QQQM - SMH: Why I Think History Says Semiconductors Are A Sell
- Semiconductors are without question the "new oil", but that does not mean they will produce positive returns for investors in the future.
- Historically, semiconductor stock performance is more closely tied to macro conditions (for example, S&P 500 earnings and commodity inflation) than intrinsic growth.
- There is a correlation between computer investment as a percentage of GDP and semiconductor returns, but it is not clear that it is predictive.
- For semiconductor returns to remain positive, commodity inflation will likely have to get below S&P 500 earnings growth.
- We have experienced a massive technological supercycle and historically, these supercycles (as with oil) have been followed by relentless bear markets.
For further details see:
SMH: Why I Think History Says Semiconductors Are A Sell