What exactly happened with that market slump? What did TPP do to take advantage?

Nvidia’s new world record.

Monday’s bloodbath wiped out $1 trillion off the stock market and Nvidia lost $589 billion in market capitalization in a day, which is by far the single greatest one-day value wipeout of any company in history, more than doubling the $279 billion market cap lost by none other than Nvidia on 3^rd September 2024; Meta’s $251 billion loss on the 3^rd February 2022 is the third-biggest daily loss.

To put this into perspective, Nvidia lost more in market capitalisation in one day than the total combined value of Shell, BP, Barclays, Lloyds, NatWest, the National Grid, BT, Sainsburys, Frasers Group, Hargreaves Lansdown, Taylor Wimpey, the Berkeley Group and Easyjet.

For the last two years markets’ belief that the rise of artificial intelligence would usher in a new era of productivity growth has fuelled trillions of dollars in stock-market gains.

Nvidia, the maker of the computer chips at the heart of the AI boom, has been in the vanguard of this advance. Wall Street has perceived the company to have an almost unbreachable defence against competition with its offerings of high-tech chips.

On Monday, the mood turned sour. DeepSeek, a dark-horse power in artificial intelligence, emerged from China. That rattled big tech stocks, led by a plunge of almost $600 billion in Nvidia, which only last week was the world’s most valuable company.

Last week, DeepSeek released an AI model that appeared to perform on par with a cutting-edge counterpart from OpenAI, the US company at the heart of the AI craze. The twist: Creative engineering tricks meant DeepSeek needed far less computing power. The upshot is that the AI models of the future might not require as many high-end Nvidia chips as investors have been counting on.

“This is kind of classic in our industry,” Salesforce Chief Executive Marc Benioff said. “The pioneers are not the ones who end up being the victors.”

The development turned Wall Street upside down. Nvidia’s stock dropped 17%. Chip stocks Broadcom and Micron Technology fell more than 10%. The S&P 500’s technology sector lost 5.6%, its worst one-day decline in more than four years. In all, Monday’s bloodbath wiped out some $1 trillion from the stock market’s value, according to Dow Jones Market Data.

Leon Cooperman, the billionaire stock picker who founded Omega Family Office, is one of many investors who says the euphoria surrounding the sector reached unsustainable heights.

“Every third word out of anyone’s mouth was ‘AI,’” Cooperman said. “Everybody was bulled up in the market. If you have a contrarian bone in your body, you have to look the other way.”

The threat to Nvidia is the largest it has faced since sales of its chips have skyrocketed during the budding AI boom. For its part, Nvidia praised DeepSeek’s advancements and pointed to strong future demand for its products. Deploying AI models “requires significant numbers of Nvidia GPUs and high-performance networking,” the company said.

Many investors had latched on to the notion that AI would unleash a wave of productivity in the economy while powering continued profits in a handful of technology giants. Several said Monday’s swoon exposed a deep vulnerability in the market: Many investors had crowded into the exact same AI trade.

The mood has picked up since Monday though as Technology stocks rebounded a bit on Tuesday. The tech-heavy Nasdaq Composite rose 2%, leading other major indexes. The S&P 500 gained 0.9%, while the Dow Jones Industrial Average added 0.3%.

Some stocks which were pummelled on Monday posted solid gains on Tuesday, though not enough to make up for the earlier session’s losses.

The rebound suggested that some investors saw Monday’s selloff as a buying opportunity, but we won’t know whether they’re right just yet. While the emergence of DeepSeek, a low-cost Chinese artificial-intelligence player, punctured the lofty valuations of many AI-linked stocks, it is also true to say that many stocks will benefit from cheaper AI. Right now it seems to be a case of sell the chip makers, buy the chip users.

In other news, the dollar strengthened against the Japanese yen and the Canadian dollar after reports that President Trump said he wanted to impose universal tariffs that would be “much bigger” than 2.5%.

The 10-year Treasury yield ticked up to 4.548%, as investors sold US government bonds in favour of riskier assets.

Corporate earnings are likely to take back the spotlight this week as investors move past the DeepSeek drama. General Motors slumped 8.9% on Tuesday after the automaker reported a $2.9 billion quarterly loss.

Meta Platforms and Microsoft are among the companies set to report earnings later Wednesday. Both could give insights into how US tech giants view the threat from DeepSeek.

The Federal Reserve’s key interest-rate committee is also set to conclude its two-day meeting. Near-unanimous expectations are that the Fed will keep rates steady at 4.25% to 4.5%, meaning that investors are likely to be most focused on the tone of Fed Chair Jerome Powell’s remarks to the press after the meeting.

Outside the US, Europe swung from losses to roughly breakeven by the end of the session. Japan's Nikkei 225 fell 1.4% but has since clawed some of that back. Hong Kong's Hang Seng Index inched higher in a shortened session. Markets in mainland China, South Korea and Taiwan were closed for holidays.

The FTSE did fall along with the US on Monday but due to its lack of tech stocks, the fall was small and brief. The same could be said for the rest of Europe as the impact of DeepSeek should be minimal there. Having said that, when the US falls, all markets tend to fall.

This week really shows how volatile the Mega cap tech stocks are especially those in the US where they trade at multiples of earnings with high expectations driven even higher buy retail investors ‘buying what they know’. The crypto influence has led to a surge of risk taking without fully understanding the consequences. This will continue to make such stocks a wild ride.

Past performance is not a guide to future performance, nor a reliable indicator of future results.

For TPP, it’s been a good start to the year. On Monday as stocks collapsed, a majority of TPP strategies were flat and enjoyed watching the turmoil as it unfolded. This is what many of them do. Ride the wave higher, then sell out and wait for the next opportunity.

This is a huge advantage of being a TPP client. Wealth managers don’t actively trade the market, they sit in it. Our traders will constantly be tweaking portfolios looking to maximise profit. In this case, many were simply waiting for a good price to get in, and this is what many did. Not all bought in though as some have stayed on the sideline waiting for conformation that things aren’t going to get worse before they get better, but those who had the confidence to buy in, are looking like the winners of this particular move.

Most strategies on the TPP platform have had a fantastic start to the year with the higher risk Long/Short strategies catching most of the moves and enjoying the volatile start. The popular Long/Flat strategies have also done well with CAC Long/Flat up 3.8% in January, Cambridge Futures similar with a return of 3.7%, but both are behind our new FTSE and CAC Tech Entry trading strategies which are now in profit by 6.1% and 9.6% respectively.

For most platforms, this would be enough, however, all have been overshadowed by the more active of our strategies with Long/Short European Stock Basket making 12.8% and Long/Short Diversified Index with a whopping 14.2% so far in 2025. Long may this continue.

As we hoped it would, TPP is showing why it is the alternative to old-fashioned investing. Portfolios around the world will have suffered huge losses this week with markets falling at record speeds. But a majority of TPP portfolios are showing profits so far week. As professionals, our traders will use the moves and try to profit from them. They will use derivatives to heighten returns where possible and mitigate the downside in case of a market collapse. This is the new way to invest, and it’s available to anyone. We built it for you, the retail investor. The world is changing, but investment management has been left behind, until now.

If you would like more information on how you can build a TPP Portfolio, please do contact us.

TPP is only suitable for investors who are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses which may arise from such an investment (which may be equal to the whole amount invested). Such an investment should be regarded as long term in nature and complementary to existing investments in a range of other financial assets.

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