Which leading exchange-traded fund (ETF) just delivered a 2,194% gain over the past five years?
Mega Bubble Ahead
In 1995, the Netscape IPO “rang the bell” for the start of the Internet Bubble which presented some of the best investment opportunities of all-time, until technology stocks finally crashed in 2000. Since that crash, technology has performed very well, and another bubble may now be forming.
Last year, Nvidia’s “miracle chip” announcement may have rung the bell for the start of an “artificial intelligence mega bubble” ahead, which we believe could be larger than all prior market bubbles by a very wide margin.
Artificial Intelligence
In 2016, ETF PM recommended Nvidia (NVDA) early because CEO, Jen-Hsun Huang, was ecstatic about the company’s new miracle chip and their potential to accelerate artificial intelligence (AI). After pounding the table on Nvidia for almost a year, we gradually turned our focus to SOXL.
Last month, we continued to pound the table on SOXL. Year-to-date, SOXL has gained more than 137%, and the trailing five-year total return is now 2,194%, or 87% annualized.
New semiconductors allow for deep learning initiatives that are expected to deliver an era of unprecedented innovation, productivity, and disruption. See the first robot citizen, Sophia of Saudi Arabia, Wal-Mart’s shelf-scanning robots, and Nvidia’s countdown to autonomous vehicles.
Risk Control
Given our experience managing the past two market crashes, volatility is always expected, especially in technology. We strongly recommend that investors employ strict overriding risk controls, and/or trend following trading discipline, in order to invest in semiconductors, with or without leverage.
ETF PM has long positions in SOXL, SMH and NVDA.
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