Dec 08th, 2020

In the Market for a Short-Term Trade? Follow Me

Now, there are many ways to work through that first step. I won’t give away the details of my process here, but I can suggest consulting Zacks Investment Research (which categorizes sectors based on earnings estimates revisions) and Investor’s Business Daily’s MarketSmith software, which ranks sectors based on relative strength. One sector that rises to near the top in both these services is the semiconductor-fabless sector. Semiconductors, or microchips as they are sometimes called, are what drive the tech economy from the ground up. They are in everything from phones and Fitbits to solar farms, supercomputers, and the servers that build out the cloud. Fabless refers to the manufacturing process. A company that produces and markets semiconductors but which does not actually make them in-house is called a “fabless” (“fabrication-less”) company. Currently, there are 31 companies that fit into that niche sector. Of the 31 fabless companies – this is step two – there are nine that are trading at a market cap under $400 million (too small for my selection process), of which four are genuine penny stocks. We can eliminate those little guys so that we keep our risk well-managed. There are four more stocks that trade on very light average daily volume (I like to see at least 500,000 shares trade daily), so they also are off the list. We want liquidity because liquidity means institutional sponsorship as well as ease of entry and exit. This culling now leaves us with 18 companies.

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Nov 04th, 2020

After 25 Years, I’ll Bite

As a rookie advisor 25 years ago, I vividly recall all of the other young advisors obsessing over tech company earnings reports. Like Captain Renault said in the film classic Casablanca: “Round up the usual suspects.”

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