03-21-2020, 04:48 AM
(03-20-2020, 10:32 PM)chadnelson Wrote: I am interested in picking up Semiconductor stocks like Nvidia, Lam Research, Microchip and Intel/Texas Instruments. I believe as people stay home, they will be locked to their phones for entertainment.
What you state is true, but it isn't going to result in overnight changes to the company financials. As VBIN implies, many of these companies are about to pre-announce a horrendous quarter, and if they are smart they will withdraw earnings guidance for as long as the rest of 2020. We can't know where the bottom is, but any stock trading at a high PE is at risk for significant pullback. Lower than even seems possible. Yes folks are stuck at home. And some of them will be stuck at home because they have no job. We are about to see some horrible unemployment numbers late next week. Worrying about paying the rent and car payment might just confine your entertainment purchases to a new subscription with Netflix or Disney (just an example).
We have to figure out at what point the bad news is baked into the price. Some restaurants and financials are getting there, and little else that I've noticed. I definitely want to grab some tech when it bottoms, but you gotta to get it close to right or you could be waiting years to get back to even. I've done that and it's not pleasant. Be patient and you just might buy a stock that triple in a few years. Pull up a 20yr chart on the companies you mentioned. Notice how hard a tech stock can pull back during the early stages of a down cycle.