Overnight the S&P 500 and NASDAQ 100 stock market fell meaningfully, following the S&P/ASX 200 (ASX: XJO) which fell 3.7% yesterday for virtually no reason.
NVIDIA stock price crunched
At one point stocks like Nvidia, the GPU design business, was down around 15%. Keep in mind it is/was the world’s second largest company, so that wiped off $400 billion from its market capitalisation.
Google loses default Search engine case
At the same time we heard big news that Google would no longer be able to pay Apple to be the preferred search engine in an iPhone and would likely face further repercussions. Google pays Apple as much as $US 20 billion to be its default search engine.
That’s why, although this may impact consumer’s choice, it may have a bigger impact on Apple’s bottom line then on Google itself.
Buffett sells whack of Apple stock
In related news, another thing that spooked investors was the decision by Warren Buffett’s Berkshire Hathaway to sell even more of its Apple shareholding. Keep in mind, however, that at one stage Buffett’s portfolio was over 40% in Apple alone. Some talking heads say he’s trying to pick the top (obviously they haven’t read one of his 50+ years of shareholder letters), but keep in mind he already sold a chunk of Apple earlier this year.
As I showed in last Thursday’s Rask Invest Live, anyone can find out what’s inside Buffett’s portfolio – with a delay – since big US fund managers are legally required to report their stock holdings in a 13F.
Many people in the US were also spooked because the Nikkei, the index for the Japanese stock market, fell around 10%.
Is there something to worry about?
Basically every commentator and ‘expert’ I watched overnight had really no idea of what’s happened to the share market and why.
While most of us really loathe this type of uncertainty in shares, and no one can predict the future, so long as we have diversified portfolios with stocks, bonds and other assets inside, volatility like this can provide great opportunities for long-term investors.
For example, while I was not awake for most of it and I do not have an interest in owning it, if I was a buyer of Nvidia stock, last night’s trading would have provided the perfect opportunity to buy the stock 15% cheaper than the day before.
Meanwhile, the business itself was not 15% smaller or 15% less profitable than 24 hours earlier.
That’s the type of opportunity smart, informed, and long-term focused investors can take advantage of if they are ready and have done their research in advance.
We have not sold anything for Rask Invest, but we have preset rules for when we would rebalance and why. Perhaps it’s time to create your own plan?
