Mike PhilbrickiShares PHLX Semiconductor ETF.SOXXHOLDJan 26, 2024

The market has shifted from GPU-intensive to CPUs in the past year. So AMD and Arm are catching up during this CPU move. We're probably entering at time where these stocks get way ahead of themselves, because that's the nature of this market. Unlike 1999, earnings are backing up all these parabolic moves and are actually getting cheap (in PE) due to their strong earnings power.

You can either wait for tech stock to correct (namely in AI) or join the momentum. He'd join. What is your alternate, bonds? What to with your capital? Sustained revenue growth is in technology and it's related to the AI build-out. It's about cloud, nuclear and utilities have momentum, which is concentrated.

Trim, or write some calls. Over 15% above the 50-day MA (anything over 10% means it's time to trim).

A good place to start. But once you see what it holds, you can then pick out actual stocks.

The main go-to for a basket of US chip stocks, and probably the most liquid. Up for the 18th day in a row. People really misjudged demand. With price action like that, you have to be careful; there is another side to the mountain. 

Great asset to own, but not to buy at these levels.

His rule has always been that if 1 stock out of 30 in a portfolio goes from a 3% weighting to 6%, then he automatically sells half. That system usually compounds returns by 1-2% over a 10-20 year time horizon. Taking $$ off the table has never been a death knell.

If we ever get a larger correction because tech stocks can't sustain the growth they've had, then we're again talking about the dot-com bubble when stocks went down 70%. Took 17 years for the NASDAQ to break even.

Be cautious. These names are very volatile. On the ZQQ, he doesn't understand the hedging. Over time, currency risk becomes benign. All this ETF is doing is paying the banks to buy options or forwards to hedge the currency.

Don't hold both. These 2 ETFs do the same thing. Don't correlate your investments. Diversify away from the NASDAQ with something else, otherwise you'll have volatility every day of the year.

OXX is an ETF that holds several semiconductor names, and roughly 40% of its expsoure is to AVGO, NVDA, TXN, AMD, and QCOM. The industry has lagged the broader markets year-to-date and on a one-year basis, but for an investor who believes chips companies can outperform the broader markets due to the AI revolution, we think SOXX can perform well here. It trades at a 22X forward earnings multiple, in line with the broader markets, and is seeing a faster growth rate. We could see a pullback or correction in the space, but largely, over a long period of time, we think the space has a lot of upside potential as we will continue to need more chips, more innovation in AI hardware tech, etc.
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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.

Is going down because the tech sector is, after a few years of rallying. Inflation could worsen tech. If you own this, be sure you are geographically diversified.

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.

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).

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.

Excellent option for semi conductor industry. Safe product with a good distributor. A.I. demand for chips steadily increasing. A good option for a portion of investor portfolio. Would recommend holding and/or buying. 

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.

Likes the general strength in sector. However, high valuation a worry for investors. Would recommend selling on strength. Wait for price weakness before investing. Overall, good fundamentals, but would advise investors to be careful before investing.