Schwab Center’s chief investment strategist, Liz Ann Sonders, pushed back against the notion that retail investors “must” hold Nvidia (NASDAQ: NVDA) in massive quantities in a CNBC interview today.
According to her, recent volatility in market leaders stems from a “misperception”: retail investors are mimicking institutional strategies that don’t apply to them.
Nvidia stock may be the top contributor to S&P 500 gains this year, but it ranks just 66th in terms of price performance – a disconnect that highlights the importance of strategic portfolio rebalancing.
Sonders’ remarks arrive only hours before the AI darling is scheduled to report its Q3 earnings.
Nvidia stock concentration risk doesn’t apply to retail investors
Sonders emphasized that the pressure to own large-cap stocks in size is primarily an institutional issue.
Fund managers benchmarked to the S&P 500 index often feel compelled to hold dominant names like NVDA stock to stay competitive. “That’s not the case with individual investors,” she said, noting retail portfolios aren’t judged against index performance.
Instead, individuals can afford to be much more nimble – trimming positions, taking profits, and avoiding overconcentration.
The recent volatility in leadership stocks, Sonders added, is partly due to this institutional dynamic. For retail investors, chasing index-heavy names in oversized allocations introduces unnecessary risk without guaranteeing better returns.
NVDA shares role in the S&P doesn’t mean they’re must-own
While Nvidia shares have been the single largest contributor to S&P 500 gains this year, Sonders pointed out a critical nuance: it’s not the best-performing stock by price.
“It’s ranked 66th in terms of price performance,” she noted, suggesting that its impact on the index is more about weighting than momentum.
This distinction matters for investors who assume that index leadership equates to individual outperformance.
Sonders cautioned against conflating index contribution with investment necessity. For those not managing against a benchmark, owning Nvidia in large size isn’t required to achieve solid portfolio results.
Strategic diversification remains key, she concluded in the CNBC interview.
Volatility in the likes of Nvidia calls for smarter positioning
Sonders believes the recent swing in high-profile tech names like NVDA shares reflect broader market misalignment.
As artificial intelligence enthusiasm and institutional flows drive concentration, retail investors may feel pressured to follow suit.
But she urges a more measured approach: “You don’t need to own names like this in massive size to pick up performance.” Instead, Sonders favours frequent rebalancing and avoiding emotional overexposure to headline stocks.
With Nvidia and other leaders showing signs of fatigue despite their index dominance, individual investors should focus on fundamentals, valuation, and risk-adjusted returns, not market narratives only.
In her view, smarter positioning beats blind allegiance. That said, Wall Street analysts rate Nvidia stock at “strong buy” heading into the giant’s third-quarter earnings release.
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