Hey y’all,
The stock markets are in a really weird place.
It’s tough to remember a time when such a small cadre of power brokers had such an outsized ability to move the markets.
It’s like riding on a seesaw with an elephant.
(Do seesaws even exist anymore? Did someone decide they were unsafe and kick them off the playground? Let me know your thoughts)…
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Now, don’t get me wrong, it’s not at all new that there are incredibly powerful people on Wall Street who have outsized influence over the markets.
That’s been true since J.P. Morgan was a living person, not a $623B institution.
But in recent months, it seems that the group of people who have that kind of influence has gotten smaller, and the influence they exert has gotten bigger.
For example, it’s not new that politicians can move the markets. But it does feel strange that Wall Street cares way more about what Jerome Powell says than they care about what Vice President Harris or former President Trump are up to.
And then there’s the non–political elite, the guys who DON’T have hard power, but still have unbelievable influence over stocks.
It’s quieted down somewhat in recent months, but do you remember when the latest Elon Musk tweet or rumor could move TSLA stock (and, for a brief period, TWTR stock) by 5-10% in a day?
And now, Jensen Huang is starting to have a similar effect…
Now, Huang is nowhere near the quixotic firebrand that Musk has been throughout his career, but NVDA’s stranglehold over the tech sector deserves to be studied.
Today, the Nasdaq is down in advance of NVDA’s Wednesday earnings call.
And that same earnings call is pretty inarguably the biggest market news event of the week.
That is an unbelievable amount of influence over the markets concentrated in the hands of one company.
And I don’t mean to sound too conspiratorial. NVDA didn’t ask for this, and I’m sure Huang doesn’t really want to move the market beyond hoping NVDA stock goes up in value. But it’s incredible to watch.
And it’s a good reminder to us as traders that the markets are not really rational. They move suddenly and for unpredictable reasons, usually for reasons that we can’t really trace, even if a headline on The Street says “It’s clearly because of such-and-such.”
As traders that can seem really frustrating, but it actually should come as a relief.
Because we shouldn’t waste time trying to predict the markets. Predicting the markets is gambling, and gambling is a good way to lose a lot of money really fast.
Instead, we should be focused on reading and reacting to what the markets give us and taking advantage of the things we can understand.
That’s why I’m so thankful for our ProsperityPub team and their expertise.
May you have an incredible Monday and may the markets, however irrational, treat you kindly this week…
To your prosperity,
— Stephen Ground
Editor in Chief, ProsperityPub
