Q: Is it concerning that NVDA had really good results (but not good enough) and the market is selling off? When all the good news is baked into prices and there's nothing stock earnings can do to impress the markets, is it time to get defensive? Is it more tariff and recession related? The 10 yr is down to 4.3% so you would think it's good for equities that rates are coming down, but if the reason for the decline is because we are expecting a recession, it's not good. I'm not really panicking but portfolio is mainly growth oriented and there are signs that the market is rolling over due to excessive valuation and a whole lot of other worries. Any advice on how we should be positioning or getting more defensive? Thanks!
5i Research Answer:
With the intense scrutiny and skittishness of markets around AI themes, we think a somewhat sideways move for NVDA is a bit of a 'win'. Expectations were high and it was likely going to take a 'blowout' in the short-term to get things moving. But of course, a single quarter does not make a company. We think the general market weakness/anxiety is just overall increasing uncertainty which includes tariffs but not that issue alone. We think it makes sense for an investor to go over their portfolio, ensure things are set up as intended and that they are not overxposed to any single trend or theme but we don't think a diversified investor needs to make material changes to a portfolio at this stage.