Nvidia (NVDA) is the hottest stock on the market…
The chipmaker is riding the huge multitrillion-dollar artificial intelligence (AI) trend.
Its chips are major components for video gaming consoles, crypto mining rigs, and electric vehicles.
Since January, Nvidia’s share price is up 91%. By comparison, the S&P 500 is up just 11% this year.
Everybody wants a piece of this popular company. It’s flying high and can seemingly do no wrong.
After such a remarkable rally, we can’t blame you if you think it’s too risky to get into this company at current valuations.
After all, Nvidia trades at a whopping 77 times earnings. That means it would take you 77 years to make back your initial investment.
And that’s assuming everything goes right for Nvidia.
But we’re not here to talk about whether Nvidia is too risky to buy right now. Rather, we’re telling you that it’s riskier to continue holding Nvidia shares if you already own them.
But when it comes time to take some paper profits off the table… Indecision can set in. After all, why sell a stock that’s setting new all-time highs?
We’ll answer that question below… Plus show you a strategy to rip profits from a company that’s running and gunning while reducing your risk.
Protect Your Profits With a Free Ride
Over the past couple of years, we’ve seen tech darlings like Meta (the parent company of Facebook) and Tesla hit a $1 trillion valuation… only to fall out of the club.
And if you didn’t take profits at the right time, you could have left money on the table.
At Palm Beach Research Group, we protect our profits on stocks that are in growth mode by taking a “free ride.” It’s like playing with house money at a casino.
The strategy is simple: When a stock you own doubles its initial position, you recoup your initial stake.
For example, if your initial position in a stock is $1,000… And it doubles to $2,000… You take your initial $1,000 off the table and let the remaining $1,000 ride for free.
That gives you cash to invest in a new opportunity. And it keeps your portfolio from getting too concentrated on any specific position.
Plus you’re still invested in the position that’s making money. So if it keeps going up… You continue to profit.
Recently, we took a free ride on none other than Nvidia.
The Power of Free Rides
We first recommended Nvidia in our flagship service, The Palm Beach Letter, in January 2020. Since then, it’s up over 1,400%. That’s allowed us to take two free rides on the stock.
The first free ride came in December 2022, when Nvidia doubled from our initial price. We sold half our original stake. So if you bought 100 shares, you’d have 50 remaining.
Of course, that’s not the end of the story…
Nvidia more than doubled in 2023. So in May, we sold another half of our remaining position. That means of our 50 remaining shares, we sold 25.
But we still hold the final 25 in our pocket. So if the stock continues to rise, our subscribers will continue to profit.
Given the market’s love of the stock right now and its extreme valuation, we’re along for the ride… But we’ve also gotten back twice our initial investment.
By taking combined profits of 423% on our two free rides, we’ve protected our wealth.
Even if our remaining stake goes to zero… We’d still have made over a 260% gain.
That’s the power of taking free rides…
Don’t Turn Reward Into Risk
When you’re looking to invest in high-growth companies like Nvidia, too much reward in your portfolio can mean too much concentrated risk when shares trend down.
As we mentioned above, Nvidia is now priced for perfection. If there’s even a single speed bump along the way, investors may flee, and the shares will tumble.
By taking a free ride, you ensure no single stock position dominates your portfolio.
Think about it this way…
If Nvidia shares grew to 10% of your portfolio and then had another 50% crash like it did between November 2021 and November 2022, your entire portfolio would drop by 5% just from the performance of one stock alone.
But if you had a 2% allocation, the total bite would only be 1%.
If you never take profits off the table… You could lose far more in dollar terms when the inevitable pullback happens.
That’s why it pays to take a free ride on a stock that’s growing like gangbusters such as Nvidia.
Not only will you decrease your risk… You’ll still be positioned for more upside.
Palm Beach Research Group
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Palm Beach Research Group
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