Semiconductor Holders (SMH)

Howard wants to buy put options on SMH. Me? I will wait and see which way she breaks from this narrow range, which started in mid 2005, before I do anything. Has it been trading in range for that long?

My guess is that semiconductors aren’t the technology darlings they once were, maybe its because chips are more of a commodity now.

Disclosure: Long INTC from years back.

Update

Here’s a perfect case for long term passive investing in an ETF. I wrote this post back in May 2007 and when I moved my blog to Hugo I put the post into archive. Now that I hold a position in SMH again, I decided to revist this post and update it.

Hindsight is always 20 / 20 and back when I wrote this post I wanted to be a day trader and make millions, so that required short term positions and selling after short term gains. I ended up selling this promising diversified ETF for short term gain instead of long term appreciation.

Stupid. Stupid. Stupid!

Look at where $SMH is trading today, $203 a share!

Doing a rough calculation here (without factoring in the dividends), if I held just 100 shares of SMH from 2007 till now, I’d have a rate of return of 442%.

Reinvesting dividends it would’ve been higher. My DRIP account of INTC didn’t perform so well, why? Because this ETF was diversifed into other chip stocks like NVDA, the new darling of the GPU chip world. Just that stock alone is what pushed SMH to new highs!

My advice if you’re starting out investing is to buy diversified ETF’s and Mutual funds that are low cost and generate dividends. Then reinvest those dividends and hold on for the long term. Long term always wins. Always.

Disclosure: Still long INTC via DRIPs and long SMH.

Learn Stock Trading, Investing, and Risk Management

There are a handful of financial and trading books that have made a HUGE impact on my investments. If you want to trade and learn about money and risk management then I suggest you get the Van Tharp book. If you want just focus on long term investing, get the Random Walk Down Wall Street book.

Hell, get them both. I owe my wealth to what I learned in those books.