Nvidia is issuing a sell signal, and its huge rally marks the peak of a 40-year market cycle, a veteran strategist says.

• Nvidia stock is issuing a sell signal, says strategist Bill Blain.

• Blain cites Nvidia’s high value and its wealthy employees as reasons to bail.

• He says the surge in the chipmaker’s stock marks the peak of a decades-long market cycle.

Nvidia stock is showing a big “sell” sign to investors, according to veteran strategist Bill Blain.

Blain, the founder of Wind Shift Capital and a longtime financial strategist, pointed out in a note Tuesday that Nvidia’s skyrocketing valuation has made many of its employees very rich. He referenced a recent survey that found 40 percent of those who worked at Nvidia had a net worth between $1 million and $20 million, while 37 percent had a net worth of more than $20 million. dollars.

Blain said that leaves less than a third of Nvidia’s staff with “any real day-to-day financial pressure on them.”

“You believe that the poor neighborhood among the nvidia pawns are they really going to give their guts to guys who are already rich and highly motivated to protect their wealth and position? Do I think Nvidia will grow another 700%? Will they be happy to remain extremely poor relative to their peers and bosses? Or is it more likely that the enormous wealth in the office means that the poorer but still highly motivated staff will realize that their chances of fortune will be better elsewhere?” Blain wrote.

Nvidia’s huge valuation could also signal a top in the broader stock market, Blain said. As investors price in ambitious rate cuts next year, policy easing is likely to be “limited” from the Fed, he said, adding that he believes interest rates of 4%-6% will be the market’s new normal.

“Some people think that lower interest rates, as the Fed has promised later this month, means unmitigated joy for the markets. (I think it could be another selling point.),” Blain said. “And many, including myself, believe that a new long-term economic cycle could reverse the past 40 years of easing inflationary pressures.”

Markets began their current long-term cycle in the 1980s as inflation steadily declined after a difficult period of inflation in the previous decade, Blain said. He suggested that markets could enter a new cycle as soon as 2025, highlighting inflationary pressures stemming from geopolitical tensions, commodities and the rising US debt stock.

“I just found my best reason to sell Nvidia, confirming that we are at the top of the market. What could come next? How about 20 years of rising inflation, rising rates and a global commodity super-cycle as nations scramble to secure future strategic resources?” he added.

The story continues

Other strategists have warned of continued inflationary pressures despite the downward trend in price growth from the 2022 peak. Inflation could see a resurgence, BlackRock strategists previously predicted, pointing to the risk of a big rise in oil prices as well as demand which exceed supply in the US economy.

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