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I put about $10,000 into Nvidia during the pandemic. Last year, I sold half my shares for about $118,000. Last Friday, the 1,000 shares I kept were worth about $187,000 (1). All told, that’s more than $300,000.
Then, in a Nov. 8 email, Nvidia CEO Jensen Huang told his employees he’d been unfaithful to his wife (1, 5). By Tuesday, the fallout had knocked about $20,000 off my shares.
The affair isn’t the whole story. Nvidia’s board launched an independent investigation “in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort” (2).
The New York Times reported late last month that Huang had developed a close relationship with an executive at a Singapore-based data company, whom U.S. intelligence officials determined was funneling information to Beijing (3).
China calls the allegations baseless (3). Nvidia’s board says it has no reason to believe national security or company secrets were compromised (2).
Investors didn’t wait for answers. Nvidia closed down more than 4% on Monday, even as the S&P 500 rose 2.3% (3). It kept sliding on Tuesday (4). Dan Ives, a partner at Yorkville Ives, called it “a black eye moment for Jensen” (5).
I’m not writing this to pile on Huang. I’m writing it because Nvidia is still a big part of what I own, and because I’ve made millions in stocks while never betting everything on one. Here are five lessons 45 years of investing have taught me.
1. Nobody can predict a scandal
I was a stockbroker on Black Monday in 1987, when the Dow fell 22.6% in a single day (6). Crashes like that at least have causes experts can argue about afterward. A CEO’s private life doesn’t show up on any stock chart.
The research firm Bernstein flagged what it calls key-person risk: Nvidia’s reliance on Huang’s leadership and decision-making (7). Bernstein said Huang reportedly has about 60 people reporting to him, and there’s limited clarity about who could take over if he couldn’t continue (7).
When one person carries that much weight, you’re betting on that person as much as on the business. No amount of research gets you around that.
If one stock is a big chunk of what you own, that’s one of many situations a second set of eyes can help.
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2. Your best winner can quietly become your biggest risk
Here’s the catch with a great stock: The better it does, the bigger a slice of your portfolio it becomes. Eventually, one company’s bad week can turn into your bad year.
That’s a big reason I sold half my Nvidia last year. I didn’t think the run was over. I just didn’t want it to become too big a piece of what I own.
On Oct. 6, Nvidia hit an intraday record high of $243.37 a share (8). At that peak, my 1,000 shares were worth about $243,000. As I write this, they’re worth about $167,000. Most of that slide happened before the scandal, as last week brought a broad sell-off in AI-related stocks (1).
If I’d held all 2,000 shares, this week would have hurt twice as much.
My cost on the half I sold was about $5,000, so the sale locked in about $113,000 of profit. I paid the capital gains tax on it happily. Paying tax on a gain beats watching the gain shrink.
For 2025, the IRS says the rate on most net capital gains is no higher than 15% for most people. Some pay 0%, and higher earners pay 20% on gains to the extent their taxable income tops certain thresholds (9).
The SEC’s Investor.gov describes a similar discipline, rebalancing, and says “rebalancing forces you to buy low and sell high” (10). It also says to think about fees and taxes before you do it (10). That’s another reason to bring in a pro. They can help you decide how much to sell, and when.
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3. You probably own Nvidia already
Don’t own Nvidia? Check again. If you have an S&P 500 index fund in your 401(k) or IRA, you almost certainly own a piece of it.
According to iShares’ holdings data as of Nov. 9, Nvidia made up 6.64% of the iShares Core S&P 500 ETF, its second-biggest holding after Apple (11). That’s more than 6 cents of every dollar in the fund riding on one company.
Index funds are still a terrific core holding for most people. But owning one doesn’t make you immune to a single company’s bad news. If you also own a tech fund or a few AI stocks, your stake in Nvidia may be bigger than you think.
4. Own some things that don’t trade on the stock exchanges
In addition to my home here in Fort Lauderdale, I own undeveloped commercial land where I used to live, in Tucson, AZ. Nobody reprices it every second based on a CEO’s headlines.
That’s the point of spreading money across different kinds of assets, not just different stocks. As an example, Investor.gov uses a street vendor who sells both umbrellas and sunglasses. Good example. By having two different products, the vendor “can reduce the risk of losing money on any given day” (10).
Investor.gov lists real estate and precious metals among the other kinds of assets some investors add, and notes that they typically come with their own risks (10).
Some retirees consider gold. Just go in with your eyes open.
If you want a small slice of gold or silver inside a retirement account, Anthem Gold Group offers Gold and Silver IRAs. Its guide is free, with no cost and no obligation.
Before you buy from anyone, get every fee in writing, as FINRA recommends (12).
5. Rebalance on a calendar, not on a headline
The worst time to decide what to own is the morning a scandal breaks. That’s when fear does your thinking for you.
I’m not dumping my remaining Nvidia shares over a news story. I sold half last year, long before any of this, so I don’t have to make a rushed decision now. For now, I’m going to wait and see what happens.
Investor.gov describes two ways to know when to rebalance. You can check on a set schedule, such as every six or 12 months. Or you can act whenever a type of investment’s share of your portfolio, such as stocks, moves more than a percentage you picked in advance (10).
Pick your number now, while you’re calm.
The bottom line
My Nvidia shares might bounce right back. The board might clear Huang. Or none of that happens and things get worse.
I honestly don’t know, and that’s the point. Nobody can see things like the Huang scandal coming. That’s why I diversify, and why no single stock gets to decide my retirement.
Own your winners. Just don’t let any of them own you.
Disclosure: I own shares of Nvidia. Nothing here is a recommendation to buy or sell any stock.
Sources: 1. Reuters via Yahoo Finance; 2. Nvidia Board of Directors; 3. ABC News; 4. The Motley Fool; 5. Benzinga; 6. Federal Reserve History; 7. Yahoo Finance; 8. The Motley Fool; 9. IRS; 10. Investor.gov; 11. iShares holdings data; 12. FINRA
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