Market Perspective: NVIDIA Price Swings

NVIDIA, a chip maker focusing on microchips and artificial intelligence technology, announced strong earnings this week and exceeded market expectations. NVIDIA is the fourth-largest company in the S&P 500 weighted index and experienced remarkable growth of more than 25% overnight, adding roughly $200 billion in market value.

It's natural to ask, "what if?" What if I held an asset that grew 30 percent overnight? What if I was 100% invested in NVIDIA on May 24th, a day before the price surge? Sure, that would be great. However, looking back at NVIDIA and other stocks like Tesla, Amazon, and Apple, we can see periods of material drawdowns. In 2018 and late 2021, for example, NVIDIA saw stock price declines of 50 percent or more.

Do we need that volatility across an entire portfolio with its potential risk-of-loss on the edge of retirement? Investing is full of trade-offs.

At Vector, we emphasize the importance of a balanced and diversified approach to investing. We use longer time-horizon segments of a portfolio to invest in higher growth, potentially higher volatility assets. In addition, we stress the importance of time in the market rather than trying to time the market.

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