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.
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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.