Lessons

1. If VIX is under 26, buy the dip. If VIX is over 26, sell the rip.

2. Always trade in the direction of the larger trend. Find the strongest trend in your time period.

3. Nothing as bearish as a failed breakout. Nothing as bullish as a failed break down.

4. Don't worry about the last dollar. Take your money and go to the beach!

5. No more than four positions at a time. Preferably 2-4. Scope out others. Pick the strongest.

6. Buy the strongest; sell (short) the weakest.

7. Nothing is guaranteed. Nothing.

Tuesday, November 3, 2009

Big Picture Economy Thoughts - Semis

The New Chip Cycle:

http://www.forbes.com/2009/10/13/whittington-apple-japan-intelligent-investing-electronics.html?partner=relatedstoriesbox

This post is a quote from the article at the link above:

SUMMARY:

This is the early phase of both a Tech Cycle and Global Economic Recovery.

Semiconductors have been underinvested in for nearly 10 years.

There are few new fabs under construction and the installed base is rapidly aging.

Semiconductor demand is coming from both Enterprise and Consumer customers.

New geographies have increased purchasing power, and tastes appear universal.

Pricing and margin degradation of the 2004-2007 time frame is over.

Electronics end markets are fueled by new product cycles.

Wireless spectrum swamped by broadband multimedia spurs infrastructure.

Smart Grid dictated by energy costs and demand for electricity to run the Internet.

Computer services are undergoing major consolidation and M&A activity.

The PC installed base has reached the obsolescence point.

Internet neutrality is a driving force for new electronics infrastructure.

Smart phones are a component-rich form factor displacing cellphones.

Mobile connectivity is an essential of the modern economy.

Windows 7 promises a viable upgrade path for Microsoft PCs lacking in Vista.

Apple software and applications drives constant upgrades within its ecosystem.

Applied technology infuses industrial, mechanical and vehicular applications.

U.S. companies have outsourced volume production but remain innovation leaders.

Software, system architecture and services remain American strong points.

Typical chip upturns see 4x-6x trough to peak share price returns.