Let’s set the table for the second half by reflecting on this year’s hated bull market

You don’t get the best first-half Nasdaq rally in 40 years simply because the Federal Reserve did this, or the yield curve in the bond market did that. This rally, which has defined this year’s advance, for the first time rivals that of 1983, which, not coincidentally marked the full-scale rollout of Intel ‘s 286 microprocessor, which was introduced the year before. It’s the chip that created advanced computing — an invention that began in the technological revolution in America and then the world. How did that happen? I could spell out the dates, but I think they don’t tell the story as we all had our brushes with this rally, in one way or another. I usually do for the empirical in these pieces but this time I want to be all-in anecdotal, because this advance had, at its core, three big revelations and you had to recognize how important they were on your own — nobody told you — and do so in a timely fashion or you simply missed the greatness and the power of the move that shook the lethargy and the fear from some brave souls not trapped by the big picture. For me? I went out to dinner with an old friend from the board of what was once the independent TheStreet.com back on Nov. 30. We had terrific Indian food, were about to finish up and he asked me if I had heard of ChatGPT. I was oblivious. He said he’d like to create a haiku homage to me. I looked at him as if he were a tad insane, a tad only because of his long history of knowing everything as it was invented, a gift of both genius and his position exploring the cutting edge of computing, courtesy of his position at a vanguard collection of publications. I knew we had to get going. It was early in the week. I had plenty of work to do on the shows and the Club. I didn’t have time to wait for the development of a haiku homage. But before I could subtly protest, it popped up. Just appeared as politician William Jennings Bryan once said in his magnificent but wrong Cross of Gold speech in 1896, “as if by magic.” I like magic. I figured my friend had programmed his poetry. Nope. He could generate, as if we even thought of that as an important verb before 2023, any amount of doggerel on pretty much anything. No sleight of hand. Just beautiful extemporaneous magic. I jumped at the chance to show the office this wondrous device — was it a device? — and we had a joyous go of it. We are all aware now when we first played with it. I interviewed “Gandhi” (courtesy of ChatGPT) on “Mad Money.” He thought me too meretricious. Nobody’s perfect. But we had a solid talk, a good back and forth that would have taken me a week to prepare for. Not great, but a good guest. Looking back I now recognize that ChatGPT is a bit of a “yes man,” although I never tested the bounds of affection the way some wag at The New York Times did when they went off the grid and onto a Black Mirror-like platonic affair, no matter the oxymoron. My mind always races to the stocks, no different from when I used to go to the stadium, any stadium, and wondered how Bud or Sunoco might be doing back when we had to endure that armpit of a venue, the old Veterans Stadium in Philadelphia. Who created this wonderous thing? Chat stymied me, some guy named Altman — Sam Altman, CEO of OpenAI. It would be almost two months before Club name Microsoft (MSFT) confirmed its stake with a $10 billion investment in OpenAI. But I sensed who might really be behind Chat: none other than my late dog, the still under-hallowed Nvidia (NVDA), bouncing around the $160-per-share level, quite a bit of a multi-hundred billion distance from its $423-per-share price tag at the conclusion of the second quarter — just under the Club stock’s record close of $438 and change on June 20). Talk about category defining. We had owned Nvidia for ages. I had been a huge fan of both the man, Jensen Huang, and the company. Call it more of a fanboy, a better term. I first saw the makings of ChatGPT on a visit about a year before. Jensen gave my mutt, not me. Nice picture. After the more-substantive-than pleasantries, the mischievous founder and CEO, took me to a wall where I was, not a computer-generated design image, but me. A more defined me than an iPhone 14 Pro could shoot. I said to me, “Welcome to ‘Mad Money.'” I astounded me. Jensen laughed as I marveled and confessed that it took him that weekend to capture my Philadelphia accent. I didn’t understand it. Again, “as if by magic.” We then proceeded to a canvas where he asked me to create a painting. “With what?” “With your voice. With a command.” “To who?” “Just out loud.” So, I tried to confound the magician with “paint me a Cezanne Seascape.” It seemed a suitable phantasmagorical for that still-life artist to imitate Monet. Up popped an impossibly painted, perfectly shadowed cliff overlooking a rounded ocean. Then to a wall with stormtroopers. Two kinds. CGI and the Jensen kind, I didn’t know what else to call it. Again, it captured the shadows, the angles of the sun, the granularity, making the CGI version look like a cartoon character. I challenged Jensen to go back to a new canvas to put me in the third row of the Globe Theatre circa 1597, watching Shakespeare’s Henry IV, Part 2. He laughed at the child’s play of my prosaic request. Is there anything it can’t do, I asked. He took me to another wall where a car was speeding down some imaginary street. He told me the car had driven down the road two billion times and still had trouble realizing it was on dangerous black ice. Who wouldn’t? When I came back from Oz, I talked about Jensen on air. I couldn’t help myself, confusing and confounding my partners on “Squawk on the Street,” Carl Quintanilla and David Faber, with what I had seen. As I would marvel at the haiku paean years later, I had seen the future and had no way of explaining it. All I could say, it was the future like I had gone to some sort of World’s Fair, like the 1964 version in Queens, where I first saw a picture phone. But I didn’t have to wait almost 50 years before everyone had seen whatever the heck it was I had seen at Nvidia world headquarters, of course, designed by Jensen, why I started calling him da Vinci. Turns out “da Vinci” had collaborated with Sam Altman back in 2016 for generative computing — and despite myriad showings like the one I had seen, nobody seemed to see commercial opportunities for ChatGPT, as I later found out I had seen. I was pedestrian enough to suggest to Jensen that it could be used for Wendy’s drive-through, blurted by me because of my wife, Lisa’s, then predilection for the Baconator with cheese. With a 27-language capability, Jensen said, whatever fast food operator who wanted to beat a mistake-prone, tired person, would of course adopt it. Wendy’s later became the first to experiment with it, announced earlier this year. I knew one thing, Club members would get the synopsis and one of a multitude of prompts to buy the stock of Nvidia. It could only be a matter of time. That time was November 2022. Now I want you to put yourself back in that timeframe. What did commentators want to discuss? You don’t have to mull: the two concerns that have possessed us for the entire move to follow — or precede — are the Fed’s next move and the yield curve. The analytical mind became enslaved by that Scylla and Charybdis and no one who took that course got through. The anecdotal, those who tried ChatGPT and then were inspired to follow the path to Nvidia, avoided the crashing rocks and got to Ithaca. You had to be free of the dogma and spurn the historians to find your way to the individual stocks that mattered. I have a severe bias against the dogmatists. They are limited thinkers who believe themselves to be the opposite. These haut followers insisted during this whole time of incredible technological revolution and revelation that we were blind to the Circe (sticking with Greek mythology here) of the yield curve. How dare we think beyond the 10-year Treasurys and 2-year Treasurys? What a bunch of gasbags. How many times did we have to hear ourselves denigrated by the absence of talk about individual companies? Was it intellectual laziness on THEIR part? Was it simply a long-standing belief that no company could get passed Circe anyway so what was the point? Or what made them so disparaging? I think it was a combination of the spawn of the 1929 crash and 2007-2009 Great Financial Crisis with a dash of the Weimar Republic’s totally schizophrenic inflation and deflation. These people spent so much time trying to blame the Fed that they lost the purpose of the job: TO MAKE MONEY. It was almost as if it was prosaic to seek profits, like, “How dare you defy the teachings of the yield curve, you foolish soon-to-be- broke apostate.” Who proselytized this garbage? Two tribes: the strategists, led by Morgan Stanley’s Mike Wilson, who has the temerity to still believe he’s right, and the billionaires who have made their money, and aren’t interested in your making money. They’ve pulled the moat up, they are in the castle, you aren’t and don’t dare to try. They know they only need to get rich once and they don’t need you to get rich. Plus, they have the edge on us; if they talk about the investing yield curve, or the Fed raising rates, or a host of other troubles, they sound intelligent and they can never really be wrong. As long as they stick by the bearish script, they can intone like wise men and what billionaire isn’t, per se, a wise man? They missed the whole first part of the move and they threw you a curve ball with their shining intellect. They didn’t want to get their hands dirty with the wonders of companies. They were too small to be bothered with and there were so many of them. Why not just default to discussing the S & P 500 ? Honestly, did you ever once hear a single company caveat from these stentorian highbrows or that the winners were narrow and already too big? What was the point? We were going to have a hard landing and what plane crash yields any survivors? And you want to tempt that kind of fate? So, they missed it. It cost them nothing because they were and will be right. To me, that’s the essence of circular reasoning. They are wrong, have stayed wrong and didn’t know the lessons of 40 years ago when technology triumphed over whatever curve — or curves — they threw at you. No one move can survive the drumbeat of negativity and it sure looked like it was going their way by year’s end. But then an economic catastrophe occurred. It was the second move, the second week of March, that told the second tale of the first half: the fall of Silicon Valley Bank. Here we had an out-of-nowhere collapse of a well-known seemingly well-run bank that ran afoul, again, of the yield curve. This time, because there was a rush of deposits all at once, courtesy of Covid, and the money was put to work to earn the maximum yield. Looking back, because of an aggressive Fed, they ended up doing the ultimate wrong reach at the wrong time. There were others: Signature and Silvergate, but their sin was a belief in abetting speculators who thought they were investing. I sometimes wonder if Goldman Sachs had been less blockheaded in its placement of SVB’s portfolio, the catastrophe would have never occurred, nor would have the subsequent collapse of First Republic. They did a terrible job but that’s overlooked because of the stupidity of Silicon Valley Bank’s management. Can’t prosecute stupidity as we know from the financial crisis. For some, the event showed that the Fed had moved too aggressively — maximum hard landing discussion. Others describe the domino effect to come. Still, others insisted that the recession was upon us, and these were just outrageous precursors. Again, apologies, I need to go anecdotal. I had a couple of days off at Delray, Florida, and I had the good fortune to be relaxed enough — only Club talks, no writing — to be able to see more clearly than I might have otherwise AND I wasn’t listening to the drumbeat of impending doom. So I saw it. The beginning of what I call the nation-state of investing, or the apotheosis of those companies with balance sheets far stronger than any country on Earth. No company could rival Club stocks Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), Microsoft and Meta Platforms (META) — nice metamorphous there and Tesla , not a Club name. Oops, how did Nvidia sneak in there. Remember, you had to believe in the first tale of the bull to catch the second. Right there, literally right there, the money avalanched into those companies and a couple of fellow travelers not worth mentioning, or, it turns out, owning. When we look back, this, the most hated of bull markets, centered on the genesis of the nation-states. The commentators were lightning quick to condemn the narrowness, and they scoffed at the fools who believed. Didn’t they see the narrowness and how it would lead to, well, more narrowness, and ultimately no survivors? Rank speculation? Nifty Fifty in the 1960s? RCA, US Steel and Alleghany and host of others back in 1929? Washington Mutual, AIG, Fannie, Freddie, and Lehman in 2008? Those who were blind to the jeremiads, of course, we now know, had a field day. You could see why: the crowd was drawn to companies that could control their own destiny regardless of what the bank tempest brought us. Sure it wasn’t in a teapot: there were other casualties, but not enough to deter the Fed. Again, the cognoscenti misread the signs. If the Fed wasn’t going to stop, how could we go? There was a pretty vicious tug of war for a time as the inflationistas and bashers of Fed Chairman Jerome Powell grabbed the microphones once again. My, aren’t they powerful? But then a couple of days at the end of May sealed the fate of the bears. Once again, we return to Nvidia. It all started with the biggest forecast increase in stock market history, Nvidia’s $4 billion revenue raise on top of what was a pretty good quarter, with all of the increase attributed to orders for cards that could accelerate computing and generate thoughts, artificial intelligence for the masses. Right on top of that quarter, Jensen talked about the hardware behind what he called an iPhone moment, or the invention of the microprocessor that allowed the personal computer, talk about a pertinent reference to 40 (Nasdaq) years ago. This time, how painful, it was the new near trillionaire company, not the one that was supposed to be, Intel. The latter now feels like IBM , king of the mainframe, when all we really wanted was a mainframe on our lap. We’ve shortened the time of a baseball game, but it’s still nowhere near as short as the flash recognition that allowed Nvidia to take on $200 billion in net worth. It just couldn’t be stopped. We had a full of month of rock ’em sock ’em after that where even the bears had to take pause. Their talisman had been revealed; a false inverted idol, led by a bunch of Dathans. I don’t know what to say now. If you choose to deviate from tech, if you did try to diversify — and we did —you more than likely blew it, Club name Eli Lilly (LLY) is a rare breed. If you bought the cyclicals off a resurgent China post-Covid, you were yesterday’s news as China never surged. If you hid in the recession stocks, you were sought and found to be losers. There was no recession. In fact, housing stocks were tech doppelgangers. Talk about strange bedfellows. So here we are, with the bears still waiting for the airplane to crash and the inversion to prove everyone wrong. Who? Don’t you see, we want to shout at them: you were wrong. It doesn’t even matter. You lost. You will never make those points that the anecdotal believers nailed. You kept so many out. We stone them to their poor souls. Oh, that’s right, their still rich. At least they gave us a chance to catch up to them. And, in true fairy tale fashion, we did. Congratulations believers and on to the second half! (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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