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The month that was:
February was a great month for the stock market. The Nasdaq went up by about 6%, the S&P 500 went up by about 5%, and the Dow went up by about 2.5%. On February 9th, the S&P 500 closed above 5,000 for the first time ever.
The biggest story of the month was Nvidia again. On February 21st, Nvidia reported earnings that were much better than expected, because so many companies want to buy its chips to build artificial intelligence. The next day, Nvidia's stock went up 16%, and its value went up by about $277 billion in a single day. That was the biggest one-day gain in value for any company in history! The S&P 500 and the Dow both hit record highs that day.
When people talk about how "big" a company is, they usually mean its market capitalization, or market cap. Market cap is the total value of all of a company's shares. To calculate it, you multiply the price of one share by the number of shares that exist. For example, if a company has 1 million shares and each share costs $50, its market cap is $50 million.
A company with a higher stock price is not always bigger. A company with a $500 stock and only 1 million shares is worth $500 million, while a company with a $20 stock and 100 million shares is worth $2 billion. That is why it is better to compare companies by market cap instead of by share price. At the end of February, Nvidia's market cap was close to $2 trillion, which makes it the third most valuable company in America, behind only Microsoft and Apple. Just one year ago, it was worth less than $600 billion.
The S&P 500 and the Nasdaq are weighted by market cap. This means that the biggest companies, like Microsoft, Apple, and Nvidia, have the biggest effect on how the index moves. When a few giant companies go up a lot, the whole index can go up, even if most of the smaller companies in it don't do much.
Buys -
None.
Sells -
None.
I did not make any trades this month. The market went up a lot, so there were not many bargains, and I am waiting patiently for good companies to go on sale.
Thanks for reading my newsletter!