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Semiconductors ETFs
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About Semiconductors ETFs |
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Technology (Semiconductors) ETFs Overview and forecast
This sector is considered the prerogative of those with technologically overachieving vocabularies, with good reason. This is a sector that still, after decades of this type of technology, doesn't speak the same language as investors. The stocks in this index are great fun for adrenalin junkies, but strictly an acquired taste for other investors.
Even Intel, the standout sector company which can reasonably claim to have tried to be a good corporate citizen for investors, has had some wild rides with its prices, without an economic collapse to play with as well. The Semiconductors ETFs contain a few horror stories, too, not least of which is one ETF which went up from $60 to $200 to $43 in the space of nine months.
That's just not good for the blood pressure. Not great for the wallet, either. The pity of the Semiconductors stocks is that they simply don't seem to get the investor market desire not to have heart failure every few hours. An open minded look at the sector performance as a whole would say "Lousy", from an investor's perspective.
From a trader's perspective, however, these stocks do have an upside. Their moves are the sort that can generate good rewards for those able to take advantage. The kind of hype which this market usually creates is usually good for getting attention, too, so even the bubbles in the semiconductor field have some passing value.
The problem, however, is that the investor market, quite rightly, just doesn't trust the amount of spruiking that comes from the industry motormouths. You'd swear everything was the greatest thing since sliced bread. The experts in the tech fields aren't often too impressed, either, so several Ghz of talk may not produce much more than a skeptical eyebrow raising ceremony, at retail consumer level. That tends to put off investors, in droves.
Short term (6 months)
This sector always does something. These aren't really speculative stocks, but they do sometimes behave like them. Semiconductors ETFs can and do bounce upwards, but overall, in the lack of enthusiasm for mirages in the investment markets, the performance has been reasonably flat.
Improving on "lousy" won't be hard to do, but some care should be taken with any significant level of commitment. This is a neurotic sector, and it's no charity to investors. Short term profits tend to be for traders, rather than growth and value investors. Semiconductors ETFs contain some excellent stocks, but looking before leaping is strongly advised.
Note: In this case, all forecasts are based on qualifiers, below.
Medium term (2 years)
In the normal course of events, the semiconductors index should be back to being its playful, totally unreliable and untrustworthy self, in the next 2 years. Investors are advised to believe nothing, research properly, and stay diversified. Semiconductors ETFs should be checked out for asset performance.
Corporate issues are quite common in this sector, where the big fish gobble up everything, including things they shouldn't gobble up. It can be expected over this time frame that a level of rationalization will have taken place in the industry, which will affect Semiconductors ETFs assets.
Long term (5 years)
The long term, in this sector, is longer than some of these companies can expect to be in business, usually. Some won't be independent in 5 years, others will be gone. Capital behaves differently in the tech sectors, and in this particular industry the kind of time and money required to produce good commercial products definitely doesn't grow on trees. Only the big guys can afford to work that way. Hence the rapid turnover of corporate entities.
However- Crude and bruising as this process is, it gets rid of the weaklings, and surviving stocks are a bit more credible. Not that "social engineering by bankruptcies" does much for investors' long suffering nervous systems. A choice of performance levels from spectacular through to comatose or dead does very little for anybody's peace of mind.
The Semiconductors ETFs will perform more or less in relation to their historic behavior: Erratic, with some positive value, but with some real risks. The market doesn't have to, or want to, play with the live grenades in the sector, and trading, rather than values, will be the key to returns, for the less solid Semiconductors ETFs.
Qualifiers to projections
If the tech industries were to need one bit of good advice, the advice would be "Grow up". The semiconductor sector, in particular, has been making itself very few friends with the apparently endless techno rhetoric about super chips that sell 5 units and cost billions to develop, etc.
Let's spell this out. As far as the investment markets are concerned, semiconductors are about the following, rather less mystic things:
* Sales
* Profits
* Intellectual property rights
* Licenses
* Margins
Anything else can go wherever it likes, but definitely not onto an asset valuation. Drivel, however well informed, isn't a marketable asset, when the risks are so very obvious.
Traders are used to the seismographic approach to life. Funds and institutions aren't. Big capital needs some reassurance, maybe even some reality. Semiconductors ETFs are going to be second class citizens, until that little matter is properly addressed. Returns can be achieved, and in some cases good returns, but don't go to sleep at the screen.
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Last Updated on: 2010-01-14 02:03:40 |
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