Photo by Igor Omilaev on Unsplash
Gregory Van Kipnis
Yesterday, a mentor and dear friend, Gregory Van Kipnis was laid to rest in Daphne, AL. I am sorry that I could not make the funeral. I cannot say enough good things about our relationship (I have written about that in My Gut Feeling over the years) but for someone like me having lost his father at the age of nearly sixteen, Greg was not only a mentor but an important part of my life. I always called him on his birthday. We would speak other times, especially after he sent me a private email to comment on My Gut Feeling. Our conversations were not quick by any stretch of the imagination as we would talk for hours.
Greg was one of the first people to not only recognize my talent and intelligence but give me the freedom to exercise it (also in that category were Michelle Witkin Mait and Scott Moeller, both of whom I would love to reconnect with). As it turns out I worked for all three of them at Morgan Stanley. Greg and I continued to work together at County Nat West.
As I progressed in the development of LakeView Asset Management, Greg was highly supportive and gave me some valuable advice along the way.
He taught me to embrace and not be fearful of corrections. Also, he said that when you buy a new position, expect a modest loss early on.
One of my favorite anecdote’s was getting a call from Greg when we both lived and worked in London, about 3am telling me that there was a coup in Russia (that was in August of 1991 when I was barely 30 years old). Understand that the night before we went out for a nice dinner and a few bottles of red wine. Greg loved his wine and cheese. I thought he was pulling my leg, but he was not. He asked that I meet him on the County Nat West trading floor as soon as possible. I cleaned up, got dressed and headed over to Bishopsgate. On that floor were the Vice Chairman of Nat West (Sir something or another), the President of County Nat West (Tim, a great guy), the two heads of the market making department (a bunch of drunkards), Greg and myself. The Vice Chairman asked those assembled what actions we should take. The markets around the world were tanking. The London market looked to follow suit, and the US Markets were down limit (the maximum allowed according to post-October 1987 crash rule, for which both Greg and I were well read in). We went around asking what we should do. The market makers said they would not make markets and wait for things to settle down. Next it was my turn, as Greg asked for my opinion, with I would note this devilish smile that he had at times. I said two things. First if you don’t make markets now, you will lose your clients when markets normalize. Second, I said once the US Markets open down limit, expect buyers to show up and lift the markets. We should be buyers as well. So, allow clients to get skittish but take advantage of their fear. Well, Greg told the more senior people that he agreed with me. The market makers were instructed to make markets but widen the bid/offer spread and soften the size of the bids. In the end, the market makers listened to me, made money and kept clients happy. As it turns out, the markets opened at their lows and turned higher from there. By the time the coup was over, markets were higher than the pre-coup levels.
Greg, rest in peace my friend and thank you for our 36-year relationship.
It Was a Nice Time to Correct
When I last wrote, I said that it was a good time to correct and that the markets needed a breather. Well, that turned out to be sage advice as we did have a short-term peak around then and sold off heavily in index points, but not in volume for the S&P 500 (SPX). The downdraft was a little more prominent for the tech heavy NASDAQ 100 (NDX).
So what did I do? Well as it turns out, along the way, money managers will add new positions based on their own research (fundamental, technical or otherwise). I always start new positions small; about 1.5%-2.0% of the portfolio. When you get caught in a correction, some of those recent purchases wind up having unrealized losses. You then have a decision to make either hold onto those positions or take small losses. Since we are in November and have rather large, realized gains in client accounts for the year, it made sense to harvest those recent losses and raise some cash. Remember, to avoid wash sales, we can always repurchase those stocks in 31 days, if I chose to do so. Alternatively, I just might start different positions when I think that the markets have settled in after their correction.
Has Nvidia Seen a Top?
According to the data I utilize on Telemet from the New York Stock Exchange and NASDAQ, Nvidia (NVDA) peaked within the last month at 212.19. The stock closed yesterday at 182.55. As a matter of risk management, I shaved off about 5% of our NVDA holdings (i.e. for every 100 shares we sold 5, or fraction thereof) at around 193.36. Despite reporting a stellar quarter and providing strong guidance, last week, NVDA seems to be struggling since then on the news that Meta (META) is in talks to purchase billions of Alphabet’s (GOOG/GOOGL) AI chips and to rent out space in Alphabet’s data centers. Right down the road from my house here in Henderson, NV on Warm Springs Road, Alphabet has built a huge Google data center. Concurrently, Broadcom (AVGO) stock surged on enthusiasm for that company’s AI chips. I think that there is enough business for all those chip companies. NVDA will recapture its former stock price high, but for now AVGO and GOOG/GOOGL are taking center stage.
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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC, own AVGO, GOOGL, NVDA, SPY (an ETF linked to the SPX) & QQQ (an ETF linked to the NDX), although positions can change at any time. The mention of stocks are not recommendations and may not be suitable investments for your individual situation.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, (LVAM) an investment advisor representative, specializing in high-net-worth private wealth management. LVAM is a separate entity of Osaic Advisory Services, LLC, a registered investment advisor.
For more information on investing with LakeView Asset Management, LLC call us at 702-749-9343 or request more information by clicking on the contact button on the top right-hand corner of the website or by emailing Scott at scott@lakeviewasset.com or Carly at carly@lakeviewasset.com. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
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