featured-image

Sundry Photography If Nvidia Corporation ( Nasdaq: NVDA ) made and sold widgets, I’d tell you to sell short as many shares as your broker would allow. In that case, NVDA would be extremely—comically—overvalued. A widget is “an unnamed article considered for purposes of hypothetical example.

” (Lately, the word has been applied to small special purpose software applications. I don’t care about those.) It’s critical that anybody trying to value NVDA stock recognize how vital this is.



Statistical, econometric, and stock valuation models all rest on a shared foundation. They assume we’re forecasting widgets. Widgets, being educational-make-believe items, involve rational data for supply, demand, pricing, etc.

Trends need not be stable. In fact, it’s better that they aren’t. This provides publishing and employment opportunities for professors and practitioners.

You can’t make money predicting the obvious. There are limits. If inputs are too weird, models can’t work.

If you’re psychic and can see into the future, there’d be no problem. But if you’re human, you’d have a dilemma. You’d face two choices.

Admit you can’t predict, and search for another solution to the problem at hand. Use the data you have as best you can and try to explain such that your readers, clients, etc. won’t realize your work is bogus.

Everyone I’ve seen who tries to value Nvidia is using Choice 2. Some do so cynically. But to their credit, most do so unwittingly.

Many do.

Back to Beauty Page