 stocks is the tipping point to where holding more stocks no longer provide diversification.

note: this is my issue with index funds, you roll with the entire market, and the majority of companies in the market are losers so you have to absorb those losses as well.

By the way, this 'style' of investing creates a portfolio that holds Microsoft, Nvidia, Amazon, and Google - hardly a risky portfolio.
In my personal portfolio, these companies make up 70% and I add a couple others that I believe are strong innovators for the future. For example, I did not 'gamble' on Tesla, but I added them when they turned a profit and it was announced that they were going to be added to the S&P 500. No tenfold increase, but a nice nearly-doubling. And I added Square as it became clear to me that they were becoming a major player with their Cash App.

2- All of these stocks have something in common. They all have morphed from a one-shot wonder into a platform-based powerhouse of diversification and market dominance. Regarding Nvidia, they were simply a strong semiconductor provider, but have morphed into "the" AI platform for the future. As a result, what was once a highly cyclical stock is now becoming a stable, much-less volatile company.

[jayk238]

Hey guys. Back in around March 2019 I was building my first PC and looking for parts. After researching, I realized that Nvidia and AMD had superior products in terms of GPU and CPU technology. I was about to invest in them at that time, but decided to stick to index funds. Since then, these stocks have both risen about 250%. I obviously regret not buying them at the time, but it wouldn't have been too significant as I only had about $10,000 and wouldn't have gone all in on them. I also can't help but feel that I was ahead of the curve on these companies, but also feel like it would've just been luck. Any thoughts?

You should read random walk down wall street. It will clarify your thinking.

The stock price does not ONLY reflect the quality of the product or even its profitability. It also is affected by fraud and mismanagement. What happens if all that success is being mismanaged by nvidia founder? Or AMD decides to abscond entirely to taiwan? What happens to its shareprice then?

See GE

You cant know all this.

Individual stocks are nothing but gambling. Its not about hindsight or skill or bad bets. Its simply luck.

[hoofaman]

You never had any unknown information that would have given an edge, don’t worry about it.

Also, even if you did that probably wouldn’t matter anyway.

Most successful stock traders use momentum, trend following, and social arbitrage...what the company actually does, it’s fundemtals, etc...that hardly matters, you will never get alpha from that, because everyone else has access to that data

[SlowMovingInvestor]

2- All of these stocks have something in common. They all have morphed from a one-shot wonder into a platform-based powerhouse of diversification and market dominance. Regarding Nvidia, they were simply a strong semiconductor provider, but have morphed into "the" AI platform for the future. As a result, what was once a highly cyclical stock is now becoming a stable, much-less volatile company.

I love Nvidia's products (I use them for applications), but that is far from clear. Some of the biggest users of GPUs are working on their or have developed their own silicon (with AMD in Google's case) and may make it available through their cloud platforms. Custom rigs for cryptomining (and in any case, staking is replacing mining for many applications).

NVDA has great products, it's not even insanely priced as a stock. But I don't think it's future is set in silicon.

[random_walker_77]

These things are so hard to call. Nvidia reported great earnings after-hours yesterday, and they're down $45 today (almost 8%).

Employees at companies sometimes get hints. For example, in the last month of the quarter, if there's a sudden travel freeze and hiring freeze, that probably means that the numbers are going to be tight. But sometimes good earnings result in the stock price tanking, and less often, poor earnings can still see the stock price rise.

[z3r0c00l]

Then NVIDIA fell by way over half through October 2022, now it is up at an all time high with P/E ratio of 200 which I think it is ridiculous. NVDA gained more in market cap today alone than AMD is worth in total. I knew it was a good product in the early 2000s at a few dollars per share but never invested. If I had purchased some, I probably would have sold before making a 10x profit in 2017, but certainly by then. Then I would have watched myself lose out on a 100x profit and regretted it.

Picking stocks is a game you are very likely to lose. There was/is/will be no way of knowing which of Intel/AMD/NVDA or some other chip maker will win out. What if Apple throws some real weight behind their own fab. and chip designs? What about Texas Instruments, IBM, Micron?

[hoofaman]

I think Nvidia has become a meme stock now, similar to Tesla when EV hype was the flavor of the month. The past few months talking heads have been pontificating about "AI", and the "picks and shovels" plays around that, eventually the talking heads will move onto the next topic of conversation they know nothing about and a new set of stocks will rally

[bg5]

I bought Nvida and have 5x my investment so I feel pretty cool....thats the good news

The bad news is I also bought a bunch of cathy wood stocks during the pandemic and for a short minutes was up 40% and thought I had life figured....then they all fell about 80% from the price i bought them at.

Add both nvidia and cathy woods stocks and I have less money than if I had just put it into VTSAX and chilled.

Ya cannot beat the market and learn from my mistakes

[Capster1]

I wouldn’t feel bad. It isn’t over. The stock can go down just as fast as it went up. See history.
I’m sure there were people that bought it Nov 2021 and then a year later were wondering why they made such a horrible mistake.


Story time-In the fall of 2018, I had an inclination to buy Scotts Miracle Grow stock, but I didn’t. I said I’ll buy it later if it goes lower, it didn’t. It kept going higher and higher; it went from $66 to $245. Talk about aggravated, what an incredible gain I missed!! Fast forward to today and the stock is now $65….

[Parkinglotracer]

I had 80 of nvidia I bought in 2021. They have done well luck of the draw. Yesterday before earnings were released I sold 40 shares at 302. It jumped 80 dollars a share today. Glad I kept 40 shares. Blind luck or bad luck. I won’t mention the other stocks like cyber cash and home seekers .com that used to print out on my statement worth 0.0 I don’t buy companies losing money like I used to -lol.

I tell my kids to stick with total market index funds BUT … they have bought a few stocks. It must be hereditary.

On a serious note Beside investing my real savings in a BH portfolio, If I see a good product I use like lululemon pants or apple iPhone or ubiquiti Wi-Fi system - I’ll buy 50 or 100 shares. I have done better than my index fund with my 10 stock portfolio but am so risk adverse I only do it with 10-15% of my portfolio.

[SmallSaver]

I tell myself that a 250% gain only really makes a difference if I had invested a significant (for me) sum. I'm not willing to gamble with a significant sum, so I won't get significant gains, even with a large percentage increase.

[mark_in_denver]

I bought AMD around 20 years ago at about $5 a share. It's all luck I had no vision, I just thought it a good alternative to intc and liked their k5.

Why are you regretting not buying or buying or whatever? This is just how the markets work and how they make you feel. Ignore it and move on with life.