Nvidia: My First 23x Investment
October 2019: On the rooftop of Nvidia’s new headquarters with my friend who was in charge of building Nvidia’s new facilities.
I always encourage the guys in my 3 F’s Cohorts to invest in quality companies that are attractively priced, that they have high conviction on, and to hold these investments for a long stretch of time. Timing the market is hard, but time in the market can bring great returns.
Though I’ve made plenty of mistakes and suffered plenty of losses (ask me about Horsehead Holding Corporation, Smile Direct Club, or that condo purchase in 2006), overall I’ve done very well as an investor (2023 was my best year ever, with a return of 184%). Today I’m celebrating my single greatest investment to-date: Nvidia, with a current 23x return. Many years ago I started hearing about this strangely named company here in Silicon Valley. I studied Nvidia and started a position. Through the years I studied and watched more, and invested more. I liked what I saw.
In probably 2014 or 2015 I first visited Nvidia’s old headquarters and was stunned by seeing stacks of packages of their GPUs, the product I kept reading about that had insatiable demand and ate up market share from other companies. Friends told me to stay away, that Nvidia would never be more than a small supplier to the gaming industry. I kept buying. Later, in both 2018 and 2019, I walked the construction site of Nvidia’s new headquarters. Everything indicated growth, growth, growth.
My average purchase price of my Nvidia shares is $39.68. Today Nvidia closed at $926.69, for a total return of 2,235%. I’ve enjoyed some great returns on other companies and assets—10x, etc, but so far this is my first return that’s reached 23x. I have two local friends who have done much better on Nvidia than my 23x, having bought most of their shares in the single digits. I sold some shares a few years ago to cover some construction costs and some at the end of 2023 because it was a good year for me to recognize some captial gains, but other than that I’ve simply done nothing—just held my shares as I’ve remained convinced of the long term thesis for the company.
There’s a case to be made to sell now, a 23x gain is extremely rare and within the blink of an eye these gains could start to fall. For now, I’ll continue to hold. I believe there’s more growth for Nvidia. Perhaps I’ll eventually be sitting on a 30x or a 40x gain? Or perhaps I’ll look back and wish I’d sold today. We’ll see. My strongest conviction right now is that my Bitcoin holdings will eventually surpass my Nvidia returns (If you’re just starting to study Bitcoin, here are some recommended resources).
What’s my point to you in sharing this? I have 3 points:
Investing > Saving. If you’re not investing your money and simply saving your money, you’re losing money. Inflation is eating away at the purchasing power of your money. Now is a great time to become an investor. Just start. Start with a tiny bit of money, start learning, start now. I believe it is poor stewardship of your resources to not invest (If you’re a Christian, study Luke 19:11-27 or chapter 8 of The Big Story to start developing a biblical foundation for investing and playing big with your life). If you’re a man (and especially if you’re a pastor), explore if you have interest in joining one of my 3 F’s Cohorts.
Investing in Great Companies > Investing in the S&P 500. By investing in great companies and assets (not just the S&P 500), you can achieve greater returns (or greater losses). If you invested in Nvidia 10 years ago and never sold, you’d now be sitting on a gain of 20,089%.
Instead, if you’d invested 10 years ago in the S&P 500 passive index fund (which I highly recommend as part of an investment strategy, and it’s a great place to start as an investor), you’d be sitting on a gain of 174%. This is a decent annualized return over the course of 10 years that beats inflation, but a far cry from what Nvidia (and many other great companies) would’ve given you.
Alternatively, if 10 years ago you chose against Nvidia and against the S&P 500 and instead chose Kraft/Heinz as the stock you wanted to hold for 10 years, you’d have a big loss—a return of -55%.
3. Invest early. We aren’t predictors of the future, but generally the earlier you invest in a great investment the better you’ll do (I’m really glad I bought Apple in 2012—though the shares I bought in 2013 I got at a lower price than my 2012 shares), and the earlier you start investing the longer your time horizon for great returns. When my sons turn 15 I open up an investment account for them and start teaching them investing. Both my 17 and 15 year old sons are presently doing very well as investors and they have a huge head start on me—I didn’t start investing until I was 32 years old.
Whatever your experience or lack of experience with investing, my message is this: Invest. Invest well. Invest now. Be on the hunt for quality opportunities that can deliver sizable returns over time.
November 2018: On the ground with my friend during the early stages of construction at Nvidia.