Nvidia Loses Half a Trillion, while Salesforce Drops $50 Billion.

AI image of an astronaut riding a horse, in the style of Picasso. Author: Asanagi. Wiki Commons. Used with permission.

Nvidia Loses Half a Trillion, while Salesforce Drops $50 Billion.
 
The S&P500 hit a new high on June 20, 2024. However, between June 20 and June 24, 2024, Nvidia plunged by 16%, over $500 billion (the value of ExxonMobil), from $3.46 trillion value to $2.8 trillion. (Nvidia is back up to $3.05 trillion.) Salesforce lost $50 billion in market cap on May 20, 2024, after reporting earnings. What lies at the heart of this volatility? Should you be worried or steadfast? How can you protect yourself from a drop, while also profiting from stocks that are roaring to new Wall Street highs?
 
Here are the topics we’ll cover in this blog.
 
Nvidia Loses Half a Trillion in Value
 
SalesForce Sheds $50 Billion in Market Cap
 
Dow Jones Industrial Average vs. NASDAQ and S&P500
 
Are Stock Prices Just Too High?
 
 
Nvidia Loses Half a Trillion in Value
On May 22, 2024, Nvidia reported revenue that was up 265% year over year. Yet in mid-June, the company lost half a trillion in market value – about twice the value of Salesforce.
 
The future remains overwhelmingly positive for artificial intelligence and its leader, Nvidia. The company expects the June quarter’s revenue to more than double over the same quarter in 2023, from $13.51 billion to $28 billion. Results for that quarter should be announced around August 22, 2024. So, who sold, and why?
 

• There was consensus insider selling in June. Nvidia’s CEO Jensen Huang sold $123 million between June 12 and June 23, 2024. Board member Mark Stevens took profits of almost $80 million, while Tench Coxe pocketed $120 million. Nvidia’s CFO Colette Kress joined the party with almost $38 million in sales in June.  
• There was also a lot of profit-taking by hedge funds and institutional investors.

 
The promise of AI had a lot of Main Street investors buying when the stock split, thinking the split alone would send prices soaring. Shares are up slightly, almost 3%, since the ten-for-one stock split on June 7, 2024. However, most people who purchased after the split are underwater.
After watching Nvidia shares inflate by a factor of almost 25 over the last five years, many insiders were motivated to sell high and capture gains.
 
So, is there a better plan than buying high, hoping to sell higher? Consider dollar-cost-averaging into Nvidia or an Nvidia-rich ETF in an age-appropriate, diversified way. (This is something we teach at our Financial Freedom Retreats.)
 
Email [email protected] if you’d like an updated Artificial Intelligence Stock Report Card.
 
SalesForce Sheds $50 Billion in Market Cap
Salesforce saw the biggest one-day drop in share price that the company had seen in the last 20 years on May 30, 2024, after announcing quarterly earnings. The company’s revenue came in at the lower end of their guidance, at $9.13 billion, but was still up 11% year over year. That’s not bad for an economy that’s only expected to grow 2.1% this year.
 
So, why the plunge in value? Salesforce is another company that is seeing consensus insider selling in the C-Suite. Salesforce’s 46 P/E isn’t as lofty as Nvidia’s 72. However, it Is far too high for a company with low double-digit growth.
 
Email [email protected] if you’d like an updated Salesforce/HR Technology Stock Report Card.
 
Dow Jones Industrial Average vs. NASDAQ and S&P500
 
Salesforce is one of the 30 companies in the Dow Jones Industrial Average, as is beleaguered Boeing. Nvidia is not. Nvidia is, however, listed in the S&P 500, as well as the NASDAQ Composite Index. Look at the difference of the performance of both of those indices compared to the more debt-laden Dow Jones Industrial Average.
 


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NASDAQ Composite Index performance (blue) compared to the S&P500 (pink) and the DJIA (turquoise). YTD 2024. (c) Microsoft. used with permission.

I have mentioned many times over the past year that without the outstanding performance of Nvidia and the Fantastic 5, the S&P 500 performance last year would have been under 10%, instead of the 26.3% total return. The companies in the Magnificent 7 doubled in value in 2023.
 
All indices are not created equal. Many large growth funds are rich in technology, while value funds tend to have more Dow components. Due to the amount of debt and leverage in the U.S., combined with a lower yield, we are suggesting value replacement funds in our Sample Pie Charts.
 
While U.S.-based, mega, multinational technology companies have higher performance, they also have higher volatility. That can be smoothed out with rebalancing and dollar-cost-averaging. Rebalancing 1-3 times a year is an important part of our wealth plan.
 
For many years, we have also listed artificial intelligence and breakthrough technology as hot industries. Having an extra slice of the Fantastic 5 can really add performance to our portfolio, especially when done in an age-appropriate way that includes regular rebalancing (capturing gains) and dollar-cost averaging in (instead of buying high). One of the best performing exchange traded funds is iShares TECB. Because TECB has a very high concentration of Nvidia and the Fantastic 5, all of which are leaders in artificial intelligence, the performance of this “Breakthrough Tech” fund has been much stronger than the named artificial intelligence ETF: IRBO. IRBO includes a lot of smaller companies that just haven’t performed as well yet. It also has a much smaller concentration of Nvidia and the Fantastic 5.
 
Are Stock Prices Just Too High?
The current average P/E is 28.53. The historical average is 17.66. Professor Robert Shiller’s CAPE ratio shows us an important story. The only time that stock prices were more expensive (going back to 1880) was in the Dot Com Recession. Between the high of March 2000 and the low of October 2002, the NASDAQ Composite Index (the famous Dot Com stocks) lost 78%. It took 15 years to crawl back to even. A lot of promising companies, including eToys, bit the dust.

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The other period of elevated equity prices was 1929, before the Great Depression. You know what happened there. According to the CAPE ratio, stock prices are even more elevated today than they were in 1929.
 
Bottom Line
Even great companies in a hot industry can see their share price sink, especially when the company’s growth potential is already priced in. A properly diversified, age-appropriate plan that we rebalance once, twice or three times a year can help us to:
 

• Profit from hot industries,
• Capture gains at the high,
• Protect our wealth from volatility and sudden drops (the S&P500 dropped -35% in just one month between Feb. 19 and March 23, 2020),
• Prompt us to do the right thing (buy low, sell high),
• Take emotions out of the mix, and
• Put us on the right side of the trade (instead of playing into the profits of the whales of Wall Street).

 
You can read about our time-proven, easy-as-a-pie-chart nest egg strategies in The ABCs of Money 5th edition, you can learn and implement these strategies at our Financial Freedom Retreats, and you can get an unbiased 2nd opinion from me through my private coaching. Wisdom is the cure. Now is a great time to capture gains, while stocks are high! Yes, you can invest in hot companies like Nvidia, with a plan that doesn’t require you to buy high with the hope of selling higher (and the fear that you’ll lose).
 


​Join us at our online Oct. 18-20, 2024 Financial Freedom Retreat. Learn how to:

* Invest in hot industries, such as Nvidia and artificial intelligence,
* Hedge against a weaker dollar,
* Invest and compound your gains,
* Green your retirement plan,
* Easy and efficacious nest egg strategies,
* Get hot and diversified (including in artificial intelligence and EVs),
* Evaluate stocks,
* Keep an age-appropriate amount safe, and,
* Know what's safe in a Debt World.

You'll even discover how to save thousands annually with smarter big-ticket choices. Yes, it's a complete money makeover. 
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Email [email protected] to register. Learn the 15+ things you'll master and read testimonials in the flyer on the home page at NataliePace.com. Register by July 31, 2024 to receive the best price. ​

"Ten minutes into the first day I was already much smarter about investing than I ever thought I would be in my life and I knew I was in exactly the right place at this retreat. I am amazed at how EASY and FUN it is to make my money work for me and those I love. I think this kind of information should be compulsory in schools. I wish I'd learned this sooner." CM

If you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing and information.

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Join us for our Online Oct. 18-20, 2024 Financial Freedom Retreat. Email [email protected] or call 310-430-2397 to learn more. Register by July 31, 2024 to receive the best price. Click for testimonials, pricing, hours & details.

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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.