In the first two weeks post-split (top chart, first column “2-Week Return”), stocks tend to drop: -0.06% average return.
Over the first month post-split, they flip positive (0.17% vs -0.06%), but they underperform the S&P (0.17% vs 0.47%).
By the third month post-split, they’re positive (1.50%) and reverse to outperform the S&P 500 (1.50% vs 1.44%).
This is the special sauce – this is the timing – and you’ll see this above with the examples I laid out post-split on Amazon, Tesla, Walmart and Apple. NOW. Let’s bring it back to today. I’m obligated to say (and this is true) that the future may not always match the past, but MOST OF THE TIME… it at least rhymes.
Nvidia has run up into its official split date (as predicted, and as evidenced above by other splits of similar nature).
We (Mark + Andrew + I) believe Nvidia could pop immediately following the stock split on Friday, or it could drop – that’s a toss up and we’ll have to see. Lucky for us – and for you – we don’t trade into stock splits, so we don’t care whether it drops or pops from Friday’s announcement to Monday. That’d be what we call “irresponsible.”
What we’re most confident in is that after NVDA’s initial reaction, it will settle lower for at least 2 weeks, maybe 1 month, maybe 2 (Mark talks about this in deeper detail in his Stock Split Live Session from this morning – make sure you catch that now if you haven’t).
That will give us our opportunity to scoop up Nvidia at a discount and ride it higher for the long term. We want to avoid the 30-Day “Stock Wash Sale Rule,” stay disciplined through the hype where Nvidia will LOOK much more attractive at $120 than it does now at $1200…
And then we’ll pounce.
Stay tuned for more info – a live reaction to the stock split on Friday – and of course, the trade that will come from this in the coming weeks.
Thanks for reading.
