And it appears that LSI will head further down this morning with the AMAT report. But what I find most troubling is that LSI is underperforming the semiconductor market, and it has done for a long time. Thus, the fundamental question is whether the ASIC model works over the long run or whether the proper model is the FPGA model. It seems to me that the ASIC model relies too heavily on other companies having large engineering departments. And since this is increasingly appearing to be the case, I am wondering if it isn't time to start thinking about selling LSI at a loss and permanently exiting this stock. I will probably hold on through the second quarter, but I don't think I made a wise investment.
I would like to add one other observation. If one looks at block volume trades as the percentage of total trades in tech stocks, it is very obvious that the Nasdaq tech stocks are the last areas where there are a lot of day traders. For example, INTC has on an average day only 15% of its trades in block volume, whereas TXN has about 45%. I believe that this means that this reflects a lot of day trading, and that by habit formed many years ago, the day traders are still trading tech stocks on the Nasdaq. However, it could also mean that over time there will always be a slight premium for top level tech stocks, since they still attract day traders in a way that other types of stocks do not.
But the problem is that fundamentally, these stocks are still overvalued. |
