Mark Newton, Global Head of Technology Strategy at Fundstrat, explains the “buy high, sell high” strategy using Nvidia (NVDA) as an example. He explains why this approach leads to better investment outcomes and warns against chasing the adage “buy low, sell high.”
Newton is a Yahoo Finance Jared Brickley Sydney Freed appears on “Stocks in Translation.” Listen to the full episode hereor wherever you listen to podcasts.
This post was written by Jimi Corpuz
Video Transcript
I usually caution investors against trying to buy really low and sell high or thinking that they’ve captured the absolute low in any kind of sector that they’re hoping is going to be the next big thing, because oftentimes these laggards take a while to really start to get strong.
And, as we all know, stocks that are below or near their 52-week lows are going to have a very hard time recovering.
So I pretty much always take the mindset of buying high, selling even higher and selling low, or avoiding the low and covering even lower, meaning instead of being able to buy something low for valuation purposes and thinking the timing was right, this is where a lot of investors get it wrong.
Let me ask you a question. You say “buy high, sell even higher,” right?
So with something like NVIDIA today, you don’t necessarily have to say buy it or not.
But when a stock is doing really well like NVIDIA is, and has been doing really well for the last year or two, is it still the right time to buy today, or should I wait until it drops a bit more?
To be honest, a lot of these questions depend on your own risk tolerance and time frame.
What I am saying is that it is important to look at people like William O’Neill.
Well, you know, who founded Investors Business Daily?
He wrote a book called “How to Make Money in Stocks” that combines fundamentals and technicals.
You see, he always advised that some of his biggest investments of all time happened after stock prices had hit all-time highs.
So he turned his attention to a stock that had risen more than 123,400%.
And, you know, typically before a stock makes a big move like this, it has to show evidence that it’s strong.
So to answer your question, when a horse runs away from the barn, you may have to chase him because he may not come back.
Well, I own NVIDIA and I’m an investor in NVIDIA.
However, my analysis suggests that it may be wise to consider diversifying in the coming months.
We just don’t see that on the charts right now.
But, but, um, I’m paying attention to a couple different things right now.
You know, technology in general is still very meaningful to me.
