When an investor holds 11,000 shares of Nvidia (NASDAQ:NVDA) and watches $270,000 vanish in days, most would panic. Indeed, there are reasons for such a reaction. Owning a portfolio that’s this heavily concentrated in one position generally isn’t a good thing, even for those who have very high conviction in a particular stock continuing to rise for a long time.

Nvidia is certainly one company that’s provided long-term investors who’ve bought the dip in the past (think 2022) with big returns in relatively short amounts of time. Thus, leveraged bets on this top chip maker have increased, with options activity continuing to soar and making Nvidia one of the most traded stocks in the market.

That said, this particular escapade from one Reddit user is particularly interesting to look at, as it highlights a few key aspects of investing worth diving into. Emotional resilience is the name of the game in volatile markets, and with stocks that have shown the penchant for heightened volatility over various time frames (such as Nvidia), this is perhaps more important.

Let’s dive into the dilemma facing this particular Nvidia investor, and what to make of this ordeal.

Key Points About This Article:

• Emotional resilience and the ability to bounce back from short-term losses is easier said than done, with some investors using the internet to vent their losses on social media platforms.
• Let’s dive into the experience of one Nvidia investor, and what to make of their
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Redditor Shares Experience with Nvidia

This particular investor certainly has a unique experience, but one many in the comments section appear to be familiar with. While holding 11,000 shares of Nvidia stock is no small feat (that amounted to more than $1.2 million when the Redditor made the post), it’s also a position that’s much larger than most investors can imagine. Others in the comments noted that they held several hundreds of shares of this company, and were encouraged by this investors’ willingness to hold through periods of volatility.

It’s unclear whether this particular Redditor actually bought more when the price declined, as suggested. Or, if the user has held his stock to today, where the value of such an investment would be worth around $1.5 million. Indeed, if that is the case, this perspective that “bigger the ocean, bigger the waves” could have served this investor well, and it would certainly be interesting to see some updates on this front with where this portfolio stands now.

The user’s $270,000 loss in the matter of days could have turned around into a $270,000 gain (or more) simply by holding shares of this highly-volatile (but high-momentum) stock. The question is whether other investors will have the internal fortitude to do so, particularly if we see another cyclical downturn in this stock. That’s the question that many investors are grappling with, because it’s no so much if a particular individual can weather the volatility, but whether the market as a whole can do so as well.

This particular investors appears to view short-term volatility in Nvidia as par for the course, and something to be expected. As such, this investor looks to have the emotional resilience to hold such a position for long periods of time, something that has proven to be a winning strategy thus far.

Clearly a High-Conviction Investment

To start, it’s hard to gauge just how big this particular investor’s portfolio is. If this purchase of 11,000 shares of NVDA stock makes up a relatively small portion of this individual’s overall portfolio, perhaps there’s nothing to see here. There are investors out there with eight and nine figure portfolios, so a seven-figure position like this one may certainly not break the bank. With that key piece of information unknown, it’s hard to make a judgement call as to whether this investor is egregiously over-indexed to one particular company and sector, or if there’s some method to this madness (this position is complemented by a much larger portfolio of diversified assets such as index funds).

Without making any assumptions with regard to position sizing, it’s clear this is a large position for almost any investor (with maybe billionaire hedge fund managers and the likes of Warren Buffett excluded). So long as this individual is closer to the average investor than the hedge fund managers, this is a large high-conviction bet that may be worth examining.

One of the questions around Nvidia I’ve had for some time is whether this company’s rise to prominence has been driven mostly by retail investors (such as this individual, presumably) or large institutional investors. If this is the case that a large proportion of wealthy investors view Nvidia as a necessary stock to own, given its prominence in the AI revolution, and weathering volatility is part of the process, then perhaps enough high-conviction bets on this top chip maker could propel the stock even higher.

Market sentiment can be a fickle thing, so if enough investors lose conviction in their pick at the same time, this trend can reverse course. However, at least for now, Nvidia remains the hottest stock in the market and one many investors intend to hold over the long-term.

Understanding Market Volatility

Market volatility often feels like chaos, and it can certainly feel that way over the short-term. But for seasoned investors, it’s an expected part of the cycle. Terms like “shakeouts” and “fakeouts” capture how markets can test even the most patient holders. A shakeout occurs when fear drives investors to sell, creating a temporary downturn that flushes out weaker hands. Fakeouts, on the other hand, are misleading movements that make it appear a breakout is imminent, only to reverse shortly after. Both are common and often exaggerated by emotional reactions and speculative trading.

For smart investors, these movements are less about panic and more about opportunity. A dip doesn’t mean the fundamentals of a strong company like Nvidia have changed. Instead, it can signal a chance to accumulate shares at a discount. Understanding this distinction is what separates short-term traders from long-term thinkers, and is the kind of thinking this particular Redditor is using as their rationale to hold this position through periods of spikes and dips.

What Investors Continue to Love About Nvidia

Nvidia has become the world’s largest company on a number of occasions, and at the time of writing, Nvidia still takes second place in the global market capitalization rankings. That’s incredible, for a company that was considered a “mid-cap” play for a long time, and one that few thought could break through to the upper echelons of mega-cap tech stocks, at least this fast.

The rise of artificial intelligence technology as the pivotal technology of our time makes this company a central component to the thesis that this is one area of the economy that will experience blistering growth for a long time, at least relative to the overall market. And while Nvidia’s revenue growth rate has slowed to below triple-digit territory, the fact that this chip maker is still providing investors with high-double-digit revenue growth (and outsized earnings growth as well) provides a fundamental case as to why this company should be valued at more than $3 trillion.

Of course, Nvidia will need to continue to perform at this incredibly high level for a long time for these numbers to make sense. But a number of experts and analysts continue to reaffirm their buy ratings on Nvidia due to the company’s continued outperformance and future growth prospects with its new high-performance chips set to be released.

As I’ve pointed out in recent pieces, I do think it’s entirely possible Nvidia could make a move toward $200 per share by the end of next year – that’s a solid bull case with some math behind it. But again, there are risks, and investors need to be aware of how volatility can impact their thinking, and question whether they can hold through massive drawdowns as this one Reddit user has.

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