Nvidia (NVDA) is the hottest stock on the market…
The chipmaker is riding the huge multitrillion-dollar artificial intelligence (AI) trend.
Its chips are major components for video gaming consoles, crypto mining rigs, and electric vehicles.
Since January, Nvidia’s share price is up 227%. By comparison, the S&P 500 is up just 20% this year.
Trading volume has skyrocketed from an average of 42 million shares per day to 180 million on some days.
Nvidia’s surge since May 25 (when it announced its most recent quarterly earnings) sent the company’s market cap to over $1 trillion – putting it in the exclusive club of Alphabet, Amazon, Apple, Microsoft, and Saudi Aramco.
Everybody wants a piece of this popular company. It’s flying high and can seemingly do no wrong.
After such a remarkable rally, I can’t blame you if you think it’s too risky to get into this company at current valuations.
After all, Nvidia trades at a whopping 245 times earnings. That means it would take you over two centuries to make back your initial investment.
And that’s assuming everything goes right for Nvidia.
But I’m not here to talk about whether Nvidia is too risky to buy right now. Rather, I’m telling you that it’s riskier to continue holding Nvidia shares if you already own them.
But when it comes time to take some paper profits off the table… Indecision can set in. After all, why sell a stock that’s setting new all-time highs?
I’ll answer that question below… Plus show you a strategy to rip profits from a company that’s running and gunning while reducing your risk.
Protect Your Profits With a Free Ride
Over the past couple of years, we’ve seen tech darlings like Meta (the parent company of Facebook) and Tesla hit a $1 trillion valuation… only to fall out of the club.
Meta hit a $1 trillion market cap on June 28, 2021. And Tesla hit $1 trillion on October 26, 2021.
They’re currently down 23% and 16%, respectively, since hitting those milestones.
Now, I’m not saying either company won’t achieve a $1 trillion market cap again… In fact, they probably will.
But if you didn’t take profits at the right time, you could have left money on the table.
At Palm Beach Research Group, we protect our profits on stocks that are in growth mode by taking a “free ride.” It’s like playing with house money at a casino.
The strategy is simple: When a stock you own doubles its initial position, you recoup your initial stake.
For example, if your initial position in a stock is $1,000… And it doubles to $2,000… You take your initial $1,000 off the table and let the remaining $1,000 ride for free.
That gives you cash to invest in a new opportunity. And it keeps your portfolio from getting too concentrated on any specific position.
Plus you’re still invested in the position that’s making money. So if it keeps going up… You continue to profit.
Recently, we took a free ride on none other than Nvidia.
The Power of Free Rides
We first recommended Nvidia in our flagship service, The Palm Beach Letter, in January 2020. Since then, it’s up nearly 680%. That’s allowed us to take two free rides on the stock.
The first free ride came in December 2022, when Nvidia doubled from our initial price. We sold half our original stake. So if you bought 100 shares, you’d have 50 remaining.
Of course, that’s not the end of the story…
Nvidia shares have more than doubled so far in 2023. So in May, we sold another half of our remaining position. That means of our 50 remaining shares, we sold 25.
But we still hold the final 25 in our pocket. So if the stock continues to rise, our subscribers will continue to profit.
Given the market’s love of the stock right now and its extreme valuation, we’re along for the ride… But we’ve also gotten back twice our initial investment.
By taking combined profits of 423% on our two free rides, we’ve protected our wealth.
Even if our remaining stake goes to zero… We’d still have made over a 260% gain.
That’s the power of taking free rides…
Don’t Turn Reward Into Risk
When you’re looking to invest in high-growth companies like Nvidia, too much reward in your portfolio can mean too much concentrated risk when shares trend down.
As I mentioned above, Nvidia is now priced for perfection. If there’s even a single speed bump along the way, investors may flee, and the shares will tumble.
By taking a “free ride,” you ensure no single stock position dominates your portfolio.
Think about it this way…
If Nvidia shares grew to 10% of your portfolio and then had another 50% crash like it did between November 2021 and November 2022, your entire portfolio would drop by 5% just from the performance of one stock alone.
But if you had a 2% allocation, the total bite would only be 1%.
If you never take profits off the table… You could lose far more in dollar terms when the inevitable pullback happens.
That’s why it pays to take a free ride on a stock that’s growing like gangbusters such as Nvidia.
Not only will you decrease your risk… You’ll still be positioned for more upside.
Good investing,
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Andrew Packer
Analyst, Palm Beach Daily
P.S. While Nvidia is up 227% this year, Daily editor Teeka Tiwari has uncovered what he calls his No. 1 AI coin that could turn $1,000 into a six-figure nest egg.
There’s three things Teeka looks for in a coin before recommending it: It has to be cheap, solve a problem in the real world, and provide automatic payouts.
When you find a coin that checks all three boxes, all bets are off, and the gains can be ridiculous.
Right now, this coin trades for pennies. It’s solving one of the main problems keeping AI from reaching its full potential. And it pays a yield (similar to a dividend) in more crypto.
This token is off the radar of most investors. But it won’t stay that way for long…
Teeka says there’s a catalyst that’s guaranteed to happen on August 23 at 4 p.m. ET that could launch this token into the stratosphere.
That’s why he’s holding a free event called The #1 Coin for the AI Boom on Wednesday, August 9, at 8 p.m. ET. During this event, he’ll share details about his No. 1 AI coin, what the catalyst is, and the problem it’s solving.
Plus, he’ll give away a free token name that could 5x your money during the event. Teeka’s past free picks have an average gain of more than 1,200%. So you’ll want to attend just for that.
All you have to do click here to automatically reserve your seat.