CryptoCurrency
I became a Nvidia millionaire playing ‘World of Warcraft.’ Am I smart — or just lucky?
Dear Quentin,
In 2010, I was working for a company that was going under, but I didn’t know that. My evil manager was a jerk and manipulated me into quitting by severely and publicly bullying and humiliating me every day. I was too naive at the time to understand this type of manipulation. I decided to quit my job like a boss, but after finding out how I got played, I was devastated. I had no job and no unemployment benefits.
I spent the next year unemployed, at home playing “World of Warcraft.” That’s when I discovered how great Nvidia graphics cards were. One day I got a surprise pension check from the company for over $4,000. I sat on the money for a while, not sure what to do with it. Eventually, I decided to put it all in Nvidia stock. Why not? I thought. It’s just a few thousand dollars, and I like their cards.
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It was literally the first stock I ever bought. Those Nvidia stocks are now worth $2 million. Yes, I became a multimillionaire by quitting my job and playing videogames all day. I’m not really religious, but even I have to think, ‘God works in mysterious ways.’ And that’s my funny story about how Nvidia made me a multimillionaire. What do you think? Did I deserve this windfall? Should I feel guilty or smart or did I just get lucky?
Mr. Lucky or Mr. Smart?
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Dear Mr. Smart,
In 2010 you were in a funk, and by investing in this stock you were investing in something far more ephemeral — hope.
You saw something others didn’t. There’s a fine line between a stroke of genius and a stroke of luck. And you, my friend, walked it. In 2018, Nvidia made a ride-or-die push to upgrade those graphics cards by revamping the graphics processing units that helped fuel its artificial-intelligence ambitions. Speaking at a conference in Los Angeles last year, Nvidia NVDA CEO Jensen Huang said that he had a “bet-the-company moment.” As TechCrunch reported, Huang said: “It required that we reinvent the hardware, the software, the algorithms and, while we were reinventing CG with AI, we were reinventing the GPU for AI.”
The awesome truth: Your good fortune is due to both your gut instinct and an educated guess as a gamer that this company displayed foresight — and pursued excellence. In 2018, Ryan Shrout, the founder and lead analyst at Shrout Research, wrote on MarketWatch about Nvidia’s next-generation graphics architecture. Despite competition from bigger rivals, Shrout wrote, “Nvidia continues to ship products with leadership performance and penetration. Even Google GOOG GOOGL is using Nvidia graphics chips for its cloud-based AI inference systems, proving that Nvidia is doing while most others are simply trying to.”
Honest retail investors who made successful once-in-a-lifetime bets in the other six members of the “Magnificent Seven” group of stocks — Apple, Microsoft MSFT, Alphabet, Amazon AMZN, Meta META and Tesla TSLA — will tell you what you told me: They bought the stock on a hunch or because they noticed something special about the company’s products or philosophy. Of course, you’re more likely to get lucky with a long-term investment: 14 hours or days may be a long time in politics, but 14 years is a short time for many investors in the stock market.
The upshot: Instinct is a powerful tool — especially when you’re proved right. You’re not the first person to buy a company’s stock because you like one of their products. Have you ever used a BlackBerry BB? I did not find them to be an easy or intuitive device to use, and I never understood their appeal. Mine stayed in the box. It was subsequently upstaged by a new device called the iPhone AAPL. So yes, not liking a company’s products may be one reason to avoid the stock — or vice versa. As obvious as it may seem, it can also be useful to look at a company’s financials and price-earnings ratio before committing your hard-earned cash.
You took a bet on one stock and, while you went against all the rules of diversification, you had perhaps once-in-lifetime luck with the explosion of artificial intelligence. But you also had an inkling that this company was doing something special, even if you did not foresee the exact nature of the stock’s meteoric rise — or that, in the words of DataTrek cofounder Nick Colas, Nvidia would “become, quite literally, the single most important company in the world to global equity investors.”
Financial advisers, for better or for worse, have all sorts of methods for choosing stocks — such as fundamental analysis or technical analysis — but there are no guarantees, even for the most forensic stock picker. And history is littered with bad calls. “Fundamental analysis attempts to identify stocks offering strong growth potential at a good price,” says Charles Schwab SCHW. “Investors have traditionally used fundamental analysis for longer-term trades, relying on metrics like earnings per share (EPS), price-to-earnings (P/E) ratio, P/E growth, and dividend yield.”
Schwab continues: “Technical analysis, on the other hand, bypasses the underlying company’s fundamentals and instead looks for statistical patterns on stock charts that might foretell future price moves. The idea here is that stock prices already reflect all the publicly available information about a particular company, so there’s nothing to be gained from poring over a balance sheet, income statement, or other financial information. Given the focus on price and volume moves, traders have traditionally used technical analysis for shorter-term trades.”
What were your objectives in buying this stock? Long-term growth? Capitalizing on a hot trend? Making a quick buck? Or did you merely want a foothold in the stock market with a $4,000 investment in your future and a shot at something less tangible — something that was in short supply after the traumatic experience with your former manager — a chance at a better future? Buying low is only the beginning: Riding the stock’s volatility, and resisting cashing out as the price slowly climbed before finally exploding. That takes chutzpah, nerves of steel and self-restraint, so give yourself credit for that.
You put your life savings in one stock, a risky move, but it paid off. God works in mysterious ways and, sometimes, so does the S&P 500 SPX.
Related: ‘I’m convinced the U.S. will be drawn into World War III’: How do I prepare my finances?
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Sales of existing homes fell in September as house hunters remained on the fence about buying a home despite mortgage rates easing during the month.
Existing home sales slipped 1.0% from August’s tally to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday. That marked the lowest rate since October 2010. Economists polled by Bloomberg expected a pace of 3.88 million in September.
On a yearly basis, sales of previously owned homes were 3.5% lower in September. The median home price rose 3.0% from last September to $404,500, marking the 15th consecutive month of annual price increases.
“Home sales have been essentially stuck at around a 4 million-unit pace for the past 12 months,” NAR chief economist Lawrence Yun said in a press release.
There have been significant challenges that have weighed on sales activity, including a lack of inventory, escalating prices, and elevated mortgage rates. Last month, however, those factors turned around.
The Federal Reserve cut its benchmark rate by half a percentage point in September. While the central bank doesn’t set mortgage rates, its actions influence their direction of movement.
Mortgage rates hit the lowest level since February 2023 ahead of the Fed decision to ease, while listing inventory picked up.
But overall, that hasn’t been enough to entice buyers.
“Some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” Yun said.
Tesla (TSLA) reported mixed third quarter results after the bell on Wednesday, but the stock jumped in after-hours trading as investors cheered the earnings beat, higher gross margins, and news that Tesla’s cheaper EV is on track for production next year.
For the quarter, Tesla reported revenue of $25.18 billion vs. $25.4 billion per Bloomberg consensus, higher than the $25.05 billion it reported in Q2 and also topping the $23.40 billion Tesla reported a year ago. Tesla posted adjusted EPS of $0.72 vs $0.60 expected, on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
The closely watched gross margin figure came in at 19.8%, much higher than the 16.8% expected.
Tesla shares were up nearly 8% in after hours trade.
“We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes,” the company said in its earnings deck. “Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025.”
Earlier this month, Tesla (TSLA) announced third quarter deliveries that slightly missed expectations, sending the stock lower.
Tesla said it delivered 462,890 vehicles in Q3, up 6.4% quarter over quarter, to mark the first quarter of delivery growth this year. The numbers also came in ahead of the 435,059 EVs the company delivered in the year-ago period. But Wall Street had expected Tesla to deliver closer to 463,897, according to Bloomberg.
“Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter. Cybertruck production increased sequentially and achieved a positive gross margin for the first time,” Tesla said in its report.
Tesla said it expects vehicle deliveries to achieve “slight growth” in 2024.
Ahead of Tesla’s Q3 disclosure, shares were down approximately 11% since Tesla revealed its robotaxi, dubbed the Cybercab, at its showy “We, Robot” event from the Warner Bros. studio lot in Burbank, Calif., on Oct. 10.
The debut and release of a cheaper EV is what many analysts and industry watchers believe will spur the next leg higher of EV sales, as even CEO Elon Musk has said before. During its Q2 report, Tesla and Musk said the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.
Investors and analysts were left wanting more details from Tesla’s “We, Robot” event on the Cybercab itself and detailed testing plans, along with questions about the development of Tesla’s sub-$30,000 EV, dubbed the Model 2.
Transak disclosed a data breach affecting over 92,000 users after a phishing attack compromised an employee’s laptop.
CryptoCurrency
The Dow plummets more than 600 points and is on track for its worst day in more than a month
The Dow Jones Industrial Average and other major indexes suffered a steep decline Wednesday afternoon as the yield on the benchmark 10-year U.S. Treasury note continued its upward climb, reaching 4.23%—a level not seen since July.
In the afternoon, the Dow dropped 631 points, or 1.4%, heading for its worst day in over a month. Meanwhile, the tech-heavy Nasdaq and the S&P 500 declined by 2.2% and 1.4%, respectively. However, there was some relief for investors as oil prices eased, with West Texas Intermediate (WTI) futures trading around $70.65 per barrel.
The Federal Reserve’s Beige Book, released in the afternoon, reported that economic activity remained largely unchanged across the 12 Federal Reserve Districts, with the Southeast significantly impacted by a harsh storm season.
On Wednesday, all eyes are on Tesla (TSLA) as the company prepares to release its latest earnings report. Analysts expect earnings per share to be 60 cents, down from 66 cents a year ago but an improvement from 52 cents in the previous quarter, according to FactSet estimates. Revenue is projected to hit $25.4 billion, compared to $23.3 billion in the third quarter of 2023 and $25.5 billion in the preceding quarter.
Apart from Tesla, investors are closely monitoring earnings reports from other major corporations, including AT&T (T), Boeing (BA), and Coca-Cola (KO).
McDonald’s stock plunges over 5%
McDonald’s (MCD) shares took a sharp hit, falling over 5% after the Centers for Disease Control and Prevention (CDC) linked the chain’s Quarter Pounder burgers to an E. coli outbreak. The outbreak has led to 10 hospitalizations and one death, driving a significant decline in McDonald’s stock during the afternoon trading session.
As of now, 49 cases have been reported across 10 states between Sept. 27 and Oct. 11, with a majority of illnesses occurring in Colorado, Nebraska, Utah, and Wyoming. The CDC noted that most of those affected had eaten a Quarter Pounder. Investigators are working swiftly to identify the contaminated ingredient.
Spirit Airlines stock soars 30%
After a failed attempt at merging with JetBlue (JBLU-0.80%), ultra-low-cost carrier Spirit Airlines (SAVE+28.01%) is reportedly turning back to a familiar partner. The Wall Street Journal (NWSA-0.34%), citing people familiar with the matter, reports that Spirit and Frontier Airlines (ULCC+3.05%) are in early talks over a potential merger. The news sent Spirit’s stock soaring nearly 30% on Wednesday.
–Francisco Velasquez and Rocio Fabbro contributed to the article
The semi-autonomous region of Tanzania is taking advantage of a sandbox regulatory framework adopted in July.
Bitcoin’s correction ignited selling in altcoins, which are slipping below critical support levels.
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