Opinions
Kim Bolton
iShares PHLX Semiconductor ETF.
SOXX-Q
PARTIAL SELL
Jun 07, 2023
Stock price when the opinion was issued
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Seeing strong outperformance due to chips and AI. Bellwether is NVDA, followed by AMD, MU and (to a lesser extent) INTC. Just getting started on the AI movement. Chips will continue to be a major part of that. Great long-term investment for diverse exposure; could buy today and still make money.
But for a short-term trade, be cautious on entry point, as many of the names have run up. Always have to be cautious when buying something that's moved significantly to the upside already.
A broad-based play. A lot of individual names go down 10-15% when they miss on earnings. This ETF gives you diverse exposure to the names you'd want to own, but wrapped up in a nice little package. Buy and hold for the next year, see where we are after that.
His thesis is that growth is going to outperform.
The Canadian equivalent is CHPS.
Remember that some of the semis are very cyclical. Right now, there's an oversupply on the memory side, which you can see with the likes of ASML. And you can see this ETF rolling over. He stays away from ETFs because they're a mixed bag. The place you want to be in semis is in AI chips -- like NVDA, and AVGO (nipping at NVDA's heels).
The semiconductors are a great barometer for information technology. The new cycle started in 2023, there was a big uptrend, and the chart now is showing distribution. What that means is that institutional investors are looking to reduce exposure. Over the last couple of months, we've been hugging this key level at the 40-week MA; on Monday, we moved below it.
So the S&P 500 made new highs this week, which might extend today, but we have this negative divergence where the semis haven't followed suit.
The 3 are on different notches on the dial of risk and growth. Allocate your money according to your risk appetite.
ZUE is solid and probably the safest, even though it has enormous exposure to mega-cap tech companies. There are ETFs to downscale your risk from that, such as RSP (equal weight) and EQL.
ZQQ has been excellent for achieving currency-hedged exposure to the NASDAQ 100. So it's even more tech and growth. Huge demand in 2023 and 2024, but (as we've seen) very exposed to downside volatility in the trade war environment.
SOXX is purely semiconductors. Enormous ups and downs on headline risk with generative AI. Even riskier.
Both have had very good runs. He'd take a third off the table. If it goes up, you still have two thirds. If it goes down, pat yourself on the back for being so smart. Then you can figure out if the trend is there to go lower. For both he'd trim a bit, and either way you'll feel good about yourself. :)