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  • Is the Berkshire Rally Running Out? 📉

Is the Berkshire Rally Running Out? 📉

Did you know that Warren Buffett’s Berkshire Hathaway holds more cash than any other publicly traded company in the world?

Did you know that Warren Buffett’s Berkshire Hathaway holds more cash than any other publicly traded company in the world?

Sometimes, holding cash instead of chasing stock market rallies can be a smart way to manage risk.

Here’s a sneak peek at today’s articles:

  • After Reaching Record Highs – Berkshire Hathaway Takes A Tumble: First, we examine the reasons behind this drop and whether more downside is on the horizon 📉

  • Nvidia’s Stock Volatility Is The Price You Pay For Market-Leading Returns: Next, we break down why short-term drops are simply part of the game when it comes to high-growth stocks like Nvidia 💰

  • Yield Curve Still No Longer Inverted: Finally, we’ll ask ourselves if the economy is really out of danger, or if a recession is still looming 🤔

Stay tuned for insights on these market shifts and what they could mean for your investment strategy. Have an awesome weekend!

After Reaching Record Highs – Berkshire Hathaway Takes A Tumble 📉

Berkshire Hathaway stock has been on an impressive run this year, climbing by 30% so far this year, and that’s including yesterday’s 3% drop.

Yesterday’s decline may have been triggered by an article which appeared in the Barrons financial magazine that the rally is a bit overdone at this point.

The article also pointed to the fact that Berkshire has slowed buybacks on its own stock.

From a near term perspective, it's true that Berkshire may be a little stretched, so more downside is possible in the near-term 📉

Nvidia’s Stock Volatility Is The Price You Pay For Market-Leading Returns 💰

The media is making it sound like a historical moment.

But while Nvidia’s big moves appear flashy, it doesn’t ultimately mean much.

Since Nvidia began its tremendous AI run around the debut of ChatGPT in November 2022, the stock has soared more than six times.

But the big move up has been coupled with multiple short declines.

In fact, Nvidia has now accounted for eight of the top 10 largest one-day market cap declines on record 📉

Nvidia is a high-growth semiconductor stock, and massive market value moves are all but inevitable.

A mid-single-digit percent move on a multi-trillion dollar market cap equals a big number – it’s just math.

Over the past year, Nvidia has posted multiple historic one-day declines, and each time the stock eventually rebounded.

It’s better not to read much into the incidents 👀

Despite Tuesday’s drop, Nvidia remains the best-performing stock in the S&P 500 this year, up 118%.

The reality is that the best-performing stocks don’t go up 1% or 2% every day with no volatility.

Investing in those names requires getting comfortable with big moves—both up and down.

As long as next-generation AI models continue to improve, demand for Nvidia’s GPUs should stay robust—and its stock should continue to hit new highs 📈

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Yield Curve Still No Longer Inverted 🤔

The yield curve has been inverted for a record 793 days or about 26 months, and there still hasn’t been a recession.

Typically, a recession occurs between six and 24 months after the 2-year/10-year Treasury yield curve has inverted.

So, it would seem now that the yield curve is no longer inverted, a recession has been avoided 😌

Many economists argue that it’s too soon to conclude that just because the yield curve is no longer inverted doesn’t mean the economy is out of the woods, a recession is coming.

But these same economists have been arguing a recession is around the corner for the past two years.

Ultimately there will be a recession, it's just part of the business cycle, but it just isn’t likely to happen any time soon 🤷

Even though the economy has slowed, there is just no sign of a recession.

The yield curve is finally getting it right.

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