Quant Who Told His Mom to Sell Nvidia Hasn’t Heard the End of It

When Jason Hsu saw Nvidia Corp. rally above $250 a share earlier this year, he gave his mom what he thought was a sage piece of advice: Sell your shares.

(Bloomberg) — When Jason Hsu saw Nvidia Corp. rally above $250 a share earlier this year, he gave his mom what he thought was a sage piece of advice: Sell your shares.

To Hsu, the founder and chief investment officer at Rayliant Global Advisors and co-founder of Research Affiliates, Nvidia’s eye-popping rally was reminiscent of over-hyped stocks skyrocketing during the dot-com bubble in the late 1990s. His mother bought the shares at $100; it was time to take her profit. Or so he thought. Nvidia has only gone up since that not-so-prescient recommendation. The stock, following a 195% surge this year, is currently trading above $400.

“I told my mom, ‘Sell Nvidia, you made such a good gain.’ And of course then it goes to like $450,” Hsu said on Bloomberg’s What Goes Up podcast. “So every time my mom sees me, she’s like, ‘I have an idiot for a son. Did you go to school? Did you actually go to school and get a PhD in finance? What is wrong with you?’”

“So until Nvidia falls below $250, I’m going to be putting a hex curse on that stock,” he joked. For it to get to that price, it would have to drop more than 40% from current levels. 

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The anecdote highlights how professional investors were caught off-guard by the artificial-intelligence fervor that swept over the market this year, and it shows how some remain skeptical of its staying power. Nvidia, propelled by AI projects that rely on its high-powered computer chips, is the best-performing stock in the Nasdaq 100 so far this year and has contributed the most to the index’s rally, according to data compiled by Bloomberg. 

Its forecasts for sales growth fueled by AI helped spark a frenzy in the broader market that led benchmark gauges higher, with big-tech companies in particular benefiting this year. But its valuation has become a point of focus for many market-watchers, including Hsu’s former Research Affiliates colleague Rob Arnott, who said the stock is priced beyond perfection and might even be in a bubble.

Read more: Bubble-Hunter Rob Arnott Sees a ‘Big Market Delusion’ in Nvidia

Hsu’s $17 billion Rayliant, founded in 2016, is an asset manager that focuses on investment opportunities within developed and emerging markets. He holds a PhD in finance from the University of California, Los Angeles. 

To Hsu, Nvidia’s price action evoked memories of Cisco Systems Inc. in the late 1990s.

“It reminds me of Cisco during the tech bubble where everyone says, ‘Oh, of course everyone would need to buy a router and Cisco will own the world,’” he said on the podcast. “That’s kind of the same narrative I hear about Nvidia.” Cisco is currently trading below its 2000 high.

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