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The QCOM Thread
#11
I never said that its riskier than INTC, NVDA etc. although there are bull/bear cases to be made either way. I dont own any tech stocks since they have been bid up so high. The P/S on NVDA is 8 for crying out loud, and unless the company can grow its revenue exponentially does not warrant that kind of a multiple. Even after a fall of ~40% over the past few months, I think it is still overvalued!

Tech is tricky for long term buy-and-forget DGI style investing because it changes so fast. The sector suffers from the Red Queen Effect simply due to the nature.
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#12
(02-28-2019, 01:44 PM)Roadmap2Retire Wrote: I used to own QCOM because I really liked how the technology was pervasive in all sorts of mobile devices -- no matter if you go with Apple or Android, all seemed to rely on QCOM tech.
However, over the years, I didnt like how the incentives misaligned with management & board decisions and decided to sell and exit the position after a decent profit. Case in point was record executive compensation for Mollenkopf et al. Another major point was the billions of stock buybacks occurring on open market, while the share count increased, collapsing ROIC etc.

The high profile litigation issues against AAPL are definitely concerning. Something that I wouldn't want to get caught in with my assets. There are better tech/semiconductor plays (like AVGO perhaps, even though its not exactly the same addressable market) without the risk that comes with QCOM.

Good points on the management pay and poor handling of buybacks. 

AVGO does raise an interesting issue, though. AVGO tried to buy QCOM last year, and one of the more interesting things to come out of that saga was the national security component of QCOM's tech. The merger was blocked, due to national security concerns (this mobile chip technology is in just about anything that communicates over cell networks, and is obviously of keen interest to the Pentagon and our three-letter agencies). The U.S. government did not want AVGO/China/Huawei getting its hands on the source of a substantial percentage of mobile data chipsets. 

In a way, I view QCOM's position as somewhat similar to BA/LMT. There is a strong defense component to its tech, and the government has made clear that it is not for sale to outside bidders. Of the five major chipset manufacturers for mobile phones, only two are based in the U.S., QCOM and INTC. I don't think that anyone can credibly argue that INTC has superior tech (they whiffed badly on 10nm, and appear to be substantially behind the curve on 7nm). I say this as an INTC shareholder. I doubt an INTC/QCOM merger would ever pass antitrust scrutiny, so I think we are left with a duopoly of QCOM/INTC in this space, with the government taking a protectionist view of these companies for so long as their tech is competitive and makes up the backbone of modern mobile communications infrastructure.
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#13
How are you positioning with the other tech giants like AAPL, AMZN, and more recently GOOGL chipping away at INTC/QCOM marketshare (not in mobile).
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#14
(02-28-2019, 02:27 PM)Roadmap2Retire Wrote: I never said that its riskier than INTC, NVDA etc. although there are bull/bear cases to be made either way. I dont own any tech stocks since they have been bid up so high. The P/S on NVDA is 8 for crying out loud, and unless the company can grow its revenue exponentially does not warrant that kind of a multiple. Even after a fall of ~40% over the past few months, I think it is still overvalued!

Tech is tricky for long term buy-and-forget DGI style investing because it changes so fast. The sector suffers from the Red Queen Effect simply due to the nature.

Also agree that you have to keep a closer eye on tech holdings than other DGI stalwart sectors, like Consumer Staples or Utilities. My dividend-paying tech holdings are comprised of AAPL, ADP, CSCO, IBM, INTC, and QCOM. I also hold SQ as my one pure growth pick, but they don't pay a dividend. IBM is a real disappointment on many levels. I'm pretty happy with all of the other ones, and don't get the sense that any of them are headed for oblivion in the near-term, but certainly do keep any eye on the horizon.

I'd love to own AMZN, GOOG/GOOGL, and MSFT, but the valuation has just never been there when I was looking to purchase.
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#15
I will say that I should have bough AMZN when it pulled back to roughly $1,500 during the December downturn. At that price, the stock looked pretty reasonably valued.

As of today, I'd be happy buying GOOGL at $1,000, but don't see that happening unless the market as a whole drops substantially.

MSFT's valuation is just nuts.
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#16
(02-28-2019, 02:53 PM)Otter Wrote: I will say that I should have bough AMZN when it pulled back to roughly $1,500 during the December downturn. At that price, the stock looked pretty reasonably valued.

As of today, I'd be happy buying GOOGL at $1,000, but don't see that happening unless the market as a whole drops substantially.

MSFT's valuation is just nuts.

Now its getting fun........

MSFTs valuation was nuts when I bought it in the 90s.  Then it tripled and I bought more on the way up.  Then it crashed and I sat on it for about 15 years waiting to get back to the point if crashed.  It nearly tripled from there after I was happy to dump it.  It spent most of those years going absolutely nowhere.  The business remained dominant in their sector throughout.  Similar story INTC  and CSCO.  None were ever anywhere close to bankruptcy.  Valuation at time of purchase matters eventually.  They were horrible buys if you missed the timing.  We all  agree on that.

I laughed when AMZN first started their online bookstore.  It lost over 90% of it's value a few years later.  Sure glad I didn't buy any.  Sad  I did load up in DEC 18 but I was scared.  Bought a share or two more every time it dropped another $50.  Cashed over half of it out right before earnings because I was scared.  That decision looks good right now but I'll probably regret it.  How much is one of the most successful companies in the history of mankind worth?  It's pretty clear our normal valuation methods are often faulty.  I had little trouble talking myself into buying some KHC on valuation though.

Back to the point somewhat, tech is not DGI, and it's dangerous to try to convince yourself otherwise.
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#17
I'd rather invest in tech than basic materials, which are a whopping 1.23% of my income stream. There are even fewer materials companies (than tech cos) that manage to be stable enough to reliably pay a dividend, much less increase it annually.
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#18
Tech needs a different lens to look through. Coming from a value & DGI perspective, you will never be able to buy companies when they are growing -- every metric seems just ridiculous.

I am trying to re-learn investing principles over the past few months/years when it comes to growth companies -- but mistakes are freakin expensive
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#19
(02-28-2019, 03:48 PM)Otter Wrote: I'd rather invest in tech than basic materials, which are a whopping 1.23% of my income stream. There are even fewer materials companies (than tech cos) that manage to be stable enough to reliably pay a dividend, much less increase it annually.

I absolutely agree.  The basic materials companies do have a problem remaining stable enough to be a DGI candidate.  I believe in the DGI strategy, but a buy and mindless hold strategy can easily fail in many sectors.  A heavy dose of my opinion, but tech stocks just have to be handled differently.  You have to be willing to pay a somewhat higher valuation for the best quality, but if you pick a highly successful tech you have to have the good sense to move some of the profits to something far more stable such as a Ute or a boring consumer stock.  As I said just my opinion.  We can all quickly think of a dozen tech companies that worked out very well for a 20 year hold as long as you didn't buy an extreme top.   I can think of 50 techs where a lifelong hold was just a bad idea unless you got in very early, but the risk was extreme at that entry point.  

I'm not suggesting techs should be traded constantly, but it's my opinion you are wise to manage them much different than PG or JNJ. And always buy low lol.  That is exactly what you are suggesting with QCOM.  The current PE isn't exactly bottom feeding, but it isn't 75 either.  I have more reading to do on QCOM.  The Div is way above typical, and I need to understand how this happened before I get in very deep.
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#20
I own some tech

SHOP--crazy stupidly overvalued--never sell

NVDA--overvalued--never sell

CSCO--fairly valued to overvalued--never sell

AAPL--fairly valued to undervalued--never sell

AMZN--fairly valued--never sell

QCOM--fairly valued to overvalued, maybe undervalued--never sell


If I had to pick any of these to put additional monies right now it would be AAPL and or AMZN.

5G wireless/5G broadband is going to be a growth factor for CSCO and QCOM, it will move slow then imho in about 5 years we'll be waist to neck deep in it, all for the better. Between this new tech/network upgrade and QCOM's legal issues I think these two stocks (CSCO and QCOM) are a little harder to evaluate. Probably can't go wrong buying these two at current prices but I'd be willing to wait due to the fact Wall Street gets impatient and or if the market gets choppy again in the near future.


Every time I read about Qcom I always think about this guy who retired from I believe NYNEX now VZ--he took a buyout package worth about 300 to 400k in the late 90's....he told his financial guy to buy 100% Qcom stock--financial adviser said horrible mistake--the recent retiree said all I know is I work in the network and I see this Qcom EVERYWHERE it's got to make money! It sure was a fairy tale his initial investment grew in the millions, sold out but kept about 2 or 3 million in Qcom stock--talk about a lucky guy!

I read about it in Money Magazine way back when....

Ha...went back and read my own post and I tend to forget how quickly time passes by--this guy if still alive is probably in his late 70's to early 80's now!
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