In three sessions beginning last Thursday, Nvidia (NASDAQ:NVDA) stock lost 17% of its value. However, investors shouldn’t panic.
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After all, we’ve been here before. It was just six months ago that the market as a whole was plunging. My advice then was simple: take the long view. In turn, investors who kept that focus, kept their cool and focused on high-quality stocks were rewarded.
September hardly looks like March, but I’ll admit the last few sessions have been nerve-wracking. The tech-heavy NASDAQ Composite dropped an even 10% over the same three trading days. As noted, NVDA stock has done even worse.
But Nvidia stock, too, has been here before. In the February/March selloff, it declined 38% in less than four weeks. By May, it had regained the losses — and shortly after, reached new highs.
An investor can go back to late 2018 as well. Fears of a “crypto hangover” and another market-wide rout led the stock to drop by more than half in less than three months. Investors did need some patience then, as it took NVDA more than a year to reach new highs. But any investor who bought the dip has done exceedingly well — even if they were early.
That’s already true in the early going, as both tech and Nvidia stock rallied on Wednesday. And looking forward, I simply don’t believe this time will be any different. Overall, NVDA stock is a buy on the dip this time, just as it has been in the past.
The primary driver of the recent selloff appears to be concerns about valuation in the markets — particularly for 2020’s gainers. From a broad standpoint, I’m somewhat sympathetic to those concerns.
After all, we have seen a massive rally since