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Notes -
So I made a successful tech play and I am trying to decide whether to (1) cash in; (2) re-balance; or (3) let it ride.
The background: I normally invest in boring Vanguard style mutual funds, but a year or two ago a buddy convinced me to take a modest chunk of my overall investments and basically make an AI play. The thinking was that this is analogous to the dot com bubble and people who got in early on "infrastructure" type investments as well as the leading companies ended up doing very well. Some of the investments fizzled, some did rather well, and some did extraordinarily well. Probably the best example is Sandisk which went up more than 50-fold. The upshot of this is that my tech portfolio is now worth a little less than $4 million. It's no longer a small chunk of my overall portfolio but instead is a slight majority of the total value.
At this point, the obvious thing to do is to take some chips off the table, but the tricky part is that part of me thinks that AI is more than just a bubble, that it will have economic impacts which make the Internet seem like pet rocks, hula hoops, and Dutch tulip bulbs. So basically I am left with a question that has been kicking around here for a while: investing in a situation where there is a huge range of possible outcomes, up to and including the possibility of a full on technological singularity. Thoughts?
This can be true at the same time as your investment declining/underperforming. You're not betting purely on AI being more than just a bubble, you're betting on this specific list of companies continuing to benefit off this narrative. Realistically, you caught a huge chunk of the move already, missing another 2x from here may sting but if you exit now you're booking solid profits and the money you take off (minus taxes) can be distributed into other assets that will still continue appreciating.
In general, I think it's a good time to start taking some chips off the table when you start having urges to post something like this. $4m being slight majority of your portfolio, you must be worth around $7m? The volatility of AI stocks is insane, will you able to stomach 30-60% drawdowns? Has the idea of having this net worth set in as new baseline in your mind? Only you can answer these questions. If I was in this situation, I'd take off 50-60% here, put it in the bank for a month or two, get used to seeing this number. And only then start thinking what to do with it.
His SNDK shares are already down around 40% from peak, so the answer to that question seems to be yes. ;)
Or perhaps he's making that post because every night his mind is racing and stomach's turning because SNDK is down 40% and he's wondering if he should hop off the train now ha
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