Nvidia Goosed 401(k) Millionaires

“History shows us, over and over, that bull markets can go well beyond rational valuation levels as long as the outlook for future earnings is positive.”

– Peter Bernstein

[Special Reminder: In case you missed our recent announcement, The Essential Investor has merged with legacy contributors to Agora Financial. The new, larger, more inclusive project is called The Grey Swan Investment Fraternity. If you’re interested in the scope and benefits of our new endeavor, please see what prompted us to merge here. If you’ve been a member of The Essential Investor, please keep an eye out for your new benefits.]

May 24, 2024 – This interesting stat shows the extent of the market’s current rally. It’s the total number of individuals with at least $1 million socked away in their 401(k):

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New 401(k) millionaires can thank Nvidia, in part, for their own investing genius.

This single company alone – which has more than doubled since the start of 2024 – accounts for 5.8% of the S&P 500 by weight.

The $2 trillion dollar AI chip maker is also one of the greatest threats to the stock market and individual investor wealth we’ve seen since funds were overweight mortgage-backed securities in 2007 — 08.

We’re doing a deep dive into the meaning of AI for the June Grey Swan Bulletin we send to paid readers.

In it, we’ll introduce new Grey Swan contributor Zoltan Istvar, who, if anybody does, has the perfect name to match his status as a world-renowned futurist.

Further introductions are on the way…

Also, one company we’re looking into is a small cap producing energy for server farms dedicated to AI computing.

With a gain of 412% over the past 12 months, the company’s share growth has outpaced Nvidia. We haven’t decided whether to pull the trigger yet, but the energy sector for AI is intriguing, to say the least.

The case for waiting to buy in, at this point, is largely made by the Global Markets Investor substack post we’ve republished below.

Hint: The company’s market cap is now larger than the stock market in Germany, South Korea and Australia… enjoy! ~~ Addison

NVIDIA is One of the Largest Threats
to the U.S. Stock Market

Global Markets Investor

On Wednesday, after the market closed, Nvidia released its financial report for the fiscal first quarter 2025. The company’s earnings per share came at $5.98, above Wall Street estimates of $5.57. Revenues in first quarter were $26.04 billion, beating average forecasts of $24.55 billion. Adjusted gross margin came at 78.9%, above the analysts projected 77%. As you can see, these are really great results and substantially exceeded expectations.

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Moreover, in the last four quarters, Nvidia’s revenue has tripled year-over-year and reached $79.77 billion.

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What caused the stock to move higher, however, was the 2Q 2025 sales outlook of $28.0 billion (plus, minus 2%) which came significantly above Wall Street estimates of $26.8 billion. The chip-maker also announced a 10-for-1 stock split and raised its quarterly dividend by 150% to 10 cents a share.

As a result, Nvidia rallied by 9.3% on Thursday and closed above the $1,000 per share mark for the first time ever. The company added $217.7 billion to its market value in just one day, more than the combined market cap of McDonald’s and Ford and almost $80 billion more than the value of Intel.

The below meme perfectly shows Thursday’s and the last few quarters of U.S. stock market developments.

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On Thursday, the S&P 500 closed down by 0.7% and the Nasdaq by 0.4% as recent economic data showed that inflation has not been easing. However, if not for Nvidia’s 9% gain, the stock market would have easily dropped by more than 2%.

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Nvidia’s performance indeed looks great, and the company has been materially exceeding market expectations for the last two years. However, have the things not moved too far and too quickly?

The company has become so great that it should be considered as the largest threat to the U.S. stock market performance in the months ahead. ~~ Global Markets Investor

So it goes,

Turn Your Images On

Addison Wiggin,
The Wiggin Sessions

P.S. Monday is Memorial Day, and the stock market is closed. As has been our modus operandi for decades now (oof!), we’re not going to publish on Monday. Enjoy your long weekend!

(How did we get here? An alternative view of the financial, economic, and political history of the United States from Demise of the Dollar through Financial Reckoning Day and on to Empire of Debt — all three books are available in their third post-pandemic editions.)

(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites:Bookshop.org; Books-A-Million; or Target.)

Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com

“History shows us, over and over, that bull markets can go well beyond rational valuation levels as long as the outlook for future earnings is positive.”

– Peter Bernstein

May 24, 2024 – This interesting stat shows the extent of the market’s current rally. It’s the total number of individuals with at least $1 million socked away in their 401(k):

Turn Your Images On

New 401(k) millionaires can thank Nvidia, in part, for their own investing genius.

This single company alone – which has more than doubled since the start of 2024 – accounts for 5.8% of the S&P 500 by weight.

We’re doing a deep dive into the meaning of AI for the June Grey Swan Bulletin we send to paid readers.

In it, we’ll introduce new Grey Swan contributor Zoltan Istvar, who, if anybody does, has the perfect name to match his status as a world-renowned futurist.

Further introductions are on the way…

Also, one company we’re looking into is a small cap producing energy for server farms dedicated to AI computing.

The case for waiting to buy in, at this point, is largely made by the Global Markets Investor substack post we’ve republished below.

Hint: The company’s market cap is now larger than the stock market in Germany, South Korea and Australia… enjoy! ~~ Addison

NVIDIA is One of the Largest Threats
to the U.S. Stock Market

Global Markets Investor

Turn Your Images On

Moreover, in the last four quarters, Nvidia’s revenue has tripled year-over-year and reached $79.77 billion.

Turn Your Images On

The below meme perfectly shows Thursday’s and the last few quarters of U.S. stock market developments.

Turn Your Images On

Nvidia’s performance indeed looks great, and the company has been materially exceeding market expectations for the last two years. However, have the things not moved too far and too quickly?

The company has become so great that it should be considered as the largest threat to the U.S. stock market performance in the months ahead. ~~ Global Markets Investor

So it goes,

Turn Your Images On

Addison Wiggin,
The Wiggin Sessions

P.S. Monday is Memorial Day, and the stock market is closed. As has been our modus operandi for decades now (oof!), we’re not going to publish on Monday. Enjoy your long weekend!

Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com

Relative to GDP, the net international investment claim on the U.S. economy was 20% in 2003. It had swollen to 65% by 2023. Practically every type of American company, bond, or real estate asset now has some degree of foreign ownership.

But it’s even worse than that. As the federal deficit has pumped up the GDP figures, and made a larger share of the economy dependent on government spending, the quality and sustainability of GDP have deteriorated. So, foreigners, to the extent they are paying attention, are accumulating claims on an economy that has been eroded by inefficient, government-directed spending and “investments.” Why should foreign creditors maintain confidence in the integrity of these paper claims? Only to the extent that their economies are even worse off. And in the case of China, that’s probably true.

As global government interest expense climbed, gold quietly followed it higher. The IIF estimates that interest costs on government debt now run at nearly $4.9 trillion annually. Over the same span, gold prices have tracked that burden almost one-for-one.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

Over that same period, gold prices have surged about 135%, while silver is up roughly 175%. Zoom out two years, and the divergence becomes starker still: gold up 114%, silver up 178%, while the S&P 500 gained 44%.

According to the American Association of Individual Investors, the average retail investor has about a 70% allocation to stocks. That’s well over the traditional 60/40 split between stocks and bonds. Even a 60/40 allocation ignores real estate, gold, collectibles, and private assets.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.

In a healthy economy, production and consumption communicate constantly. If a company builds something useful, customers respond by buying it. If they overbuild, inventories pile up and prices fall, sending a signal to slow down.

AI infrastructure, by contrast, is being built largely on faith. Companies are scaling up compute power without clear signs of sustainable demand. Unlike oil and gas, where prices adjust second-by-second, AI companies operate in a fog. They release tools, collect usage stats, and hope that paid conversions will follow.

But hope is not a business model.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.

But hope is not a business model.

Nvidia Goosed 401(k) Millionaires – Beware

NVIDIA is One of the Largest Threats
to the U.S. Stock Market

Nvidia Goosed 401(k) Millionaires – Beware

NVIDIA is One of the Largest Threats
to the U.S. Stock Market

Nvidia Goosed 401(k) Millionaires – Beware

NVIDIA is One of the Largest Threats to the U.S. Stock Market

Nvidia Goosed 401(k) Millionaires – Beware

NVIDIA is One of the Largest Threats to the U.S. Stock Market

NVIDIA is One of the Largest Threats
to the U.S. Stock Market

NVIDIA is One of the Largest Threats
to the U.S. Stock Market