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Strategies & Market Trends : The Art of Investing

PICK 44.56

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Nov 4 4:00 PM EST

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To: Trader J who wrote (8281)	3/19/2024 11:35:26 AM
From: Sun Tzu	Read Replies (1) of 10513

SMCI is not the kind of stock that I'd play on either side. It's volatility means that I will have to take a smaller position and I prefer to take a bigger position on something that doesn't move as erratically. The net results works out comparatively similar for me. I don't think of them as the biggest pump and dump. I think of them as being way over their skis both for the financial expectations they have clearly implied and for the business and management skills they need to have. And I think they know this and therefore are more interested in milking this accidental windfall for all they can rather trying to go against the major cloud providers and Dell, because they know that they can't. I agree with you that it moved based on their low float. And I believe that the increase in float takes the wind off of their back and will bring them back to earth. All these stock issuances will have a big impact on the trade dynamics. And I am not even getting to the business issues. There is a famous Scott McNealy interview about SUNW during the dot-com era. He basically said the investors were a bunch of idiots buying SUNW at 10x revenue because at those valuations there'd be no way for them to recoup their investments in a decade let alone a year. So everyone was just playing a game of musical chairs. And that talk applies even more so to NVDA and much more so to SMCI. Why much more so to SMCI? Because as NVDA ramps up production, and as all the cloud providers bring in their own AI chips, there will be fewer reasons for SMCI to exist. So yes, if you are a good swimmer and you can play the float and flow, you will be fine. But you will get into trouble if you confuse that game with investing and business execution. But that is just my opinion. Your mileage may vary.

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