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I found a great article on the history of stock market crashes.
Use the information when you need it most.
Click the image of the book at left to be taken to its Amazon page. (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)
A drawdown is when the price of a stock falls 20% or more from its all-time high.
Nvidia (NASDAQ: NVDA), the leader in AI, is down 47% from its all-time high.
There was a time when it didn’t seem like Nvidia’s stock would ever go down. Until it did…and boy, did it get crushed. It went from a 52-week high of $292 down to $124. That’s a 57% drawdown – or loss, in plain English.
Since then, it’s managed to “claw its way back” to only being down 47%…
Why did the stock give back 57% of its gains?
Reason number one: they missed their quarterly earnings goal, and guided (projected) lower than analyst expectations like all of the semiconductor stocks.
Reason number two: the general market, of course, sold off hard.
Here’s what you need to know. The fundamentals that made Nvidia a star haven’t changed one iota.
In the case of Nvidia, a drawdown gives you a second chance to buy a company at the center of the biggest technology boom in history.
That is why drawdowns are good for us.
Disclaimer/Disclosure Statement: Information in this article is not intended to be a recommendation to invest in any stock. Rather, it is presented for readers’ education and consideration when making their own investment decisions. The author is long NVDA.
Click the image of the book at left to be taken to its Amazon page. (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)