VRA Investment Letter: Nvidia Posts Another Stunning Quarter. BTC Halving and What It Means. Reminders of the Roaring 2020's.
/Good Thursday morning. The AI “king of the hill” did it again yesterday with Nvidia posting (another) quarter with absolutely stunning growth.
NVDA Bottom Line, as Tyler outlined in his podcast yesterday:
- Earned $5.16/sh, beating already sky-high estimates of $4.64/sh.
- Revenue also came in above expectations, totaling $22.1 billion vs forecasts for $20.5 billion.
- Record data center revenue of $18.4 billion, beating the $17.2 billion estimate.
- Sees Q1 revenue of $24 billion, blowing past the forecast of $22 billion.
NVDA is firing on all cylinders and AI is driving the growth. NVDA is trading up 12% this AM to fresh ATH’s of $760/sh.
I got this question last night from Matt in NY.
Kip, why don’t we own Nvidia??
Answer: Matt, while it would be great to have NVDA in the VRA Portfolio, we prefer to own SOXL (3 x Semi ETF). The diversification of owning an ETF, rather than an investment in a single company (like NVDA), just works better for our investment approach. As to missing out on NVDA returns lets take a look at the NVDA vs SOXL comp.
- Following NVDA earnings the shares are up 12% this AM, while SOXL is up 11%…close to a push.
- As to the longer term returns, from the bear market lows of 10/13/22, NVDA is up 602% while SOXL is up 552%. Again, also close to a push.
This is why we use leveraged ETF’s. We like the diversification, which spreads our risks (beyond one company) and of course the added leverage allows us to post similar gains to the hottest of stocks.
Instead of NVDA, our AI/innovation bull market holdings are in the VRA Portfolio. We continue to have a strong buy recommendation on each of these holdings.
Interview with Wayne Allyn Root
On Monday Wayne asked me to join him on Real America’s Voice to explain Bitcoin to him and his viewers. Thanks again Wayne…the hardest working man in the business and a great friend for 20 years.
https://rumble.com/v4ewd8k-americas-top-10-for-21024-interview-with-kip-herriage.html
Bitcoin Halving in Approx 60 Days — Here’s What That Means
Heads up: after a bout of weakness over the long weekend in the US, BTC hit a fresh 52 week high on Tuesday of $52,936.
The 4th BTC halving will take place in approx 60 days. Good piece below from Dow Jones as an explainer of BTC halvings along with the price action following each of the (3) halvings to date (2012, 2016, 2020).
Here are the price action results of each of the previous 3 halvings:
Halving #1: $12 to $964 (7900% in 1 year)
Halving #2: $640 to $19,752 (2900% in 18 months)
Halving #3: $8750 to $69,990 (700% in 18 months)
Dow Jones News
Investors are closely watching bitcoin’s upcoming halving, which is expected to happen in April, as history has shown the cryptocurrency usually sees significant price appreciation in the wake of halvings.
The largest crypto (BTCUSD) has gained more than 20% so far this year to around $52,000, building on a 150% gain in 2023, according to CoinDesk data. It is still off about 25% from its all-time high of $68,990, hit in 2021.
However, some analysts are expecting the next bitcoin halving to send the crypto to a new all-time high.
Halving is a mechanism written in the blockchain’s algorithm to control the supply of bitcoin, which has a cap of 21 million. At halvings, the reward for bitcoin mining is cut in half, meaning that miners will receive 50% fewer bitcoins for verifying transactions.
Halvings are scheduled to happen after every 210,000 blocks are mined, or about every four years, until the maximum supply of 21 million bitcoins are all released.
The next halving is estimated to happen on April 19, though the exact time is subject to change, according to bitcoin investment platform Swan Bitcoin. Bitcoin’s block reward is expected to be cut from 6.25 to 3.125 bitcoins in the next halving.
Bitcoin has gone through three halvings in its history, and has rallied in the months after each halving.
The first halving happened on Nov. 28, 2012, when bitcoin traded at around $12. It rose to $964 a year later, according to data from Swan Bitcoin.
Bitcoin traded at around $640 when the second halving happened on July 9, 2016, according to CoinDesk and Dow Jones Market Data. It rose 40% in the six months after the event and had logged a 296% gain one year later. Bitcoin reached a cyclical peak of $19,752 on Dec. 17, 2017.
When bitcoin had its third halving on May 11, 2020, the crypto traded at around $8,750. It gained 79.7% in the six months after the halving and had risen 547.7% one year after the event. On Nov. 10, 2021, bitcoin hit its all-time high at $68,990.90
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It’s not difficult to see why crypto investors are excited about the upcoming halving, with front-running clearly underway. Note: BTC is trading at extreme overbought on steroids (EOBOS) on the VRA Investing System, meaning that a shake-out would not surprise us here. However, we would be aggressive buyers, should a shake-out take place. Note 2: in years past there has been a solid correlation between BTC and stock market movements. That correlation broke down a bit over the last couple of years but appears it may be in-sync, once again.
Reminders That We’re in the Roaring 2020’s
American co’s are in their strongest financial shape in decades
Ed Yardeni — Even More Bullish
Overbought but Room to Run
VRA Bottom Line: AI is not a fad, rather the modern day reincarnation of the 1995–2000 dot-com boom, which along with the crypto-boom (financial engineering) means that our AI/innovation bull market is only in its infancy. Overbought shakeouts in the broad market do not impact our core bull market holdings or long-term investment game plan. “Buy the dip” should continue to be the smartest of smart money strategies.
Until next time, thanks again for reading…
Kip
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