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On the other hand, my uncle lost a fortune investing in a wireless networking company in the 00s. He has worked an entire career in networking and has contribut

On the other hand, my uncle lost a fortune investing in a wireless networking company in the 00s. He has worked an entire career in networking and has contributed to bleeding edge systems in the area. This company had excellent tech, but ultimately didn't succeed. A lifetime of savings kaput. nvidia's p/e is also insanely high. "Wow they sure sell a shitload of product" isn't necessarily enough to justify the price. There are highly profitable companies that nevertheless see their stock price turn around.

anon291 2y ago
The vast majority of financial issues would be prevented simply by following Buffett's advice to not lose money. It's tongue in cheek, but he's correct. Suppose you have a great idea for investing. It doesn't matter how good it is... don't put your life savings into it. If you do this you will make money. Investing is mostly about not losing money.
- panarky 2y ago
  > Investing is mostly about not losing money Counterintuitively, when I focus hard on not losing money, I become too risk averse, I fail to take appropriate risk, and my returns are stuck in the low single digits. I can't count the times I sold great companies like Apple and Netflix and Tesla years too early because I was afraid to lose money and wanted to "lock in" a 50% gain. By focusing on potential for high returns instead of not losing money, with a diverse portfolio of assets that don't correlate perfectly with each other, total returns are much greater even though individual bets can show big losses for months or years.
  - lumost 2y ago
    This is where a diversified portfolio makes sense. It's completely fine to take a "big bet" on what would amount to a years worth of returns/cash investment every now and then. But many great opportunities have already been priced appropriately, so the extra concentration of risk doesn't yield a great return. If one was to be able to simply select the 50% of companies which perform better than the rest of the field. You would be in good shape.
    - floatinglotus 2y ago
      THIS. As much as I wish I put all my money into NVDA when I bought it, I’m happy to have a lot of diversity in high tech IT. The daily swings are not nearly as bad and aim not biting my fingers all day long.
      - bdangubic 2y ago
        THIS is a way to get rich. To get wealthy, you cannot be diversified. No wealthy person is diversified.
        UncleMeat 2y ago
        It is also a great way to get poor. Every lottery winner bought a lottery ticket, after all.
        bdangubic 2y ago
        Yup, you can definitely get poor too or hopefully just not as rich and you'd have to work as Walmart doorman in your retirement. Go big or go home :)
        itchyouch 2y ago
        Wealthy folks aren't diversified, because they have _control_ (and knowledge) over their particular investment (ie company founders). Stock investors do not have the luxury of control, thus they must diversify. And generally that's what the wealthy do. They go all-in on their own company, grow it to incredible returns, then use those returns to be invested in a diversified manner to grow further. Other stocks, realestate, angel investing, etc. Most of the billionaires are like this. Or if you're Warren Buffet, you invested in a diversified manner, because he didn't control the companies he owned.
        bdangubic 2y ago
        > Or if you're Warren Buffet, you invested in a diversified manner, because he didn't control the companies he owned. you should check out Buffet's portfolio - he's not very diversified at all... If that was your portfolio someone would tell you you are nuts/gambler/...
  - anon291 2y ago
    It's impossible to lose money you don't bet. I don't understand this mentality. If you have a 30k portfolio... fine bet the 5-10k... even if you lose it you're fine. > I can't count the times I sold great companies like Apple and Netflix and Tesla years too early because I was afraid to lose money and wanted to "lock in" a 50% gain. Ah the sunk cost fallacy. Having an exit strategy is important. Never beat yourself up for an appropriate exit strategy.
    - czl 2y ago
      FYI: This isn't a case of the sunk cost fallacy. The sunk cost fallacy involves continuing an investment due to the amount already invested, regardless of future potential. What you're describing is more related to regret aversion and hindsight bias.
- pylua 2y ago
  Even Warren buffet and munger have made large mistakes though. Don’t bet more than you can afford to lose is probably the biggest rule.
  - pinewurst 2y ago
    Especially where technology was concerned e.g. their IBM and HP investments…
- WatchDog 2y ago
  At the same time, Buffet and Munger also think that diversification is dumb if you know you have a good stock, putting all your eggs into one good basket, is better than putting your eggs into multiple bad baskets.
- EVa5I7bHFq9mnYK 2y ago
  I have a similar "wisdom" for you: buy low, sell high, that's all!
tharmas 2y ago
True. But another piece of knowledge about Nvidia is its competitors are waaaaaaaaay behind. They stand peerless. Another piece of information is that CUDA software was provide free or cheaply to Universities doing LLM research I think. And the software is easy to use.
- mnau 2y ago
  Isn't CUDA basically hidden behind pyrorch and others? I know that it's touted as the key competitive advantage, but it seems to stem from the fact it actually works, unlike others. Still great advantage, but not a lock in. If competitors get their act together, couldn't they just replace CUDA with another API, all hidden somewhere in the sw stack?
- josephg 2y ago
  > its competitors are waaaaaaaaay behind. They stand peerless. Its competitors are only way behind when it comes to software support. The hardware coming out of Intel and amd is, especially for its price, very capable. Given how much money is being invested in AI right now, I don’t see Nvidia’s moat lasting more than a few more years.
  - Vvector 2y ago
    Hardware has never been AMD's problem. Their chips are great, on paper. But their software has always been a few generations behind.
    - latchkey 2y ago
      They are moving a lot more quickly now on resolving those issues. It won't happen over night, but the ship is definitely changing course on that.
      - floatinglotus 2y ago
        The number of companies that wish they were a SW company rather than a HW company is very long, and despite all their efforts once they get to a certain size the die is cast.
deadbabe 2y ago
I don’t get the whole P/E thing. Do people basically say we shouldn’t bother buying anything with a crazy P/E more than 20? Despite the fact that these high P/E companies are now making people lots of money? Wtf?
- simpsond 2y ago
  Some people care about PE. Some people don’t. It’s just one metric that represents past performance. If it’s high, the market believes the stock price will go up.
  - rib3ye 2y ago
    And to piggyback on this, these people may have between 0 and 100% understand of the core business. For me personally, it’s a turn off.
  - rcxdude 2y ago
    No, P/E being high means the stock market thinks the company's income will grow by a lot in the future. The price may go up or down as those expectations for the future change (a high P/E stock can announce record profits and have the stock go down, if in fact the stock was being priced on the expectation that the profits would be higher than announced).
- snewman 2y ago
  A company with a high P/E is by definition not making much money for its shareholders, relative to the size of their investment. Unless you mean that the share price may appreciate. That's absolutely a thing, but it's a dangerous game. Of course plenty of people have made fortunes this way; people have also lost fortunes; I think the advice to steer away from such companies is basically a statement about risk.
  - chii 2y ago
    > Unless you mean that the share price may appreciate. this has already happened because the P/E is high! Betting that it will continue to grow in price (aka, reach an even higher P/E) is risky.
floatinglotus 2y ago
Insanely high PE? On earnings day? Isn’t today the day that it adjusts for this new amount? I still don’t find the forward PE to be that bad for the best tech company in the world right now.
burningChrome 2y ago
>> There are highly profitable companies that nevertheless see their stock price turn around. This happened with a local sports drink maker. It was branded for kids, more healthy, less sugar then Gatorade and energy drinks. Company took off, went public, stock went through the roof for about two years. Blue skies, everything coming up roses, lots of articles in the local business mags and websites. Then their supply chain dried up - a precursor to the pandemic and the founder even said in a startup presentation they were the canary in the coal mine and one of the first businesses in the state to suddenly have their product, packaging, and materials all just evaporate in a matter of weeks. Suddenly they couldn't get product into stores, stores eventually pulled their placement and within three months they were bleeding money horrendously while scrambling to find replacements. Something they were already working on, but soon enough every supplier they'd call had the same answer, they too had no means to ship stuff out and they too were dead in the water. Then two months later the pandemic hit in full force and it was the death knell for the company. Delisted, and bankrupted, they closed up shop about 3 years after being a "can't lose" stock and company. My family have all invested heavily in Nvidia and they're making good gains now, but I'm seeing the same thing you are - this can go bust very fast if Nvidia doesn't manage this really well.
- theGnuMe 2y ago
  Nvidia has been around for along time.
  - throw0101b 2y ago
    > Nvidia has been around for along time. So has Cisco: how has their stock price been doing since the late 1990s? It's not like the Internet has stopped being a thing, and people are still buying Cisco gear, and yet people aren't excited about it anymore. It's possible for AI/ML to be a thing, for Nvidia to sell gear, and for the stock to go down. There are numerous examples throughout history: * https://en.wikipedia.org/wiki/Technological_Revolutions_and_Financial_Capital https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
    - deleted 2y ago
solumunus 2y ago
The forward PE is not insanely high in today’s market, and this is the PE figure investors care about. It’s not “oh they sell a shit load of product” it’s “oh sell a shit load of product with ridiculous high margins and they’re growing rapidly YOY”. Will NVDA correct at some point? Of course.
nostrademons 2y ago
Remember Zoom trading at a P/E of 400+ during the pandemic? They've lost 85% of their value since then, despite growing their earnings about 3-4x in 4 years and becoming the namesake for an entire generation.

anon291 2y ago

The vast majority of financial issues would be prevented simply by following Buffett's advice to not lose money. It's tongue in cheek, but he's correct. Suppose you have a great idea for investing. It doesn't matter how good it is... don't put your life savings into it. If you do this you will make money. Investing is mostly about not losing money.

panarky 2y ago
> Investing is mostly about not losing money Counterintuitively, when I focus hard on not losing money, I become too risk averse, I fail to take appropriate risk, and my returns are stuck in the low single digits. I can't count the times I sold great companies like Apple and Netflix and Tesla years too early because I was afraid to lose money and wanted to "lock in" a 50% gain. By focusing on potential for high returns instead of not losing money, with a diverse portfolio of assets that don't correlate perfectly with each other, total returns are much greater even though individual bets can show big losses for months or years.
- lumost 2y ago
  This is where a diversified portfolio makes sense. It's completely fine to take a "big bet" on what would amount to a years worth of returns/cash investment every now and then. But many great opportunities have already been priced appropriately, so the extra concentration of risk doesn't yield a great return. If one was to be able to simply select the 50% of companies which perform better than the rest of the field. You would be in good shape.
  - floatinglotus 2y ago
    THIS. As much as I wish I put all my money into NVDA when I bought it, I’m happy to have a lot of diversity in high tech IT. The daily swings are not nearly as bad and aim not biting my fingers all day long.
    - bdangubic 2y ago
      THIS is a way to get rich. To get wealthy, you cannot be diversified. No wealthy person is diversified.
      - UncleMeat 2y ago
        It is also a great way to get poor. Every lottery winner bought a lottery ticket, after all.
        bdangubic 2y ago
        Yup, you can definitely get poor too or hopefully just not as rich and you'd have to work as Walmart doorman in your retirement. Go big or go home :)
      - itchyouch 2y ago
        Wealthy folks aren't diversified, because they have _control_ (and knowledge) over their particular investment (ie company founders). Stock investors do not have the luxury of control, thus they must diversify. And generally that's what the wealthy do. They go all-in on their own company, grow it to incredible returns, then use those returns to be invested in a diversified manner to grow further. Other stocks, realestate, angel investing, etc. Most of the billionaires are like this. Or if you're Warren Buffet, you invested in a diversified manner, because he didn't control the companies he owned.
        bdangubic 2y ago
        > Or if you're Warren Buffet, you invested in a diversified manner, because he didn't control the companies he owned. you should check out Buffet's portfolio - he's not very diversified at all... If that was your portfolio someone would tell you you are nuts/gambler/...
- anon291 2y ago
  It's impossible to lose money you don't bet. I don't understand this mentality. If you have a 30k portfolio... fine bet the 5-10k... even if you lose it you're fine. > I can't count the times I sold great companies like Apple and Netflix and Tesla years too early because I was afraid to lose money and wanted to "lock in" a 50% gain. Ah the sunk cost fallacy. Having an exit strategy is important. Never beat yourself up for an appropriate exit strategy.
  - czl 2y ago
    FYI: This isn't a case of the sunk cost fallacy. The sunk cost fallacy involves continuing an investment due to the amount already invested, regardless of future potential. What you're describing is more related to regret aversion and hindsight bias.
pylua 2y ago
Even Warren buffet and munger have made large mistakes though. Don’t bet more than you can afford to lose is probably the biggest rule.
- pinewurst 2y ago
  Especially where technology was concerned e.g. their IBM and HP investments…
WatchDog 2y ago
At the same time, Buffet and Munger also think that diversification is dumb if you know you have a good stock, putting all your eggs into one good basket, is better than putting your eggs into multiple bad baskets.
EVa5I7bHFq9mnYK 2y ago
I have a similar "wisdom" for you: buy low, sell high, that's all!

tharmas 2y ago

True. But another piece of knowledge about Nvidia is its competitors are waaaaaaaaay behind. They stand peerless. Another piece of information is that CUDA software was provide free or cheaply to Universities doing LLM research I think. And the software is easy to use.

mnau 2y ago
Isn't CUDA basically hidden behind pyrorch and others? I know that it's touted as the key competitive advantage, but it seems to stem from the fact it actually works, unlike others. Still great advantage, but not a lock in. If competitors get their act together, couldn't they just replace CUDA with another API, all hidden somewhere in the sw stack?
josephg 2y ago
> its competitors are waaaaaaaaay behind. They stand peerless. Its competitors are only way behind when it comes to software support. The hardware coming out of Intel and amd is, especially for its price, very capable. Given how much money is being invested in AI right now, I don’t see Nvidia’s moat lasting more than a few more years.
- Vvector 2y ago
  Hardware has never been AMD's problem. Their chips are great, on paper. But their software has always been a few generations behind.
  - latchkey 2y ago
    They are moving a lot more quickly now on resolving those issues. It won't happen over night, but the ship is definitely changing course on that.
    - floatinglotus 2y ago
      The number of companies that wish they were a SW company rather than a HW company is very long, and despite all their efforts once they get to a certain size the die is cast.

deadbabe 2y ago

I don’t get the whole P/E thing. Do people basically say we shouldn’t bother buying anything with a crazy P/E more than 20? Despite the fact that these high P/E companies are now making people lots of money? Wtf?

simpsond 2y ago
Some people care about PE. Some people don’t. It’s just one metric that represents past performance. If it’s high, the market believes the stock price will go up.
- rib3ye 2y ago
  And to piggyback on this, these people may have between 0 and 100% understand of the core business. For me personally, it’s a turn off.
- rcxdude 2y ago
  No, P/E being high means the stock market thinks the company's income will grow by a lot in the future. The price may go up or down as those expectations for the future change (a high P/E stock can announce record profits and have the stock go down, if in fact the stock was being priced on the expectation that the profits would be higher than announced).
snewman 2y ago
A company with a high P/E is by definition not making much money for its shareholders, relative to the size of their investment. Unless you mean that the share price may appreciate. That's absolutely a thing, but it's a dangerous game. Of course plenty of people have made fortunes this way; people have also lost fortunes; I think the advice to steer away from such companies is basically a statement about risk.
- chii 2y ago
  > Unless you mean that the share price may appreciate. this has already happened because the P/E is high! Betting that it will continue to grow in price (aka, reach an even higher P/E) is risky.

floatinglotus 2y ago

Insanely high PE? On earnings day? Isn’t today the day that it adjusts for this new amount? I still don’t find the forward PE to be that bad for the best tech company in the world right now.

burningChrome 2y ago

>> There are highly profitable companies that nevertheless see their stock price turn around. This happened with a local sports drink maker. It was branded for kids, more healthy, less sugar then Gatorade and energy drinks. Company took off, went public, stock went through the roof for about two years. Blue skies, everything coming up roses, lots of articles in the local business mags and websites. Then their supply chain dried up - a precursor to the pandemic and the founder even said in a startup presentation they were the canary in the coal mine and one of the first businesses in the state to suddenly have their product, packaging, and materials all just evaporate in a matter of weeks. Suddenly they couldn't get product into stores, stores eventually pulled their placement and within three months they were bleeding money horrendously while scrambling to find replacements. Something they were already working on, but soon enough every supplier they'd call had the same answer, they too had no means to ship stuff out and they too were dead in the water. Then two months later the pandemic hit in full force and it was the death knell for the company. Delisted, and bankrupted, they closed up shop about 3 years after being a "can't lose" stock and company. My family have all invested heavily in Nvidia and they're making good gains now, but I'm seeing the same thing you are - this can go bust very fast if Nvidia doesn't manage this really well.

theGnuMe 2y ago
Nvidia has been around for along time.
- throw0101b 2y ago
  > Nvidia has been around for along time. So has Cisco: how has their stock price been doing since the late 1990s? It's not like the Internet has stopped being a thing, and people are still buying Cisco gear, and yet people aren't excited about it anymore. It's possible for AI/ML to be a thing, for Nvidia to sell gear, and for the stock to go down. There are numerous examples throughout history: * https://en.wikipedia.org/wiki/Technological_Revolutions_and_Financial_Capital https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
  - deleted 2y ago

solumunus 2y ago

The forward PE is not insanely high in today’s market, and this is the PE figure investors care about. It’s not “oh they sell a shit load of product” it’s “oh sell a shit load of product with ridiculous high margins and they’re growing rapidly YOY”. Will NVDA correct at some point? Of course.

nostrademons 2y ago

Remember Zoom trading at a P/E of 400+ during the pandemic? They've lost 85% of their value since then, despite growing their earnings about 3-4x in 4 years and becoming the namesake for an entire generation.