1. Introduction
First, let’s take a look at the past five semiconductor cycles since 2010. From a time perspective, the current fifth upward cycle has lasted 35 months, while the longest in the past 15 years was 36 months. Of course, AI is still booming, and I cannot say that the sector cannot continue to rise, but from the perspective of a complete investment cycle, it has basically been sufficient for me. Therefore, on this day of market excitement, I have chosen to liquidate my positions in this sector.
2. What Has Been Done in the Past Three Years
Since the end of 2022, I have focused on semiconductors, and in February 2023, I wrote my first article on how to adjust during the semiconductor downturn. Now, it has been nearly three years. During this period, I have written 25 articles from the perspective of semiconductor observation. Although the review articles are numbered 32, I have actually written over 40. In total, there are 70 articles, averaging two summaries per month. Of course, this does not include regular summaries of sub-sectors.
3. Areas for Improvement
However, there are still many areas where I have not done well. I focus more on the performance outlook of companies, the degree of valuation realization, and potential, but I lack timely grasp of short-term news, which still relies on the support of tech leaders in the investment group for more timely information.
4. Holding Experience
The volatility in this sector is indeed quite large, and it is greatly influenced by emotions, so the holding experience is quite average. One can either trade to smooth out returns, but the problem is that one might ultimately fail to keep up with market changes. Alternatively, one can hold without action, but doing so may lead to extreme fluctuations.
5. Experiences and Lessons
Currently, the market still seems to follow past patterns, and there is always uncertainty in the future. Just as I mentioned at the beginning, I do not know how far the current market enthusiasm will go.
The most noteworthy experience is:
1.New is better than old.Given the iteration speed of China’s manufacturing capabilities, after a technological breakthrough, a sunrise industry will enter a mature phase within three years. Therefore, the first and second waves can be pursued, but the third wave should be avoided.The first wave is the initial introduction, where the market cannot assess the space,and the A-shares are mainly driven by speculative themes. The second wave is the performance realization during the growth phase, where companies with good performance can achieve higher valuations. The third wave is industry saturation, where it is very difficult to emerge from areas of overcapacity.
2.In the four quadrants of investment, there are macroeconomics, industrial policies, company performance, and people.The fourth point– the behavior of people needs further study.Therefore, the upper and lower limits of company valuations need to be given a wider range, meaning that during pessimistic times, one should be more pessimistic, and during euphoric times, one should wait until the market has peaked.
6.What to Do Next
I have previously mentioned that I have been worried for the past year that once this technology cycle is over, there will be no new direction. Therefore, I have spent a lot of effort looking into other industries, which has also affected my focus on tech stocks in the past three months.
What results have come from other industries?Currently, I am tracking 215 individual stocks, covering most industries and leading companies in the A-shares, including technology, consumer, pharmaceuticals, advanced manufacturing, and some cyclical sectors.The subsequent work is to better track these leading growth companies and seek more advice from industry leaders.
Can these companies outperform computing or semiconductors? It may be difficult in the short term. However,the characteristic of A-shares is that every three years, a major hot sector emerges. If we do not act now, we may miss the opportunities when they arise in the future.
In the short term, I will reduce the reviews of tech stocks and write periodic tracking reports on sub-sectors.In the future, I will write more analyses of other industries as a transitional period, and this transitional period is also a golden period for future reserves.