Why This Is a New Bull Market

I follow this money manager on Twitter and he has a blog. It kind of harmonizes with my thoughts. Experts say that we are due for a bear market which is a 20 percent correction across the board of the major indices.

But what is not factored in, is that computers are much more smarter and run many of the major trading
systems. As a result, though we may not have had a 20 percent correction across the board, many sectors have been down over 20 percent in recent times.

From Mid 2015 to Mid 2016:

Energy stocks -50% Correction
Biotech stocks- 40% Correction
Financials stocks-25% Correction
Small and Mid Cap Stocks -25% Correction

A compelling video he put out today talks about the new bull market leader this time around. The semiconductor stocks. And interesting enough, he mentioned Skyworks strong quarter and strong volume Friday as reference points. Take a look.

https://www.joefahmy.com/2017/02/18/weekend-video-new-bull-m…

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What about software? I’d tend to feel safer long-term with software than with hardware, which runs a higher risk of being commoditized and requiring more R&D money.

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The stock market doesn’t lie. The top S&P stock last year was Nvidia. I totally missed the move but I took notice of the results in November quarter where the stock went up 39 percent in one day! Nvidia is the leader in semi revolution at the moment because technology will return to the edge and we will see cloud computing take a back seat. This link is a video of what I’m talking about.

To me the 2 companies driving this innovation are Tesla and Nvidia. Worth a look. Semi’s that dominate this space will lead the next bull market.

https://vimeo.com/196002313

Nvidia is the leader in semi revolution at the moment because technology will return to the edge and we will see cloud computing take a back seat. This link is a video of what I’m talking about. To me the 2 companies driving this innovation are Tesla and Nvidia. Worth a look. Semi’s that dominate this space will lead the next bull market.

Hi Gclever, Interesting video. But one of the things he kept emphasizing is that prices of these devices will come down and down, by orders of 100 times, over and over again. How is a semiconductor manufacturer going to be a long term profitable growth company when its products are being commoditized at that rate?
Saul

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Thanks Gclever,

An interesting technical video.

Here’s another technicals guy for your viewing.

http://www.ciovaccocapital.com/wordpress/

But one of the things he kept emphasizing is that prices of these devices will come down and down, by orders of 100 times, over and over again. How is a semiconductor manufacturer going to be a long term profitable growth company when its products are being commoditized at that rate?

Depends on the rates. Moore’s Law is slow enough to keep semiconductors profitable. A similar law applied to optic fiber was so fast that the original optic fiber providers went broke.

The video mentions Colonel John Boyd who was an amazing thinker. Unfortunately he never wrote a book, his presentations were mostly briefings. Some videos are available and I collected them in a somewhat related essay. The videos are at the bottom:

Email to Stuart Kauffman re Reinventing the Sacred

http://softwaretimes.com/files/email+to+stuart+kauffman+r.ht…

Denny Schlesinger

Hello Saul,

I agree that chips get cheaper as time goes by but the bull case for semis is just starting. It is in the speculative phase that bull markets start.

Self driving cars take massive amounts of data and lots of chips to support it.

I think the sox index will do well, but love Nvidia. Their gpu is made to do more than power video game processing. Data centers have discovered that they are useful in the cloud, car makers see these same chips as being the brain of self driving cars. And as far a gaming there is a market called esports where people actually watch professional gamers play video games like going to a football game!!

These gamers spend crazy money on buying Nvidia goodies to make their systems competitive.

Check out the write up in Forbes that calls them the next Intel, I know it sounds crazy but it is definitely a nice read.

I can’t post link because its paywall content but if you Google Nvidia being next Intel you will be able to read the full article.

Also Nvidia gave the keynote to Ces in Vegas this year. You can find it on YouTube.

Tell me what you think if you have the time. Thanks for reading.

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