Nvidia: sometimes risk pays off
Risk-taking in the stock market
One afternoon, one of my mom’s neighbors and I struck up a conversation. He was retired with a few properties and he gave me some advice. “You’re in your 30’s…take risks…you can always bounce back if you take a loss.” This stuck with me and I decided to apply it to my investing philosophy. I’ve lost a lot of money through trial and error over the years, but I hit gold taking a calculated risk on one stock, Nvidia.
Watching CNBC I would constantly hear guests talk about this now trillion-dollar semiconductor company and I was intrigued. To summarize, Nvidia makes GPU chips that help power many technologies from data centers to self-driving cars. Tesla, Microsoft, Google, and Meta are all customers and use them in various ways. Artificial Intelligence is the newest phenomenon and Nvidia might be the most important company at the center of it all.
After all my research, I first purchased the stock in 2021 for an average cost of $188 and kept buying…today the stock price is $921 and has provided me a 384% return on my money. My confidence in the stock came from my understanding that chips are like the new oil. With our world becoming increasingly digital with cell phones, 5G, laptops, cars, tech equipment, virtual reality, etc…the demand for chips will only increase by 2030. They will be essential to the A.I revolution, our economy, and have even sparked tense geopolitical fodder between nations.
If you read some of my previous posts, I highly recommend investing in an S&P 500 index fund like “VOO” if you’re new to the stock market because it’s the safest path to build wealth. But I mention this story to highlight that taking one well-researched risk can pay off in the long run. Now, don’t go buying 10 companies in the hope one hits because you’ll fail miserably. But if you have conviction in a stock and are willing to ride the ups-and-downs, take a SMALL portion of money you’re willing to lose and go for it. Like my mom’s neighbor said, you can always bounce back.
Disclaimer: I am not a financial advisor and thoughts here are my own.