February 7, 2024


On Nov 15, 2021, NVDA closed at $345.30 on a hundred million shares of volume.

Without context, that information is interesting but unhelpful.  I’d note it was a monthly options-expirations date (those are bigger than ever for hedging, and routinely we find that Activist swaps are set in step with them).

Let’s add more context.

dreamstime m 212403964

Photo 212403964 | Big Tech © Waingro | Dreamstime.com

On Mar 16, 2020 – options expirations – NVDA closed at $49.10 on 73 million shares of volume. That seems so long ago! And eighteen months later NVDA was up 600%.

On Oct 14, 2022 (yes, into an expirations period), NVDA closed at $112 on 71 million shares of volume.  Down 68% in a year.

Yesterday, NVDA closed at $682 on 68 million shares of volume.  Not an expirations date. For those doing the math, NVDA traded nearly $50 billion of stock.

NVDA rose from $50 to $350, gave back two-thirds of that, then doubled it. 

It’s also interesting to know TSLA closed at $337.80 Nov 15, 2021, and traded 104 million shares.  That’s about $35 billion of stock.  Yesterday, TSLA closed at $185 and traded 122 million shares, about $23 billion in dollar-volume.

I don’t see that business fortunes for NVDA or TSLA markedly changed (some will demur). I know I’d find it disconcerting as a business owner if my business’s value were that volatile.  NVDA is up almost 4,000% the past five years, TSLA over 1,300%.

Lowly META is up a measly 254% the past five years.  No stock was more hated, loathed, in Technology than META two years ago.  Between Nov 15, 2021 and Oct 31, 2022, META lost 73% of its value.

What happened? While the crowd chews on the metaverse and renaming Facebook, and blah blah…

Let’s look at the data.

The best way to know what caused it is to measure behavioral change in the composition of volume – our core competency. From Jan 3-Nov 15, 2021, Active and Passive investment averaged a combined 34% of META daily volume as price shot up. After Nov 15, 2021 and until the end of Jan 2022, those behaviors combined for 53% of META daily volume. Active money doubled, from 10% to 20%.

META went into an accelerating downward spiral that continued for months.

Clearly, Active money thought META had a lousy business plan. A stock almost never anymore has 20% Active Investment in volume-composition. But that still means 80% is something else.

How the worm doth turn (which I think is a metamorphosis reference). From Oct 20, 2022 to Feb 5, 2024, META is up 254%, the same as its five-year return. Everybody loves META.

What changed? 

Combined Active and Passive Investment in META thus far in 2024 are about 30% of trading volume.  Machines and derivatives are 70% of volume.

Before your eyes glaze over and you start regretting Dry February (Karen and I are doing Dry February because we were too busy drinking to do Dry January), there’s a clarion call in these data.

Things rise and fall. Behaviors cause it. Timing matters. 

I’ve used wild statistical outliers from Big Tech to make a point. They rise and fall. You could make 250% in META in a few months, or a few years. Or you might lose 73% of your money invested in META in a few months. Or two-thirds of what you invested in NVDA. Or you could make 4,000%.

Timing matters.

In the data, Active money – that’s your story, public companies – may reactively sell a bad turn. But they are a distinct behavioral minority. The data bear it out. And the data also tell us machines and derivatives are often behind soaring gains.

Behaviors change. It’s all measurable.

We could dissect the rest of the so-called Magnificent Seven (which have really become the Magnificent One, plus LLY). And don’t forget AVGO. It’s top-ten in the S&P 500 now and two days ago had a bigger market cap than TSLA.

Speaking of LLY, it lords imperiously over a vast addressable market for GLP1’s in the Fat USA.  Imagine. A pill to make you thin!  With results Feb 5, LLY jumped about 6%. Active money rose 12%, from 6.1% to 6.8% of volume.


Less than 7% of LLY volume on earnings was stock-picking. Meaning 93% was something else.  Machines and derivatives were 76% of trading volume.

If we don’t like that mix, we should take it up with the SEC, which has packed our stock market with leveraged ETFs, 0DTE options and myriad more ways to have one-day investment horizons instead of investing for the long term in your story.

Egregious. Mind-boggling. A fact.

So why are we spending the same amount of time shoveling information to the market – in the same old way! – today that we did when Active money was 80% of the trading volume and over 90% of the assets under management?

If you know going into earnings that 76% of the trading volume will be machines and derivatives driving your stock price up and down, what should you do? 

As you talk amongst yourselves about that, here’s an idea: Rethink your earnings cycle.  If you want some answers, we have them.

And I’m not pining for Wet January. I’m down about nine pounds without a GLP1 pill. Clearly, I needed the dry break!

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