Blood in the streets

When I saw that NVDA fell $5 premarket, I first thought there was a glitch until I started digging into the news.

NVDA had to lower their forecast due to competition from AMD and unexpected costs due to warranties and repairs from some of their chips. In this market, it created the perfect storm for a disaster with the stock.

With this short term problem, I see this as one of the best buy opportunities in the market. There is virtually no risks when it is trading this low and huge opportunities for gains. The long term growth story remains virtually the same which is what I have been focusing my valuation on.

I am going to rebalance my portfolio, increasing my weighting into NVDA because it is too good to be true at the price. The short term is definately going to suck and be extremely volatile, but the long term is still strong. I still think the stock should be trading in the 40s with its growth prospects and competitive advantage. With a margin of safety of about 70%, this is a no brainer if you can handle the pain.

This decision would be easier if LDK was up a little more, but unfortunately it is trading like a penny stock having a 30% drop on good news. If the stock was in the 40s like a week ago, I would jump into NVDA in a heartbeat. NVDA has definately less risks at these levels, but LDK has greater rewards when it is trading at 30, which is clouding my judgement on the situation.

LDK has more catalysts in the short term, making this decision even harder. I might have to sleep on it before deciding how to act. Ideally, I would like to trade 1 LDK share for 3 NVDA as arbitrary as it seems.