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Josh Brown gives the 'OK' to trim Nvidia. The 'Halftime' Investment Committee debates
CNBC Television • 2025-07-17 • 9:55 minutes • YouTube
📝 Transcript (359 entries):
earnings Taiwan semi one of the factors there. So Josh at this place we're at right now is this the time to take some chips off the table or just ride this rally going into earnings.
>> I think for every individual person watching this and for every portfolio manager, unfortunately I don't have advice that would cover the gamut of what everyone's trying to do. But one of the things that I think is very obvious is now is not the time to be
getting more bullish than you were a month ago or six weeks ago. Now is the time to maybe say, okay, I've had a good run, a bunch of stocks that are up double digits in a very short period of time, and do I still want to have as much exposure as I did when valuations were lower and there was less enthusiasm priced into these names? And for some of you, you'll say, you know what? Actually, I haven't thought about that in a while, but maybe I don't want to have a 5% position that just went to 8%. And it's not a it's not the same as saying, oh, we're about to have a correction. And I predict that it starts in 27 hours. It's just a recognition that this has been an amazing market to be involved with, and a lot of stocks have probably outgrown the original size that you put them on in your portfolio. And you might want to make some decisions right now about if today were the starting point, how do I want to be allocated going forward?
>> Joe, coming over to you so far. Very early goings burning season actually going better than expected. The estimate was 5.7 at six and a half, according to Elsag. Right now, do you want to just continue to ride your winners into earnings, or is it time to take a few bucks off the table and reposition a bit?
>> Well, I'm going to reiterate what Josh said. It's a little bit difficult to give a very succinct answer to that, but I'll do my best in an attempt. I think if you believe this is some form of an inflection point, something similar that we've seen on a secular basis, maybe in 2000, 2007, then for sure it's definitely a moment where you want to take action in the portfolio. If this is nothing more in the upcoming quarter than a quarter in which maybe the S&P is flat to slightly down because we have September 17th Federal Reserve meeting, you have a lot of issuance coming. The long end of the curve is backing up okay.
You just kind of set an expectation for yourself. And you say this quarter is not going to look like the previous quarter. And if I want to do some minor selling, trimming some positions, I have no problem with that. But I'm going to stay anchored with the positions that I have. I think the risk in believing that this is some form of an inflection point, number one, is that you are going to get that rate cut in the fall. The earnings, as you mentioned, Frank, are very strong. And then just lastly, I do a lot of pattern matching. If you go back, you have to remember we had the precipitous decline already this year. We had it in the spring. Go back and pattern match the period from the spring of 2018 through the end of 2019, and you'll see that precipitous decline in the fall of 2018. On the other side of that, you had a very steady staircase move higher, and this pattern match to that time period is very high. That's potentially what we're setting up for right now. So I think you stay anchored and you just set the expectation that maybe Q3 doesn't look as good as the prior quarter.
>> All right. Just put this all in context. If we're going from the April lows, Nasdaq is up more than 35%. The S&P is up more than 25%. The Dow is up just about 18%. Well come over to Bill Baruch I don't have to ask you, Bill. I know what you're doing. You're actually taking some money off the table.
Why don't we start off with you trimming the Triple Q's. What's the rationale behind that? Listen, I. >> Think earnings are going to be good. But remember how you felt and what the market was going through in early April.
And you know, this is why you take risks like we did in April is being in you monetize it right here. We were trimming things, bringing back to balance, taking creating a little bit of cash gives us a little flexibility as we go through earnings season. And, you know, I think there's going to be some churn here. We're gearing for maybe a record high close in the S&P today. But it could be some churn as market kind of just digests things. I don't think as Joe said, it's going to accelerate. But I do remain overall bullish. I'm not sitting here bearish, but this is just tactically raising some cash.
>> Goldman actually out with a note talking about some of the moves that you're making, or at least referencing a possible move similar to the ones you're making. I'm going to read part of it. The average tech stock in the S&P is implying an earnings day move of under 5%, the lowest in two decades, suggesting complacency set up and lower probability of relief rallies.
The recommending hedging tech exposure with puts or buying puts on stocks with high earnings revision risks agreeing with this strategy.
>> Well, here's the thing if you're buying puts, you're spending money now, you could really protect your downside. And there's times to hedge. In 2022 we hedged our downside use puts. The fed said they're going to drive the market lower. I don't see this really being the instance here. We could get a nice little flush down. I don't think it could last very long.
But if the market pulls back I want to be able to get cash to work. I do agree with Joe. There's really some great pattern. I've been going back a couple of months ago in May saying this party like it's 2019 and we're going to see a tremendous bull market in the second half. But I do think we
have to work through the digestion of the run and earnings. You know they're going to be good. Beats and raises are expected. But how many quarters have we seen? Maybe not. That May was one where the expectations were low and that reinvigorated the bull market.
Tech came in with the I spend but how many quarters have we seen in 24 and 23 where the expectations were high at the beats and race? They came, but the stocks did not accelerate higher. We could see something like that here.
>> I feel like the three of us are chopping through an answer here. I think Josh gave the one sentence that really summarizes it all. You probably don't want to get more bullish right here.
If you're long, you probably don't want to buy. >> I would say for most people, the most cost effective hedge that exists is to not put money at risk that you can't afford to lose. Like there's a million different ways to buy insurance and do long dated puts and have have trend following rules. And I'm not saying anyone is better than any other. Everyone can pick their flavor, but in the end, the best form of risk management is saying this is the bucket of my assets that I am willing and able to witness a 20% decline in at any given moment. And here is the bucket of my assets that I'm not. And we're not investing money that we can't afford to see a decline with. And it's really as simple as that. So to answer your question, people emotionally extrapolate. And they've just made a lot of money. So they feel like they're about to make even more. And we get the same way when we just when we lose money, right? The minute we see a 10 or 20% drawdown, it's like now they're about to cut me in
half. So this is like human emotion. There's nothing you can do about it. Some people are more afflicted than others. Some people are able to program themselves to act in the opposite manner. That's Warren Buffett. But in the end, if you can't afford to lose the money, it shouldn't be invested in the first place. How's that for a
hedge? >> Here we go. Important to note, you know the Nasdaq 100 very close to an all time high while Bill is trying to trim.
You know, this is pretty close to an all time high right at it right now. That's Nvidia. You actually posted this week that you're actually giving your followers permission, permission to sell a little bit Nvidia what's the rationale there. We found out earlier this week they can sell those H20 chips in China. Now a lot of people think that's unlocking a whole new chapter of revenue, if you will.
And the fact that we also essentially find out that China really needs our US tech, specifically our hardware, why sell here, especially ahead of earnings?
>> Okay, I'm not selling. I'm giving people permission. Let me give you the context on the China front. Let's just do this quickly. Bernstein reiterated Nvidia $185 target. And what they said was that for every $10 billion in recovered revenue in China, meaning business we didn't think they could do up until a few days ago that could add $0.25 to Nvidia's earnings per share. So they say that could be like $40.50 in 2026 if they capture back 15 to $20 billion worth of China revenue.
Great news. Happy to hear that as a long that be that as it may put that aside we'll assume Bernstein has it roughly right. The big picture is for the last 11 years, I've become the person that's been the most associated with Nvidia for better, for mostly for, for better. Although there have been times where the stock's been in a 50 even a 70% drawdown in years like 2022.
There was the crypto crash in 2017, 2017 when they thought all these chips were good for was mining. So I've had the ups and downs, but mostly ups. People walk up to the street, people walk up to me on the street, they come into me stores, airports, you name it. The question that I'm getting the most over the last month or so is not do you still like Nvidia?
It's should I sell some Nvidia? And I totally get it. Look at what the stock has just done. It's really remarkable. And now it's a $4 trillion market cap.
So just for fun, if you think this is a $5 trillion market cap, you basically need the stock to get to $201 a share, assuming constant share count, not a lot of issuance. And they're not going to take action on the buyback. If you think it gets to $10 trillion that's a $403 stock. So like do you think it's going to go to 10 trillion.
Could it maybe I guess like so I'm just looking at it from a risk reward standpoint. I'm not a seller. But if you are so nervous about your position that you're hocking me in the bagel store, the answer I'm now giving you, I used to say no. Or I would say I don't know lol. The new answer is yes. Awesome, I get it. It's a $4 trillion dollar market cap. How bullish do you need to be to think it goes to $10 trillion. You have to be insanely bullish. So if it's making you nervous you have my permission. Sell 10% sell it I don't care. You know.
>> A few points. So you're not selling. But you'r