Nvidia's Rebound from Its Correction Only Makes the Stock More Dangerous to Buy
Semiconductor stocks are bubbling and could lose 40% of their value. Parallels to the top of the internet bubble are too obvious to ignore.That's the implication of recent research into market bubbles and their eventual bursting. The research suggests it's "nearly certain" that, at some point in the next two years, the market value of Nvidia , as well as the semiconductor industry generally, will be down 40%.When an industry's trailing two-year alpha - the margin by which it beats the market - is 100 percentage points, according to the researchers' calculations, the probability of a crash is 53%. It grows to 76% when the alpha is 125 percentage points, and to 80% when the alpha is 150 percentage points. Above that, a crash becomes "nearly certain.". We may be seeing something similar today in investor reaction to Nvidia's recent correction - which saw the company's stock drop 16.1% on an intraday basis in just two trading sessions. Though it's impossible to know how many investors are
