Fred Hickey, the longtime editor of “High-Tech Strategist”, was quoted on Nvidia, Inc.NVDA in The Market Ear on Thursday (“A Legend Expects A Crash In Nvidia Relatively Soon”):
A PhD in NVDA crashes
“Over the past 25 years, I've witnessed five NVDA stock collapses of at least 55% and up to 90% and I've participated (via put options) in most of them. I expect a sixth relatively soon…
The AI overbuilding bender
“Proving that human psychology never changes, here we are 24 years later and the tech industry is on another one of its overbuilding benders, even though it's clear (to me) the result will (inevitably) be a capacity glut and collapse. Instead of the limitless computing capacity needs of the Internet, this time it's the artificial intelligence (AI) story driving the capacity build out. This is a more dire situation than the great fiber-optic capacity overbuilds”
Crash Protection For Nvidia
If you’re long Nvidia, and still bullish on it, here are two ways to hedge in case Hickey is right.
Here’s a closer look at that second hedge, an optimal collar on Nvidia.
Note that the net cost of that hedge is negative, meaning you would have collected a net credit of $250 when opening it.
That hedge was calculated as of Thursday’s close. For an updated one, you can use the Portfolio Armor iPhone app. You can download it by aiming your iPhone camera at the QR code below, or by tapping here if you are reading this on your phone.
And if you would like a heads up next time we place an aggressive trade, like our recent winner on Robinhood Markets, Inc.HOOD
Calls on Robinhood Markets (HOOD -0.95%↓). Bought for $1.70 on 11/12/2024; sold (half) for $6 on 11/25/2024. Profit: 253%.
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