Investors' Playbook : Is Nvidia stock a bubble?

📖Today’s Agenda

• Stock Market : “Is Nvidia stock a bubble waiting to burst?“

• Entrepreneurship : TOP 3 AI TOOLS OF THE WEEK

• Personal Finance : "Retired? You May Want Stocks, Not Bonds, to Power Your Portfolio"

📈Stock Market

Is Nvidia stock a bubble waiting to burst?

Nvidia's stock price has become a bubble, according to Rebellion Research.Shares could soon crash like 17th-century tulips or 1990s dot-com companies did, the think tank said.The semiconductor giant has soared 180% this year, thanks to the rise of generative AI.

Nvidia's stock has soared so high this year that the semiconductor giant now trades at a bubble-level valuation reminiscent of 17th-century tulips and late-1990s dot-com companies, according to Rebellion Research.

Shares have jumped 180% to $410, but the think tank said earlier this month that the stock is now hugely overvalued and could crash at any time.

"Historically, financial markets have witnessed numerous asset bubbles, from the tulip mania in the 17th century to the more recent dot-com bubble in the late 1990s and early 2000s," Rebellion analysts wrote.

Generative AI programs like ChatGPT run on high-powered, specialized graphics processing units (GPUs) – and Nvidia has a lion-sized share of that market.It's posted back-to-back stellar quarterly earnings report that showed demand for its products has surged thanks to the AI craze, and investors have responded by loading up on shares.

That's pushed Nvidia to a trillion-dollar valuation and establish it as a member of the mega-cap "Magnificent Seven" group of Big Tech firms.

But it remains to be seen how "practical and profitable" AI can be and that makes Nvidia's stock vulnerable at its current price, according to Rebellion.

🎯Entrepreneurship

TOP 3 AI TOOLS OF THE WEEK

1. DALL-E 3

TEXT TO IMAGE

This advanced new tool sets itself apart from older models by providing significantly higher image quality, adding more detail and specializing in creating texts on images. DALL-E 3 is not yet available for a demo, but is expected to be released in early October, making it the perfect time to get started!

Key features of DALL-E 3 include:

• High quality and detail when generating images from text
• Ability to add text to generated images
• More precise results than earlier AI models

2.BRANCHER

NO CODE APP BUILDER

YOYA is a revolutionary AI tool that enables users to build their own personalized generative AI apps without needing to code. With YOYA, users can leverage the power of natural language processing to create apps based on deep learning machine models. This next-generation software opens up unprecedented opportunities for users to develop their own apps in the most convenient way possible.

Key Features:

• Allows for rapid prototyping and development of personalized AI applications.
• Create and train AI models with natural language.
• Offers increased accuracy and debugged algorithms with deep learning.
• Create entire solutions at the scale of user’s imagination.
• Suitable for non-technical users.

3. CLAID AI

IMAGE TO IMAGE , TEXT TO IMAGE

Use Claid AI in your branding and e-commerce ventures to generate content quickly and efficiently. Benefit from its unique capabilities to tailor flawless images that are perfect for enhancing your brand's online presence. Leveraging Claid AI's AI-driven photo editing capabilities, you can quickly produce eye-catching product images that perfect capture your brand's essence and create a great first impression on your customers.

💸Personal Finance

"Retired? You May Want Stocks, Not Bonds, to Power Your Portfolio"

If you’re already retired, it may be time to rethink the role that stocks and bonds play in your portfolio. While conventional wisdom suggests that investors should shift more assets to bonds as they approach retirement, at least one expert says investing heavily in equities is the best asset allocation for retirement.

John Rekenthaler, vice president of research at Morningstar, examined market data from the last 80-plus years and determined that portfolios heavily weighted in equities allow retirees to safely withdraw more money each year than those with large bond allocations. Stock-heavy portfolios, meanwhile, led to more capital appreciation than moderate and conservative portfolios reliant on bonds.

Using historical data, Rekenthaler calculated the safe withdrawal rates of three different asset allocations – a conservative portfolio, a moderate portfolio and an aggressive portfolio – across 30-year rolling periods between 1930 and 2019.

While the conservative option comprised 90% bonds and 10% cash, the aggressive portfolio was invested entirely in stocks. The moderate portfolio, meanwhile, held 50% stocks, 40% bonds, and 10% cash.

By conducting 1,000 simulations for each asset allocation, Rekenthaler found the aggressive and moderate options supported higher safe withdrawal rates than the conservative portfolio. He defined a safe withdrawal rate as “the highest amount that can be removed for all 30 years of the simulations without depleting the portfolio in at least 90% of the simulations.”

In other words, despite containing more risk associated with equities, the aggressive and moderate portfolios would have given retirees more safe spending power during the 30-year periods examined.

Additionally, Rekenthaler found the equity-weighted portfolio would have resulted in leftover assets after 30 years of withdrawals in each time period. On the other hand, retirees using the most conservative allocation would have run out of money during three different 30-year periods in the 20th century, according to the simulations

Bottom Line

Retirement doesn’t mean investors should rid themselves of stocks, according to Morningstar’s John Rekenthaler. Portfolios that contain equities can support higher safe withdrawal rates than those dominated by bonds, and result in significant surpluses even after 30 years of retirement spending. While past results don’t guarantee future performance, equities should play an even larger role in the investment portfolios of retirees.