Semiconductors

[jonnyfrank]

I am looking for insight into the semiconductor market. On one hand, there is weakening demand, and on the other, there are still very few brand new cars for sale on lots in USA. What gives? I decided to short semis today with SOXS (bought yesterday late)--not too much, just a little. I am trying to figure out my position for the long play with semis. Thanks in advance.

SOL....is this an OK question or does it fall into the "like a rabid squirrel in my underwear" question?

I know I can do my own research and I have. I am just curious what others might know and compare to what I have learned.

[SOL]

I am looking for insight into the semiconductor market. On one hand, there is weakening demand, and on the other, there are still very few brand new cars for sale on lots in USA. What gives? I decided to short semis today with SOXS (bought yesterday late)--not too much, just a little. I am trying to figure out my position for the long play with semis. Thanks in advance.

SOL....is this an OK question or does it fall into the "like a rabid squirrel in my underwear" question?

I know I can do my own research and I have. I am just curious what others might know and compare to what I have learned.

FYI, You or anyone else can ask any question. The only thing I raised is that if I don't have the time to answer it I don't want to get hammered for not doing so. There are many astute traders that can chime in if they want to. I will have to answer this later.

However, consider this. Not too long ago, they were talking about a semiconductor shortage, and then suddenly the narrative changed. In almost every instance someone does something to affect the supply. Either too much or too little.

AI is gaining traction and the only way AI can improve is via chips and this industry is going to need a massive amount of chips. More to come later or someone else will beat me to the punch

[Jaz]

I am looking for insight into the semiconductor market. On one hand, there is weakening demand, and on the other, there are still very few brand new cars for sale on lots in USA. What gives? I decided to short semis today with SOXS (bought yesterday late)--not too much, just a little. I am trying to figure out my position for the long play with semis. Thanks in advance.

SOL....is this an OK question or does it fall into the "like a rabid squirrel in my underwear" question?

I know I can do my own research and I have. I am just curious what others might know and compare to what I have learned.

FYI, You or anyone else can ask any question. The only thing I raised is that if I don't have the time to answer it I don't want to get hammered for not doing so. There are many astute traders that can chime in if they want to. I will have to answer this later.

However, consider this. Not too long ago, they were talking about a semiconductor shortage, and then suddenly the narrative changed. In almost every instance someone does something to affect the supply. Either too much or too little.

AI is gaining traction and the only way AI can improve is via chips and this industry is going to need a massive amount of chips. More to come later or someone else will beat me to the punch

Semiconductors, and semi equipment companies are cyclical. The valuations are cheap right now, even though some of them are up over 50% in less than a month (excluding Nvidia and ASML, which I think are still expensive, but they're unlikely to become cheap, either).

I expect many of the Semi's to report further weak Quarters in the coming quarters. But my research done not long ago shows Semi stocks tend to bottom after the first or second bad Quarters are reported, long before earnings start to gain traction again. So, I believe the sector has already bottomed.

Anyhow, the Semi bust has already happened. Look at Intel and Micron especially. Earnings got obliterated. A few weeks ago, you could have brought Intel for book value, paying a 6% Dividend (like I did). Not sure how it's going to get cheaper than that, even with all it's problems. Then this week we find out Buffet was buying TSMC.

Also bear in mind Auto's are only one part of the semiconductor market. Those chips tend to be older technology, low profit margin, and very competitive. I don't believe there is any supply constraints in semi's any longer. Probably other reasons for the lack of new car supply. Maybe listen in on Ford's earnings call for insight?

The trend to watch is Data Centre. They have to upgrade every few years to keep up with client demand for ever growing data processing and storage. Same with Mobile/Laptop. And of course, Datacentre AI.

We are clearly overbrought (daily charts), but still with some upside left IMO. If your outlook is long term (years), I would be looking to be a buyer in the pending correction. Your short might work out okay. But ... If we've already bottomed, and in the early stages of a bull market, why waste your energy trying to short. Focus on the long side.

[Eric]

I sold puts on SOXL, got assigned, sold covered calls above my break even and it looks like it's going to get called away from me unless I roll out.

Right now I'm long & bullish chips. Round and round we go. I'm not married to it but looking pretty good to me and I'm willing to go for a roll in the hay.

[MarkD]

Fundamental Analysis on individual company finances is always subject to manipulation. Economy or industry-wide data is usually a much better inication of fiscal condition. With that in mind, I grabbed this from the web a few days back. Thought best not to post at that time, however, due to this discussion decided to throw it out there. Not a recommendation but big picture is always where I like to start.

https://imgur.com/QYVZviY

A second tell to the fundamental story is buried in this chart re: semiconductors. The reshoring story you were told was planned a long time ago. It takes years to decide, plan, and execute an economic transition of this magnitude of physical construction, which had to take place Pre-Covid.

https://imgur.com/QvlLWgV

I venture to guess the baseline represents significant investment in data centers as that story has been ongoing for a LT. My guess is lockdowns allowed low interest rates to be used in corporate / municipal bond funding to support both business and municipalities.

One last item I found interesting

https://imgur.com/Wb9rONt

[Jaz]

Fundamental Analysis on individual company finances is always subject to manipulation. Economy or industry-wide data is usually a much better inication of fiscal condition. With that in mind, I grabbed this from the web a few days back. Thought best not to post at that time, however, due to this discussion decided to throw it out there. Not a recommendation but big picture is always where I like to start.

Mark .. These are good charts. Where are you getting them from?

[MarkD]

Some from Twitter, others from email dumps I receive free of charge. Just accumulate stuff and download what I feel is possibly important. I don't subscribe to them as the free information is enormous.

Just wanted to add, my take (and only mine) is that Covid was the vehicle to execute the transition underway. We can argue whether it's good, bad, necessary, etc. But the schmucks pretty much have screwed, " We the people,...". The G20 has now adopted digital passports. Meaning to me, capital controls are almost here.

[Jaz]

Some from Twitter, others from email dumps I receive free of charge. Just accumulate stuff and download what I feel is possibly important. I don't subscribe to them as the free information is enormous.

Do you want to be more specific?

[MarkD]

It might be a tad bit of work to send you everything I get. Some stuff I read for a while then drop, on both fintwit and other free stuff. Would suggest you start with Twitter and follow:

@RadicalAdem
@policytensor
@AlertCredit
@HKuppy
@InsideBuySS
@DeepThroatIPO
@SFGrannis

You will receive other feeds similar to these when you follow the above which seem to just drop new information like I posted herein. This is more than enough for now.

[jonnyfrank]

Thank you! That is some interesting trend info!

[MarkD]

One point to keep in mind. All of the sources provide different pieces of data. I cull what I find useful or interesting and dismiss quite a lot of it. None of them are consistent in reporting either as some have subscriber bases. I also access data at the FED FRED site but the delays are only useful in a rearview mirror typically.

The reason MP/Sentiment are so important at major turning points!

[Yodean]

Thank you! That is some interesting trend info!

not specific to semiconductors, which to me is a bit of a "no brainer" investment, if you have a long-term perpective, but some good Twitter accounts I follow include:

-Lyn Alden, Puru Saxena, Santiago Capital ... there are a few others, but those three aren't bad places to start ... you've got a very talented macroecon-chick, an incredibly astute investor in the small cap growth tech space with proven amazing CAGR and >25+ years' experience in the markets including managing other peeps' money previously, and the Dollar Milkshake dude ...

Like Mark mentioned, I don't necessarily agree with everything that is said in those accounts - but they're useful to consider, and also free.

[MarkD]

At least Twitter is free for now, until app X arrives per Elon. I have zero interest in using any app to manage my life. Too much centralization.

That's what bitcon and crypto were supposed to do but now that path is going to be closed imo.

[Yodean]

That's what bitcon and crypto were supposed to do but now that path is going to be closed imo.

Precisely one of the key reasons why btc and eth will do well, vs. many other cryptos.

Btc is really a surveillance coin, and eth (proof-of-stake) is at this point centralized at its core.

So governments, PTBs, etc. don't mind the masses owning btc and eth. The bubble in these two will be inflated again, at some point - '24?

"Real" privacy coins like Monero, PirateChain, Dero, etc. are the ones that governments don't want to see mass adoption.