Happy Nvidia Day, Where One Company Tells Us Whether America’s Economy Is Good or Bad

Welcome to yet another momentous day in our super normal and not at all AI-driven hype cycle we call an economy where the cost of everything, including NFL teams, is too damn high. Nvidia, the only company in the world that matters, will announce its earnings later today, letting all of us know if it will see its shadow or not and whether we will have an economic spring or winter in the near future.

That paragraph is obviously riddled with tongue-in-cheek sarcasm, but it’s not that far off from what The Wall Street Journal publishes every time Nvidia announces its earnings. Here they are today in their straight news writeup:

All eyes are on Nvidia.

The AI chip maker is set to report earnings after the closing bell. Investors will look to Nvidia’s results as a broader indicator of the strength of AI-related demand, which propelled markets upward for much of this year.

This is so absurd. I spent thousands of dollars and thousands of hours beginning at this same time last year to get a master’s in finance, learning the basics of how companies get valued and how money is moved around time. There are all sorts of very serious and tedious rules one must adhere to in the seemingly impossible task of assigning a firm value to a market that is constantly evolving.

There are valuable indicators like the CAPE Ratio which reveal this to be the third-most expensive stock market relative to the ten-year average of inflation-adjusted earnings in the 153-year history of the indicator. My professors taught me to treat these secrets I paid for with the utmost respect. Doing things like calculating the present value of future cash flows is a great way to learn what companies are really worth, and holy moly some of this stuff does not cost what it should.

But it turns out that none of that matters and all you have to do is make a binary decision about the most powerful company on earth on a quarter-to-quarter basis! If Nvidia’s earnings are good today, then screw the CAPE Ratio, it doesn’t know what the hell it’s talking about. This market is cheap, baby! Buy buy buy!

If Nvidia’s earnings tank, then the CAPE Ratio was a harbinger of doom and we all should have seen this gravy train coming to a stop eventually and Very Serious Financial Professionals like me get to say “I told you so.”

Such is usually the backwards-looking notion of most market commentary you see on TV. From a presentation standpoint, it makes sense that you need a scoreboard to keep track of who is winning the fake arguments you are staging mainly for entertainment, but if there is anything I took from my master’s program, it’s that successful financial decision-making is a process-oriented endeavor where repeating good decisions and operating within proper frameworks will ultimately yield the best results over time. The dirty secret that no financial professional wants you to know is that if you just buy the S&P 500 and forget about it for ten years, you’ll outperform a majority of fund managers. “Keep it simple, stupid” is a very smart long-term investing strategy, and a lot of the Very Serious stuff that seems opaque simply follows the logic of buying a market where ten percent annual expected returns can add up pretty quickly.

But fuck that noise, I’m here to make money today baby. Nvidia has gapped up the last two times after it announced its earnings, and the trend is your friend ’til the end and we’re betting making Very Serious financial judgements about today not being the end here at the Splinter Finance HQ. Nvidia is my meal ticket to pay for all my Christmas shopping in a few months and daddy needs some new golf clubs (obviously not financial advice and it’s on you if you follow me into this madness).

It may seem absurd that one company is genuinely this responsible for influencing the direction of the entire market, but think about our centralized and monopolistic world, does it really sound that crazy?