Yes, you've restated it well.
I would add:
I have no faith that I am correct. I will decide on a stop-loss price for any short, when I initiate the short, and stick to that decision, no matter what, because I could very well be wrong.
I assume that the "big money" will know before I do, when demand at semis begins to firm, and when capex is going to stop getting cut. As a "little guy" managing my own portfolio, that's one disadvantage I have. So, if the stocks start steadily going up, through resistance levels, and I haven't heard any news that would justify it, it may just be that the news hasn't reached me yet (or I ignored the early hints).
But "big money" does not have a longer time-frame than individual investors. "Big money" is controlled by people who are evaluated, rewarded, and fired, based on their quarterly results.
Most of the semis hit new 12M lows in February, because business conditions markedly worsened very recently. The same is true for companies that make things using a lot of chips, like CSCO. So, right now, there is a discrepancy between the valuations of the chip and chip-equip sectors. Very similar to the way in mid-2000, there was a big discrepancy between the telecom service (WCOM, FON, T) and telecom/network equip (CSCO, NT, LU) companies. Those kind of "disconnects" get corrected, sooner or later. So, was the "big money" wrong in selling the chips last month, or are they wrong in not selling off the semi-equips? It has to be one or the other. The semi-equip sector can't be doing well, if the chip sector isn't. |
