Introduction and My Current Take on AMD
Hello all,
I'm one of the lucky ones to have received a free SI lifetime membership. It's great to finally be able to post here with you all rather than on the ridiculous Yahoo board of stupidity that I've been stuck with the last few years since I started this whole crazy stock market adventure. Message number 3777 (actually 3778 I see, oh well) seems good enough for me as my first message on SI. A big thank you to Goutama Kantamaneni for making this happen, along with milo_morai for donating the free membership that has become mine. It couldn't have happened at a better time, given my situation w/ AMD.
A little history: I've been trading stocks for a couple years now (I'm 21 now and have been following the market closely since I was 17), with countless ups and downs in that time. I managed to do quite good last year, thanks almost entirely to some good Qualcomm trades. So far this year I haven't done so well, despite some good RMBS shorts, and AMD. I've been in AMD off and on since around october of last year. I only wish I'd actually held it all the time since. As is, I've missed out on most of the runup, but currently am holding nothing but AMD. Actually I'm in AMD on margin so deep that I probably wouldn't be believed if I said exactly how much. Let's just say that Datek's "method" of calculating buying power is very strange...
So I've been following the original AMD board off and on for nearly a year, and this new moderated one since the start. I hope that my likely somewhat unique perspective will provide some insight for all.
Now in an effort to make this first post have some useful purpose besides as a self-indulgent personal history, I will briefly give my view on AMD right now:
Quite simply, based on what I'm seeing, I'm going to go out on a limb and call a bottom for AMD here at 60. It's just too hard to see this company which has a projected one billion in earnings just this year to be valued at under 10 billion for much longer (currently 9.6 billion).
The longer AMD continues to execute as well as it has the past few quarters, the more people will come to change their view of AMD as a nobody to AMD as a serious rival to Intel, which to people in the know, is the position it has been in for over a year now. And once the Q3 1999 loss is erased from the PE in another couple months, and the trailing PE begins to really start showing AMD's value, this will only escalate further. Perhaps needless to say, I feel it is unlikely that AMD will need all the coming events to actually happen in order for the stock price to improve beforehand. In my view, stocks are all just about potential. As more people become aware of the potential for AMD in the coming months, quarters, years, we will see an gain in the stock. It will only if events fail to take place that are expected (that are built into people's hopes for the stock's potential) that the stock will then fall. My confidence in the awareness of AMD's potential continuing to increase in the coming weeks is what gives me confidence in my huge AMD long position, making me able to sleep at night.
Given that AMD is beating Intel at their own game (or at least matching), and the likelyhood that this will continue, I can not see it likely that AMD will continue to be valued at 1/43 of INTC, as it is now. My personal hope/goal is to see AMD valued at 1/10 INTC, which given INTC's present price, would value AMD at about 42 billion, instead of 9.6 as it is currently. Now I am not suggesting that amd is going to quadruple from here. All I am saying is that given the circumstances it seems that either/or: AMD is undervalued at its current price, INTC is overvalued. Based on the potential for more people to come to see this, I confidentally hold AMD long (also the fact that AMD has already dropped 40% from it's high of 97 helps). But as I said at the start, this is how I see AMD right now, and as the market is constantly changing, so do I try to make my view of it change.
I hope that the above can be a real example of my trading philosophy. Basically as I believe most good traders would say, it's best to trade people, not stocks. If caught up in a particular stock, one ends up caught up in one's personal emotion. So it's best to trade based on one's general view of the emotions of the market as a whole. What is the potential for people to buy a stock (stock to rise), and what is the potential for people to sell (stock to fall)? Judging correctly when positive potential and negative potential are at an offbalance is to know when to make a trade (weather it be long or short).
As I've probably made apparent by now, I tend to be more of a short term trader ("position trader" perhaps) than a long term buy and hold type. But I do continue to see the "up" potential for AMD beating the "down" potential, so I'm holding long quite strongly right now.
Now briefly some more specific reasons for this: I think that given performace since the introduction of the Athlon, AMD will continue to be able to at least keep pace, if not make the pace, with Intel in the coming months as far as processor power/speed goes. Also I believe AMD dual processor systems will be showing up sooner than some think (quite possibly even by sometime next month). And with the continuing industry adoption of DDR as the next standard, I believe we will see the first AMD DDR 200/266 chipsets released very soon (likely within the next six weeks in time to see dual Athlon CPU/ DDR 266 machines by October). Also as time goes on there seems to be only more evidence revealed that Willamette and Itanium are not going to be seen for quite a bit longer than a lot of people think, so Intel is resorting to another PIII die shrink and other intersting tactics (I'll avoid the use of the word, "tricks") to yet again extend the life of their existing old Pentium Pro architecture of six (?) years ago, all of which suggests that Intel is genuinely afraid they are going to have problems competing with AMD in the coming months/years.
And again, all of this seems to be as of yet generally not considered by most of the street. No, the general street consensus when it comes to AMD is still that they are insignifigant and do not execute well and Chipzilla Intel can crush them any time they want with the wave of a hand. Well I think it's about time this starts changing, and as AMD continues to execute, I don't see how it won't change. We simply can not continue much longer with a 2000 P/E of 10.
I see a return to above 80 (or just 40 post coming split) within the next month as very likely, and 160 (or 80 after aug. 21) by the end of the year seems quite possible.
Best wishes,
Henry
nothingtosay.dyndns.org
"These are my principles. If you don't like them I have others."
- Groucho Marx
PS. My homemade classic Athlon 750 personal/server Linux box has been running non-stop since last year now, without fail (or over 5000 CPU hours). I like it.
PPS. Advance apologies for any possible errors, etc. in this message; as it's after 5:30am I should really be getting to sleep now... |
