@value-investing I understand the charts of Cisco and Nvidia look similiar. But after seeing NVDA's Q1 earnings go from 7B to 25B y/y, doesn't that acceleration make you think this bubble could last a while? ~350% y/y growth in revenue is mind boggling no?
Delta in Nvdia’s market cap is last 50 days is more than BRK’s market cap of 6 decades - Jensanity as per Jesse Felder. So Sven is right in sounding the alarm bells …Thanks for calling it out!
I'm reading Mastering the Market Cycle right now and so much of what you say resonates with Howards Marks' way of thinking, too. The higher the prices go up, the more optimistic people get, the lower their risk premium becomes when valuing stocks (because how can this stock go down?), the more risk they take on so they don't mias out... until eventually something pops and things turn out bad. The only question mark is when will this happen? Given the latest ECB rate change, probably sooner than later.
Love ❤️ you, Sven. Nothing silly about the warning ⚠️. Another great cautionary discussion. You remind me of Cassandra...😅 some nay sayers will always be so, it is their nature.
YOur videos always put me on the rational path and away from the cliff even though I'm tempted to invest in these AI stocks at times. I guess I'm a value investor black sheep like you Sven. All the best!
Thanks for the very interesting lesson! I appreciate your information and perspective. Great charts. I always learn so much from every video you produce! I love the Charles Mackay quote! I hadn't heard it before.
What I find interesting is that with the amount of bubbles we have seen pop people are still unable to recognize them. What is even more interesting is the analysts at BOA are also unable to recognize bubbles.
It was nice buying NVDA during the lows of October 2022 and selling them once NVDA crossed over a thousand. The return was wonderful for me, but I will be cautious about investing into NVDA (even if I invest a small amount into NVDA or other semiconductor companies). I do agree with Sven. Better to invest wisely and miss out than lose your shirt.
Great video Sven! Nvidia margins will probably be crushed at some point, who knows when. Btw I dont own bitcoin and I agree that it has no value, but I also cant think of a reason bitcoin would go to $0
I 100% agree with you. Whatching nvidia gross profit margin skyrocketing makes me think that whenever the competition makes a good product, they will have to lower the prices and nvidia rev will take a big hit. Gpu at 40k is insane. I will be buying puts in 2025
it has an exponential up curve, that is not sustainable by any means. I think it will drop then stabilize at some price. But I think the stock will grove linearly after that.
Thanks to the Super Micro Computer Bubble i got around 135 shares at 90$ and sold most at 350-400$ and 850-950$. Now im waiting for a bigger leg down to buy more :)
Of course, if you miss out something like that you have to explain it to your follower and subscriber. Just watch adam khoo`s thought about AI and Nvidia.
Honest questions: If the market truly crashes, how are you certain the valuestocks doesnt crash with them? Isnt there a risk that the good metrics in themselves are a result of the good times in the market/economy?
They crash as well. Meanwhile, bubble stocks crash 80% easily (e.g. Beyond Meat), those with reasonable valuations return to their fair value afterward. If the company is making profits and they have a good capital allocation, they help by buying back shares.
*great point about AI bubble ,you think people would be wise to sell S&P 500 at a profit and buy value stocks that currently have a margin of safety to outperform in the next 10 years* ?
When everybody is expecting huge efficiencies, and hence an edge and massive profits, but it's......everybody.....then nobody has any advantage, and it is all very, very much priced in at this point. The many discussions I've had with cheerleaders on a stock AFTER it has tripled never cease to amaze me.
Let me know whether you have any short position or put options to profit from the price drop of Nvidia. Prove to the world by showing your position if you believe that it is going to drop in the stock price?
I am a value investor, thus I only invest if there is NO RISK and all what is left is upside. So, in the NVIDIA case I just make videos :-))) I make money :-)) For charity, but ok!!!!
Speaking of AI is possible that AI itself could essentially make value investing completely obsolete much like the modernization of how we get our information has made value investing much harder than in the past? If AI can essentially be an infinite set of eyes of every stock in the world and AI has all of the information there is to have, could that not make markets 100% efficient?
Interesting idea, but at the moment AI are not at the level of a human and AI has the problem that it just looks at previous data. In the past, a value investor had to invest in companies with a high book value. Now these companies most certainly have a big problem and underperform the market. At the end, if something works, it will be used at the stock market.
Its craziness as far as the eye can see. It is as obvious as the nose on my face. But human nature never changes. People will watch your video, some may agree and then eventually buy NVDIA :)
@@jeffjones114 70% margins are not sustainable, competition and or any lack of demand will cut those margins in half and the stock will correct similar to Tesla
@@-jovoc it is possible companies can actually not afford not to invest in these chips, since they drastically reduce power consumption costs (especially the coming blackwell chip). AMD isnt close
Great assessment. The universe may be infinite but the earth is finite and the law of big numbers has not been repealed. Icarus will not fly to the sun this time or ever.
Bubbles are bubbles, nothing to miss out if you are rational, they go irrationally up and then down. Bitcoin final price is Infinite because fiat will go to zero.
Thank you for this rational analysis. When investing it is important to remain grounded to a bedrock of rationality and remember, - those whom the gods would destroy, they first make mad.
Sven I think your bearish ego is what keeps you from missing out from getting wealthy from these Ai stocks, just set stops if you’re so worried about stocks going down
Eventually you'll be right but (fwiw) I have a feeling that this bubble is just beginning; because as opposite to the other bubbles you mentioned, so far the nvidia pop was supported by an equal explosion of profits and free cash flow, not just stories and fantasies on the future. Of course it'll be impossibile to sustain a 35/40% growth on such scale for an extended period of time but in the meantime the fomo and the mania might last for a while.
I kind of agree with you on some things. Nvidia is on pace for 60B in Net income a year. It’s not Cisco. I don’t own any Nvidia stock either fwiw. Many bubbles probably will pop for companies being given AI valuations without earnings to back it. I think Tesla is set up to run being on the cusp of solving autonomy and having earnings to back AI investments.
Agree its a bubble and every bubble has one stock that is the poster child of the bubble. This time its NVDA. Even though the bubble poster child is usually a great profitable company with huge growth that doesn't prevent shareholders from losing more than 50% of their money in the inevitable popping of the bubble. History repeats.
With about 25 years of investing experience, I often took the contrarian view and done well. However, never be contrarian for the sake of being contrarian. AI development is real and you will want to weed out the noise and stay invested in the few that will make real profits over the next 4-6 years.
you are already starting to see it . Ai pricing is collapsing in china as Baba has started a price war, and they are about a yr or so ahead of us in the cycle
You are right. we are about to live the internet crash from septembre 2000 to october 2002 again. I would not touch technos with a pole. Gold mining looks undervalued. Bear in mind that it will fall should the market severrely falls
Every one gonna say he's a genius when Nvidia crashes. In reality we all know it will just don't know when. And neither does Carlin. One thing is for certain tho. He will say he predicted it
Time in the market beats timing the mkt most of the time. * diversified portfolio.low cost .index fund. You remind me slightly of that actor... Christopher Walken.
Since I started investing in 2003 or thereabouts, there has been a number of really big selloffs or crashes. I think you are doing the job of mentoring the younger generations who have only read about them. Experiencing them will change most investors from barging ahead like lions to carefully tiptoing into the markets. But I fear that the younger generations, like my younger self, will ignore the advice of boring oldies and figure it out themselves the hard way. Which is, perhaps, the way it should be.
Nvidia is selling way overvalued, with future earnings already in the stock price...it's not for me at this level. My entery price is way lower. Fomo is not for me. Value always.
I constnatly have the urge to invest in Nvidia, and I feel like I have missed out because when I did the calculations and I saw the numbers, I felt like it was overpriced, but then it has increased so much after that. It is also hard because Nvidia does not have much competition, so the moat is massive, because AMD is even more expensive than Nvidia. How do I combat the urge? I keep reminding me of Buffet's wisdom: You do not need to catch all the waves. If you catch a couple of them in your life, you are set for life. Would have been amazing to invest in Nvidia before the boom and sell it now? Yeah, absolutely. But we are not 6 months ago, so the decision is different. And at the end of the day, I can invest in "slower" stocks which I see as much safer, even when the eventual bubble bursts, instead of gambling all or nothing in a single stock. At the end of the day, I am not aiming to become the richest man on Earth, nor my life style depends on being the best in the market. I just want enough wealth to stop worrying about money, and I think I can achieve that with slower, safer stocks.
You cannot judge if a stock is "overpriced" from just looking at its price, you need to look at the earnings. If the price rises together with the earnings than there is no overpricing there, but a proportional representation of the company's business situation. That is the case for Nvidia right now. Their earnings are literally exploding because Nvidia is ahead of any other competitor at the moment. Which has not to stay like that, of course.
There is one big difference between comparing internet bandwidth cost and AI cost: business typically pays flat fee for internet connection, but with AI businesses will be paying by volume - th e more AI they use, the more it will cost them.
Glad to see even after years of insane growth, complete market dominance, unbelievable margin, and no competition in sight, some are still calling it a bubble
People were saying the same about Tesla a few years ago, now the biggest loser in the S&P 500... Tesla got competition and their margins dropped, the same will happen to NVDA eventually.
@@lareau6 early 2023 it hat eps of about 0.5 or lower now it has over 6. I was AI enthusiast since i was about 10. I believed like many scifi authors and scientists now that AI will be the biggest catalyst in the human history ever. Because AI is self improving recursevly faster. It can solve every problem that human can but exponentialy faster. Every company and ChatGPT user is paying now the NVIDIA tax. soooo
@@lareau6 I think with the stock split price increase is a short therm hype which it could be liquidated, but it can run higher. Short therm i don't know in the long therm it will rise. But i don't know how much...
Hi Sven, thanks for the video. What do you think abt taking advantage of INTC low/fair price today to ride the AI boom? They are going to introduce their newest AI chip gaudi 3 in Q4 2024
Can you talk more about valuations of these bubble companies? Are they comparable to Tesla of 2021 and all those canabis stocks you are mentioning? Also, at what price would you consider NVIDIA for your portfolio?
What does Sven think of the Prudential spin-off Everest Group and investing in Bermuda based companies? Everest is so close to its tangible book value, buying back stocks and huge free cash flows. Insurance market tough now but looking at boom after 2025!
Good company. But insurance sector is great right now, not in a tough environment at all! More likely profits won't be as good in the future. Fidelis is another good Bermuda insurer, cheaper than Everest but smaller and less solid. Sven said many times he does not invest in financials, he doesn't like bank and insurance, because of risk
@@Value-Investing don't know. I just think some other AI companies will run and pop harder during the bubble. AI is a bit different than many bubbles as there aren't that many technology revolutions in our history and AI is one.
@@VanillaAttila Well, is it really? It's basically just bots, which have been around for a while... Chinese are using it with robotics etc which is definitely useful... but at least today you simply can not TRUST LLMs to be correct on anything, so that seems to be a problem. I feel A.I. is more of a marketing term than reality. But yes, it will probably replace search engines in the long run, it's just so much easier to use AI to search the data/web.
CNBC says s&p500 P/E is 21. Problem is you are backwards looking while the market is forward looking. If S&P 500 eps hits &250/share this year it’s not an expensive market at all. You are assuming $250 is too much that’s why you insist on 27 P/E. I’m not saying you are wrong. We have 7 months left this year to figure out true P/E. time will tell. The cool thing though is you don’t throw in the towel when there is exuberance. Lisa Young, Mike Wilson have all given up on their bear market view while you haven’t.
the market is always forward looking because they can make it look better than reality, reality is where the cash flows are and the dividends come from - when the market touches on reality it gets ugly :-(
You miss some fundamentals. We are near the end of Moore Law and the times were price of each transistor lowers and lowers has gone! now is the time of advance packaging, etherogeneous integration and 3D architectures and current AI is a hungry data and compute predator
Sir, you are right about some items being hyped, but AI is real and we are just in the beginning, so not quite a bubble yet. You will eventually be right about a crash, but that won’t come anytime soon.
Great statistics and data snippets. Thanks Sven. Nvidia is a great company and has always been too pricey. It's a hype stock. Nvidia's growth is an anomaly -- really something. It's leadership has been forward-looking, hard-working, cutthroat and run an exceptional playbook. But the real game changer has actually been their exceptional luck. And one shouldn't depend on luck.
Sounds like this guy missed out and missed the boat on everything and is happy to be poor and missable. Of course stocks can hit exuberance and then tumble. The big question is has Nvidia, QCOM, Avgo, or even Apple, Microsoft, Meta, Google. Reached that stage. With 6.4 trillion on the sidelines and the next step the FED will take is cutting rates. I do not think we have hit exuberance yet in AI. Eventually this guy will be right and then he will put an other feather in his hat.
Mr Carlin, you are even far far from "not Smart". Your point taken, regarding possible bubble coming up. however in case of just Nvidia , price is not justified with a PEG of 0,17 ? at the moment? I think the later one gets in such a stock, the bigger is the risk that next earning report will not meet the expectations.
The same was said for FB which ipo’d at 32 but fell to 16 because it seemed a bubble and over optimistic… two years later crushed all FCF expectations and was at 200… now 500…
Even if there's a 50% crash, if you call it right once per 10 year or per 20 years, you still lose money over flowing the trends and making money with growth investing during 10-20 years then crash. Howard Marks also spoke about that: you stay so far being not being invested, trying to avoid the crash. You say invest in value stock instead. Wouldn't it be better to make more money following the trends? Certainly more than investing in emerging markets. What do you say?
In fairness to Sven, I don't think he is saying don't invest I think he is saying don't overpay. He is saying if you are buying Nvadia for example now you are overpaying for what returns that business will return. Another point is that if a stock crashes 50% most people don't have the stomach or belief to hold that stock. I put myself in that group.
I say take the Nvidia chart and tell me explicitly how do you define trend and how do you get in and out effectively to capture that. Then take that same strategy and backtest it on every other trend: how did it work on Bitcoin? how did it work on every other cryptocurrency that no longer exists? how did it work on EV's? how did it work on pot? How many folks get to the Forbes list by playing these games? By "following trends" there is no conviction, so you just end up throwing meaningless amounts of wealth into everything, hoping that prices will go up: for every Nvidia that worked, how many plays did not? And the ones that did work, they likely earned you a return on a meaningless portion of wealth anyway, so you likely didn't get very far. If you put 1% of your wealth in Nvidia or crypto and you 11x that, you obtain the same result as if you get a 2x on 10% of your wealth. Value investing consists in focusing on risk so that you can concentrate meaningful portions of wealth into quality businesses and compound in any environment, regardless of market trends. Catching tops and bottoms only works in hindsight.
i made 5x with NVIDIA , and didnt listen guys like you that told me that it is bubble, get and ride the train, until it goes. Not financial advice thought
Just because you got lucky on price, doesn't mean you know what you are doing. Just like a lottery ticket winner saying you should buy tickets. This channel is about fundamentals, low risk high reward. Not following the hype because the price goes up. I am happy for your gain. But when do you sell? Or don't you sell and why? What's the plan?
Fama and French identified 5 factors plus momentum as accounting for essentially all of the returns on any investment approach. That includes Warren Buffet's returns. Picking individual stocks is always a fool's errand, even when it works out.
In order to include those factors into an index, you are indeed picking stocks. And factor ETFs are more expensive in terms of fees than do it yourself.
@@Value-Investing The split could be an indicator, I think one reason for the split is to make the stock afordable for small investors and increase liquidity, so that big investors can sell it. I see some analogies with Tesla. The split was done at 300 $ and then it went to 100 $.
This gentleman has the most integrity of any youtuber
I agree.. I trust people who don't mind giving unpopular opinions, instead of just pandering to peoples greed.
Too bad he's a total fraud as well as being clueless.
Yes, but if you have followed his guide to the stock market, you have been left behind. But your time will come.
The profits will be passed on to the customer. Exactly! This is like telecom companies switching from cable networks to fiber networks.
The amount of Indian Bots in the comments is unbelievable!!
Yeah. One would thinks that Google's awesome AI tools could filter them out. But no.
The number of Indian Bots in the comments is unbelievable!!
for what?
Yes, I am constantly reporting them as spam, to help Sven clear the comments section
They aren't indian. Most of them talk about dollars, and have western names.
@value-investing I understand the charts of Cisco and Nvidia look similiar. But after seeing NVDA's Q1 earnings go from 7B to 25B y/y, doesn't that acceleration make you think this bubble could last a while? ~350% y/y growth in revenue is mind boggling no?
You're my favorite financial youtuber by a mile, thanks Sven for the great nuanced video
Happy to hear that!
Delta in Nvdia’s market cap is last 50 days is more than BRK’s market cap of 6 decades - Jensanity as per Jesse Felder. So Sven is right in sounding the alarm bells …Thanks for calling it out!
thanks for sharing!
“Geometric progressions forge their own anchors” - Warren Buffett.
Fascinating quote.
And hence you one would short one of these GPs, you could lose a lot of sleep! Human nature never changes!!!🎉
I'm reading Mastering the Market Cycle right now and so much of what you say resonates with Howards Marks' way of thinking, too. The higher the prices go up, the more optimistic people get, the lower their risk premium becomes when valuing stocks (because how can this stock go down?), the more risk they take on so they don't mias out... until eventually something pops and things turn out bad. The only question mark is when will this happen? Given the latest ECB rate change, probably sooner than later.
thanks for sharing!
Love ❤️ you, Sven. Nothing silly about the warning ⚠️. Another great cautionary discussion. You remind me of Cassandra...😅 some nay sayers will always be so, it is their nature.
The ones who is calling you idiot, they’re the idiots.
Appreciate your hard working.
thanks!
YOur videos always put me on the rational path and away from the cliff even though I'm tempted to invest in these AI stocks at times. I guess I'm a value investor black sheep like you Sven. All the best!
Thanks for the very interesting lesson! I appreciate your information and perspective. Great charts. I always learn so much from every video you produce! I love the Charles Mackay quote! I hadn't heard it before.
great to hear!!! thanks!
What I find interesting is that with the amount of bubbles we have seen pop people are still unable to recognize them. What is even more interesting is the analysts at BOA are also unable to recognize bubbles.
it is all about looking smart at the moment for BOA
It's different this time, bro. Y'know, same as all the other times it was "different this time".
It was nice buying NVDA during the lows of October 2022 and selling them once NVDA crossed over a thousand. The return was wonderful for me, but I will be cautious about investing into NVDA (even if I invest a small amount into NVDA or other semiconductor companies). I do agree with Sven. Better to invest wisely and miss out than lose your shirt.
Best Channel on CZcams
Why?
If the objective is to massively underperform the index, yes it is the best.
Great video Sven! Nvidia margins will probably be crushed at some point, who knows when. Btw I dont own bitcoin and I agree that it has no value, but I also cant think of a reason bitcoin would go to $0
I 100% agree with you. Whatching nvidia gross profit margin skyrocketing makes me think that whenever the competition makes a good product, they will have to lower the prices and nvidia rev will take a big hit. Gpu at 40k is insane.
I will be buying puts in 2025
:-))
Do you release your YTD or annual performance on your portfolio? No hate towards you, just that I practise scepticism on ALL youtubers.
Yeah he underperforms the market on a consistent basis lol. Also charges people for 'research' to underperform alongside him.
I will always underperform stocks like NVIDIA :-)
@@Value-Investing don't worry i don't judge someone based on 1 stock pick. Do you publish your portfolio returns YTD or per annum basis?
even if he did, would u believe... but this certainly would be interesting...
czcams.com/video/Yt0MKz0twhE/video.html
it has an exponential up curve, that is not sustainable by any means. I think it will drop then stabilize at some price. But I think the stock will grove linearly after that.
Thanks to the Super Micro Computer Bubble i got around 135 shares at 90$ and sold most at 350-400$ and 850-950$. Now im waiting for a bigger leg down to buy more :)
good for you
Of course, if you miss out something like that you have to explain it to your follower and subscriber.
Just watch adam khoo`s thought about AI and Nvidia.
Thanks for sharing
Honest questions: If the market truly crashes, how are you certain the valuestocks doesnt crash with them? Isnt there a risk that the good metrics in themselves are a result of the good times in the market/economy?
They crash as well. Meanwhile, bubble stocks crash 80% easily (e.g. Beyond Meat), those with reasonable valuations return to their fair value afterward. If the company is making profits and they have a good capital allocation, they help by buying back shares.
*great point about AI bubble ,you think people would be wise to sell S&P 500 at a profit and buy value stocks that currently have a margin of safety to outperform in the next 10 years* ?
'outperform' is the key word of destruction here - perform should be the focus, not outperform!
When everybody is expecting huge efficiencies, and hence an edge and massive profits, but it's......everybody.....then nobody has any advantage, and it is all very, very much priced in at this point. The many discussions I've had with cheerleaders on a stock AFTER it has tripled never cease to amaze me.
the higher the stock, the more exuberant the projections... :-))
Value stocks that pay great dividends have worked great for me over 25 years. I am glad the hype does not get to me.
that is how we work!
Sven, when your investment is overvalued, would a value investor sell a portion of it or sell everything and wait for the next opportunity.
I fully agree we are in the craze right now... but the more important question for me is, when will it burst? Nobody knows
correct, nobody knows! But while bubbles grow big and burst, we just keep on compounding!
Could still go up a few more percent. Maybe 10.
NVDA is leading the bubble. It will lead the burst too.
time will tell!
Let me know whether you have any short position or put options to profit from the price drop of Nvidia. Prove to the world by showing your position if you believe that it is going to drop in the stock price?
I am a value investor, thus I only invest if there is NO RISK and all what is left is upside. So, in the NVIDIA case I just make videos :-))) I make money :-)) For charity, but ok!!!!
Speaking of AI is possible that AI itself could essentially make value investing completely obsolete much like the modernization of how we get our information has made value investing much harder than in the past? If AI can essentially be an infinite set of eyes of every stock in the world and AI has all of the information there is to have, could that not make markets 100% efficient?
Interesting idea, but at the moment AI are not at the level of a human and AI has the problem that it just looks at previous data. In the past, a value investor had to invest in companies with a high book value. Now these companies most certainly have a big problem and underperform the market.
At the end, if something works, it will be used at the stock market.
Its craziness as far as the eye can see. It is as obvious as the nose on my face.
But human nature never changes. People will watch your video, some may agree and then eventually buy NVDIA :)
That is how it is! Stocks that go up are in demand!
i don’t buy Nividia for price appreciation, i buy it for the yield.
Is that sarcasm?
hahaha
NVDA price action is similar to TSLA a few years ago
:-)
except NVDA's price is following fundamentals closer, and they dont have maniac ceo
@@jeffjones114 70% margins are not sustainable, competition and or any lack of demand will cut those margins in half and the stock will correct similar to Tesla
@@-jovoc it is possible companies can actually not afford not to invest in these chips, since they drastically reduce power consumption costs (especially the coming blackwell chip). AMD isnt close
@@-jovocnow if you could only supply the 'WHEN', we'll be golden 😊
Ai bubble may or may not burst. Anyone buying Nasdaq ETF 5 years ago would have made more money than investing in value stocks.
Great analysis of the problem, I was very much looking forward to suggestions for solutions.
I'll gamble on BTC at 15K, NVDA is a nice short at this price and higher. I'm buying deep value stocks many that pay a well covered dividend.
Great assessment. The universe may be infinite but the earth is finite and the law of big numbers has not been repealed. Icarus will not fly to the sun this time or ever.
:-)
It seems you have pretty much missed out on everything
I have been compounding since 2002, thus missed on all the risks out there!!!
Bubbles are bubbles, nothing to miss out if you are rational, they go irrationally up and then down. Bitcoin final price is Infinite because fiat will go to zero.
I don't think you're wrong on the bubble, but I'm afraid it will be awhile before it pops. We're still at the early stage.
could be, could be!!!
Thank you for this rational analysis. When investing it is important to remain grounded to a bedrock of rationality and remember, - those whom the gods would destroy, they first make mad.
:-)
Perfect 👌
Thanks 😄
You give a lot of data that support your opinion, I agree with it,Thanks for the lesson.
AMS25K is probably the most promising coin on this bull market..
Is it as good as scamcoin?
Another scam crypto coin?
Sven I think your bearish ego is what keeps you from missing out from getting wealthy from these Ai stocks, just set stops if you’re so worried about stocks going down
I missed on the cannabis, I missed on Tesla, I missed on Zillow, - adding things up, it is ok I miss those
I don’t know about AI but I remember you saying at the end of last year that gold was overvalued.
gold doesn't produce anything, so yes, at any price is overvalued :-)))
Eventually you'll be right but (fwiw) I have a feeling that this bubble is just beginning; because as opposite to the other bubbles you mentioned, so far the nvidia pop was supported by an equal explosion of profits and free cash flow, not just stories and fantasies on the future. Of course it'll be impossibile to sustain a 35/40% growth on such scale for an extended period of time but in the meantime the fomo and the mania might last for a while.
could be! I'll watch it from the sidelines!
I kind of agree with you on some things.
Nvidia is on pace for 60B in Net income a year. It’s not Cisco. I don’t own any Nvidia stock either fwiw.
Many bubbles probably will pop for companies being given AI valuations without earnings to back it. I think Tesla is set up to run being on the cusp of solving autonomy and having earnings to back AI investments.
thanks for sharing!
Agree its a bubble and every bubble has one stock that is the poster child of the bubble. This time its NVDA. Even though the bubble poster child is usually a great profitable company with huge growth that doesn't prevent shareholders from losing more than 50% of their money in the inevitable popping of the bubble. History repeats.
thanks for sharing!
Great video! You are 100% correct IMHO
I know I am not correct, but it fits me and you likely - we will definitely be wrong most of the time :-))
With about 25 years of investing experience, I often took the contrarian view and done well. However, never be contrarian for the sake of being contrarian. AI development is real and you will want to weed out the noise and stay invested in the few that will make real profits over the next 4-6 years.
you are already starting to see it . Ai pricing is collapsing in china as Baba has started a price war, and they are about a yr or so ahead of us in the cycle
thanks for sharing!
You are right. we are about to live the internet crash from septembre 2000 to october 2002 again. I would not touch technos with a pole. Gold mining looks undervalued. Bear in mind that it will fall should the market severrely falls
Prediction made on the 15th of june 2024. The Nasdaq stands at 17 688, an all time high
thanks for sharing!
As far as I'm concerned, this is 2000 all over again... the parallels are remarkable!
Only this time, I will (try to) go short! 😜
:-)))
Underrated advice, this has swayed my opinion and i will be very cautious investing in Ai
If not AI, where do you recommend investing in Sven?
Where is your money at now during this high peak?
Every one gonna say he's a genius when Nvidia crashes. In reality we all know it will just don't know when. And neither does Carlin. One thing is for certain tho. He will say he predicted it
thanks for sharing - it is not the point when
Use PE as final yardstick to conclude your view on all stocks. Gold stocks with PE 7 like 1929, ultra cheap
What is the trigger?
Earnings won't justify the currnt multiples.
But what will trigger the sheep to turn direction.
Time in the market beats timing the mkt most of the time. * diversified portfolio.low cost .index fund. You remind me slightly of that actor... Christopher Walken.
:-))
Since I started investing in 2003 or thereabouts, there has been a number of really big selloffs or crashes. I think you are doing the job of mentoring the younger generations who have only read about them.
Experiencing them will change most investors from barging ahead like lions to carefully tiptoing into the markets.
But I fear that the younger generations, like my younger self, will ignore the advice of boring oldies and figure it out themselves the hard way.
Which is, perhaps, the way it should be.
Nvidia is selling way overvalued, with future earnings already in the stock price...it's not for me at this level. My entery price is way lower. Fomo is not for me. Value always.
I constnatly have the urge to invest in Nvidia, and I feel like I have missed out because when I did the calculations and I saw the numbers, I felt like it was overpriced, but then it has increased so much after that. It is also hard because Nvidia does not have much competition, so the moat is massive, because AMD is even more expensive than Nvidia.
How do I combat the urge? I keep reminding me of Buffet's wisdom: You do not need to catch all the waves. If you catch a couple of them in your life, you are set for life.
Would have been amazing to invest in Nvidia before the boom and sell it now? Yeah, absolutely. But we are not 6 months ago, so the decision is different. And at the end of the day, I can invest in "slower" stocks which I see as much safer, even when the eventual bubble bursts, instead of gambling all or nothing in a single stock.
At the end of the day, I am not aiming to become the richest man on Earth, nor my life style depends on being the best in the market. I just want enough wealth to stop worrying about money, and I think I can achieve that with slower, safer stocks.
Just buy QQQ, good luck trying to outperform it over a 20 year period
getting rich slowly, as would buffett say!
You cannot judge if a stock is "overpriced" from just looking at its price, you need to look at the earnings. If the price rises together with the earnings than there is no overpricing there, but a proportional representation of the company's business situation. That is the case for Nvidia right now. Their earnings are literally exploding because Nvidia is ahead of any other competitor at the moment. Which has not to stay like that, of course.
There is one big difference between comparing internet bandwidth cost and AI cost: business typically pays flat fee for internet connection, but with AI businesses will be paying by volume - th e more AI they use, the more it will cost them.
Thanks for sharing!
Glad to see even after years of insane growth, complete market dominance, unbelievable margin, and no competition in sight, some are still calling it a bubble
that's true for the past. Here we are trying to see the future trajectory though.
And it’s cheaper at 1200 than it was at 300
People were saying the same about Tesla a few years ago, now the biggest loser in the S&P 500... Tesla got competition and their margins dropped, the same will happen to NVDA eventually.
Selling$7,200 AI chips to Tesla and others at $35-40,000 a pop is indeed a bubble! It won't last I promise you!
Agreed on the point competition but who can compete with Ndva?
The price of Nvidia is high right now even if we assume very high growth rates due to a lack of competition.
When i invested in NVIDIA last year. I felt like a contrarian. EVERYBODY i know said it is a bubble. It raised too much. Now we are here :)
My only questions are: how much of it is hype? how long is it gonna go?
@@lareau6 early 2023 it hat eps of about 0.5 or lower now it has over 6. I was AI enthusiast since i was about 10. I believed like many scifi authors and scientists now that AI will be the biggest catalyst in the human history ever. Because AI is self improving recursevly faster. It can solve every problem that human can but exponentialy faster. Every company and ChatGPT user is paying now the NVIDIA tax. soooo
@@lareau6 millions of new antibiotics were found recently. Also microsoft and google found millions of new elements.
thanks for sharing!
@@lareau6 I think with the stock split price increase is a short therm hype which it could be liquidated, but it can run higher. Short therm i don't know in the long therm it will rise. But i don't know how much...
See you at the next video, Professor.
Hi Sven, thanks for the video. What do you think abt taking advantage of INTC low/fair price today to ride the AI boom?
They are going to introduce their newest AI chip gaudi 3 in Q4 2024
Intel is low since 2008...
AI to the moon ... you have already missed it. Its time to take epic profits now :)
great for you!
We should invest in companies that will benefit from AI, not in AI companies. So, which are these companies you think we should invest in? Thank you
hm, or find companies that will not be affected at all
Charles Mackay was himself one of the proponents and involved in the biggest bubble of his time - Railroad Bubble
Can you talk more about valuations of these bubble companies? Are they comparable to Tesla of 2021 and all those canabis stocks you are mentioning?
Also, at what price would you consider NVIDIA for your portfolio?
What are we talking about 30 times sales! For a value portfolio you need a long-term durable moat - within the semis industry, things change fast.
@@Value-Investing What price?
You did not even analyse the business
2:15 exactly like bitcoin
thanks for sharing!
What does Sven think of the Prudential spin-off Everest Group and investing in Bermuda based companies? Everest is so close to its tangible book value, buying back stocks and huge free cash flows. Insurance market tough now but looking at boom after 2025!
Good company. But insurance sector is great right now, not in a tough environment at all! More likely profits won't be as good in the future. Fidelis is another good Bermuda insurer, cheaper than Everest but smaller and less solid. Sven said many times he does not invest in financials, he doesn't like bank and insurance, because of risk
If so confident post your PUTS Sven 🥰
you can't be confident, impossible to know the timing!
I agree with AI bubble due to prices coming down, but NVIA is infrastructure with physical goods and at the front of the IP curve.
for the next 10 years?
@@Value-Investing don't know. I just think some other AI companies will run and pop harder during the bubble. AI is a bit different than many bubbles as there aren't that many technology revolutions in our history and AI is one.
@@VanillaAttila Well, is it really? It's basically just bots, which have been around for a while...
Chinese are using it with robotics etc which is definitely useful... but at least today you simply can not TRUST LLMs to be correct on anything, so that seems to be a problem. I feel A.I. is more of a marketing term than reality. But yes, it will probably replace search engines in the long run, it's just so much easier to use AI to search the data/web.
buying and holding bitcoin IS the contrarian move...
And BitCoin?
Always keeping us in reality 👍
:-)
Apple is a compounder, same as Gougle and Amazon. Nvidia, on top of being grossly overvalued, operates in a very a cyclical industry
I agree with you 120% !!!
You are not an idiot. Thank you very much. Regards from Denmark 🙂
thanks!
CNBC says s&p500 P/E is 21. Problem is you are backwards looking while the market is forward looking. If S&P 500 eps hits &250/share this year it’s not an expensive market at all.
You are assuming $250 is too much that’s why you insist on 27 P/E. I’m not saying you are wrong. We have 7 months left this year to figure out true P/E. time will tell.
The cool thing though is you don’t throw in the towel when there is exuberance. Lisa Young, Mike Wilson have all given up on their bear market view while you haven’t.
the market is always forward looking because they can make it look better than reality, reality is where the cash flows are and the dividends come from - when the market touches on reality it gets ugly :-(
Hi Sven! Any chance you could take another look at investing in emerging markets?
I am always looking at that!
You miss some fundamentals. We are near the end of Moore Law and the times were price of each transistor lowers and lowers has gone! now is the time of advance packaging, etherogeneous integration and 3D architectures and current AI is a hungry data and compute predator
Sir, you are right about some items being hyped, but AI is real and we are just in the beginning, so not quite a bubble yet. You will eventually be right about a crash, but that won’t come anytime soon.
thanks for sharing!
Great statistics and data snippets. Thanks Sven. Nvidia is a great company and has always been too pricey. It's a hype stock. Nvidia's growth is an anomaly -- really something. It's leadership has been forward-looking, hard-working, cutthroat and run an exceptional playbook. But the real game changer has actually been their exceptional luck. And one shouldn't depend on luck.
thanks for sharing!
Sounds like this guy missed out and missed the boat on everything and is happy to be poor and missable. Of course stocks can hit exuberance and then tumble. The big question is has Nvidia, QCOM, Avgo, or even Apple, Microsoft, Meta, Google. Reached that stage. With 6.4 trillion on the sidelines and the next step the FED will take is cutting rates. I do not think we have hit exuberance yet in AI. Eventually this guy will be right and then he will put an other feather in his hat.
Analysts and traders have always been saying NVDA is way overpriced, then sell and buy back in at a higher price.
:-)
Mr Carlin, you are even far far from "not Smart". Your point taken, regarding possible bubble coming up. however in case of just Nvidia , price is not justified with a PEG of 0,17 ? at the moment? I think the later one gets in such a stock, the bigger is the risk that next earning report will not meet the expectations.
thanks for sharing!
You can make money off it but it's not worth the risk. Appreciate your thoughts brodie.
thanks for sharing!
Thank you Sven, You are Awesome!
Thank you too!
It may happen. The question is: when?
that is impossible to know!
@@Value-Investing could it be before the US elections?
The same was said for FB which ipo’d at 32 but fell to 16 because it seemed a bubble and over optimistic… two years later crushed all FCF expectations and was at 200… now 500…
thanks for sharing!
Even if there's a 50% crash, if you call it right once per 10 year or per 20 years, you still lose money over flowing the trends and making money with growth investing during 10-20 years then crash. Howard Marks also spoke about that: you stay so far being not being invested, trying to avoid the crash. You say invest in value stock instead. Wouldn't it be better to make more money following the trends? Certainly more than investing in emerging markets. What do you say?
It's about FUD so you buy his course instead.
In fairness to Sven, I don't think he is saying don't invest I think he is saying don't overpay. He is saying if you are buying Nvadia for example now you are overpaying for what returns that business will return. Another point is that if a stock crashes 50% most people don't have the stomach or belief to hold that stock. I put myself in that group.
It does not make any sense to invest now if you're a new investor. At least not the US markets. Wait for reversion to mean.
some truth to it.. also explains why its so hard to beat the "index" .. over long time !
I say take the Nvidia chart and tell me explicitly how do you define trend and how do you get in and out effectively to capture that.
Then take that same strategy and backtest it on every other trend: how did it work on Bitcoin? how did it work on every other cryptocurrency that no longer exists? how did it work on EV's? how did it work on pot? How many folks get to the Forbes list by playing these games?
By "following trends" there is no conviction, so you just end up throwing meaningless amounts of wealth into everything, hoping that prices will go up: for every Nvidia that worked, how many plays did not? And the ones that did work, they likely earned you a return on a meaningless portion of wealth anyway, so you likely didn't get very far.
If you put 1% of your wealth in Nvidia or crypto and you 11x that, you obtain the same result as if you get a 2x on 10% of your wealth.
Value investing consists in focusing on risk so that you can concentrate meaningful portions of wealth into quality businesses and compound in any environment, regardless of market trends. Catching tops and bottoms only works in hindsight.
what about the "metaverse bubble"? or is the AI bubble just V2 of that? Not sure what I should be Going FOMO about! ;)
Even Stanley Druckenmiller said, that "AI might be a little overhyped now"...
He is a smart one…
i made 5x with NVIDIA , and didnt listen guys like you that told me that it is bubble, get and ride the train, until it goes. Not financial advice thought
If you follow the herd, you have to do it EARLY! Now its risky. DCA carefully.
Now sell it. It's any day now that this bubble will burst.
You don’t make any money until you sell. That’s the conundrum.
Just because you got lucky on price, doesn't mean you know what you are doing. Just like a lottery ticket winner saying you should buy tickets. This channel is about fundamentals, low risk high reward. Not following the hype because the price goes up. I am happy for your gain. But when do you sell? Or don't you sell and why? What's the plan?
@@JayKay9112000 Best thing is that NVIDIA pays a dividend! Thats amazing!
Fama and French identified 5 factors plus momentum as accounting for essentially all of the returns on any investment approach. That includes Warren Buffet's returns. Picking individual stocks is always a fool's errand, even when it works out.
In order to include those factors into an index, you are indeed picking stocks. And factor ETFs are more expensive in terms of fees than do it yourself.
Would you short NVIDIA?
no, impossible to time!
@@Value-Investing The split could be an indicator, I think one reason for the split is to make the stock afordable for small investors and increase liquidity, so that big investors can sell it. I see some analogies with Tesla. The split was done at 300 $ and then it went to 100 $.