Nvidia's rise: Why retail traders may want to wait to buy

Retail traders are jumping on the opportunity to invest in chipmaker Nvidia as it reached a $1 trillion market value. Maconomics Financial Expert Ross Mac joins Yahoo Finance Live to discuss when it is the best time to buy or sell a specific stock, like Nvidia. For those who are looking to make a little extra cash, Mac also breaks down how to effectively establish, plan, and build your own side hustle.

Video transcript

- Everyone is watching Nvidia as we close out the month of May. The stock briefly joining the $1 trillion club on Wall Street during yesterday's session. Shares of NVIDIA, though, closing the trading day off just about 5.5%.

Now to achieve that trillion-dollar level, the stock would have to close above 404 just about, $404.86 a share. Now the big question for investors now, is it too late to get in on the stock? Here with some of the stock buying and selling tips content creator Ross Mac, economics financial expert.

Ross, it's great to have you back again. So I think a lot of people are out there wondering if they missed the boat on Nvidia. What do you think?

ROSS MAC: Well, one, thank you so much for having me. And the question of, did you miss the boat? That's obviously a loaded question.

What I would say is short answer is no. What I rush to get in right now, short answer, again, is no. And the reason I say that is here, right?

If you look and ask yourself, what is your time horizon. If you were to look and say, is Nvidia going to be higher five years from now? The answer is probably yes.

If you were to say, should I get in right now? I think you could get in maybe cheaper moving forward, right? I think if you look at certain things, certain indicators right now when it comes to if you should buy a stock, you've got to look and say the vast majority of people that are buying Nvidia currently, they have to understand that the stock right now is very overextended, right?

I think when I ask myself, am I going to buy a stock? I love to look at it and try to get it at a discount, right? And so Nvidia right now, it's a lot of hype. It is arguably-- not arguably.

One of the best performing stocks year to date. And that's because of they are the forefront when it comes to artificial intelligence. However, I think there could very well be a cheaper price that you can get in.

And I think when you're determining that I think two great indicators to look at, is the RSI, which is the Relative Strength Indicator. And that is just letting from a momentum standpoint, is it overheated? And that number is going to go from 0 to 100.

And any time, it's over 70. That means yes, it is overextended. Meaning it's overbought.

And now's the time that people are probably going to start taking some profits. And you know, so when I take a step back, and I say when is a good time to buy one, the true and greatest approach that has been proven is dollar cost average, right?

And so if you were to be a person and say, hey, I have $1,000 to start investing in Nvidia today. What I would say is, one, is very difficult for the average person to try to time the market, let alone professionals, right? So it's a very hard concept to grasp.

So what I would have, I would rather you do is just dollar cost average. Maybe you're putting $100 every other week or every month or so up until you actually get to your 1,000 being fully invested. And why that's good is because one is going to allow you to take the guessing game out of it, right?

Because the vast majority of people when they're investing, they get a little nervous. Should I buy now or should I wait? And a lot of times, you find yourself taking too long and actually missing out on a trade.

But I've got a lot of people in my community were asking, is now a good time to actually buy the stock? And I told them I think it's going to come down some because a lot of sophisticated investors and institutional investors are going to start taking profits because, one, they're looking at it being it's overextended.

- So Ross, Diane here. I want to ask you. You posed the idea of if you have 1,000, where you would put it? Let's say just getting that extra $1,000.

So a lot more people have side hustles. There's a recent bankrate survey out showing about nearly 40% of Americans have a side hustle. So what do you say? What do you tell people about where to go to get those extra funds? And then what do you do with that?

ROSS MAC: I love that, right? I think we could all agree that we are in some alarming times when inflation is so high and the cost of living is constantly increasing. Yet rates or wages are not increasing at that rate.

And so some people literally in order to make ends meet, they need a side hustle. And so when it comes to actually having a good side hustle one, I think you need to first understand the actual way you want to structure your business, right? And most times, you're probably going to want to get an LLC. And that's a very cost-efficient way of being able to now remove your own personal liability from your own side hustle, your business.

But the reason I say that is, one, understanding that the tax code in the US was made for business owners to tax employees. So once you become a business owner, and say you still have a W-2 job, what you get to understand and obviously, here's the caveat speak with your own tax professional.

But one thing you're going to understand is that by having that LLC, you're going to see a lot of business expenses are going to be a deductible, right? Just the cost of doing business, which, in turn, will keep you from spending more money when it comes to taxes, right?

So I think understanding what business structure you want to have, chances is going to be an LLC. Another thing I want you to understand is work on branding right. You want to post content. You want to post content daily or every other day, or once a week.

But be consistent so that your brand is something that people are going to know is synonymous with being a great product or a great service. And another thing, and lastly, understand what your competitive advantage is. See what your competitors are doing. And from there, figure out are you able to do that better or are you able to do that cheaper. But figure out what that is and understand that people need to be coming to you for either a better service or a great service, that's just slightly cheaper.

- So Ross, if you have the side hustle, you're getting more income than you were prior to that. So how should people go about trying to figure out their budget? And how much they should be saving versus spending on a month to month basis?

ROSS MAC: I love that, right? One thing, at the end of the day, we're seeing alarming statistics that over 63% of Americans. Well, over 60% of Americans are living paycheck to paycheck, right?

And at the end of the day, the number one goal whether how you want to think about your budget spend less than what you make. And so when I started thinking about that, the very first thing I want to do is say, how can I start automating my savings, how can I start automating paying my bills?

And everything starts with the budget. So in order for you to actually track your inflows and outflows, and once you're doing that, that's going to give you a good understanding of, OK, am I living beyond my means or am I living above or below my means? And what steps do I need to do in order to now get below and back at a comfortable rate?

And so at the end of the day, I like for a person to not spend more than 50% of their monthly income on their necessities. And that is being your rent, your food, your insurance, groceries, et cetera, right? And from there, I want you to say, OK, the things that I want to do, things that I want to do, whether it's traveling, dining out, I don't want you to be spending more than 30% of your after tax take home pay on that.

And then lastly, 20% should be for saving, investing in paying down debt, right? I think we know that now, we're approaching dollars in credit card debt people.

The average interest rate we're paying is roughly 20%. And so once you start thinking about the best ways to save, spend less than what you are making. And then more importantly, try to avoid spending so much on credit card. And clearly, it's a problem here in America.

- It is. I mean, it's the consumerism that is so part of just kind of the American culture. But Ross, we are going to have to put a pin in our conversation. We always appreciate having you on, Ross Mac. And we love your videos on Instagram. Thank you.

ROSS MAC: It's an honor Thank you guys so much for having me.

-All right.