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Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

AI Stocks Portfolio Accumulate and Distribute

Companies / Investing 2024 Jun 26, 2024 - 06:09 AM GMT

By: Nadeem_Walayat


Several more target stocks have entered their buying ranges - TSMC, ASML, Apple.ALB, CRUS, JBL, GPN to join the likes of AMD, ADSK, GFS and TSLA.

The key metrics to watch are the buying ranges and deviations from all time highs i.e. AMD is well within it's buying range and is trading at -36% deviation from it's all time high set just a few weeks ago! As well as now no longer trading above 100% of it's PE range unlike META.

Here's how I quickly read where the opps are using the Spreadsheet.

Where the Primary stocks are concerned right now where are the opps to accumulate? What stands out?

1. Tesla -75% of PE range, -65% from ATH, -41% YTD, -17% from top of buying range. EGF is negative at -21% but one can't get an opp without there being bad news.

2. Nvidia 57% of PE range, -22% from ATH, -16% MTD, Eye watering strong EGF's, currently Nvidia is at it's cheapest valuation since it blasted off May 2023. The stock price broke below support at $800 and looks destined to trade under $700 to target $600 which would represent a whopping 40% deviation from it's recent ATH. Key milestones along the way will be for a break below $750, $700, and $660 on route to $600 to enter it's buying range of $628 to $496. At this point I suspect the stock will find strong support at $700 given that so many have been waiting to buy Nvidia, that and the earnings are a month away on 22nd May, still $700 will deliver a 30% deviation from the high.

(Charts courtesy of

3. TSMC 73% of range, -20% ATH, -2% below top of Buying range. Positive EGFS, Presenting an unfolding app to accumulate at $128 vs near $160 a month ago..

4. AMD 95% of PE range, -36% ATH, -10% below to of buying range that extends down to $136, Positive EGFS, only a few weeks ago AMD was $228 now $146! I trimmed heavy in the run up to the high so have had plenty of scope to reaccumulate. Imagine selling at $210 and buying back at $150, that's an effective buying price of $90 vs those who just DCA / buy and hold, that's how ones position becomes FREE over time which it can never be if one just buys and holds. This is why it's pointless to look to sell the tops or buy the bottoms, the only prices that matter are the spreads between where one sold and where one re bought, even selling a chunk of AMD at $195 and buying back at say $155 results in $40 erosion in ones average price paid per share, so an original $90 buy now becomes $50 for those shares, all without trying to sell the top or buy the bottom. The only thing that matters is that you never sell at a loss. Never do something stoopid like Sell META at $100 because you think you can invest in something better because Clown Cramer says it's finished. That's how to wreck your portfolio!

Just before the dump I sold a large chunk of LRCX at $960, current is $870. So say if it continues to correct down to $760 and I bought back what I sold then I will have lowered my average price paid for those shares by $200, so say I originally bought at $600 which would then become $400. It does not matter where the individual buys are as we will only know THE low in hindsight, the only thing that matters is that I am buying back for less than where I sold.

As I often say there is no easy money, you have to work for it. People want it easy, bung it in an S&P ETF, play around with the numbers to pretend they are getting a higher return than what they are, all you'll get in the S&P is 8% per annum. My objective is not really focused on return, it's more focused on driving down the average cost per share to ZERO via trimming and reaccumulating, so what if I bought AMD at $165, and more at $155 and even more at $145, these rebuy's are still a lot less than where I sold a few weeks ago.

The above current real time examples illustrate how it's done in practice. For instance Tesla's fallen to $147 thus prompting over exposure to 129% invested of target, there'll come a time when Tesla is trading at $400 by which time I will have trimmed down to probably under 90% invested, what will be the average cost per share? Probably a lot lower than $147. I already did this last year when I bought the dip all the way down to $100 and then trimmed about 80% of what I bought on the rally to $300.

Though don't make the mistake of over trimming and then be sat 90% in cash! I keep a close eye on the total percent invested as I want to aim for my portfolio to be around 80% invested so as to capitalise on the underlying inflation mega-trend. The rich don't sell assets, they are constantly adding more because they tend to take things to the next level by BORROWING against their assets i.e. leverage. So in effect never sell and thus don't trigger taxable events with the objective being to pass on their assets to the next generation. Meanwhile Joe blog's is spinning his wheels by selling good stocks for 10% or 20% gains or worse taking a loss during a draw down and then sat mostly in cash which is constantly losing it's value.

So one should not fear falling prices because -

a. They might not fall!

b. That any fall will be temporary

And thus the REAL RISK is NOT to be INVESTED in good stocks. Instead be parked in cash losing value.

You already do this via the mortgage on the home you live in, borrowed against an asset that you have no plans to sell.

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Q1 Earnings Season
TSM - $127.EGF +4%, +30%, PE 24.3, PE Range 73%
TSLA - $147 - EGF -21%, +2%, P/E 47, PE Range -75%
RTX $102 - EGF +2%, +356%. PE 20
META $481 - EGF +24%, +39%, PE 30.9, PE Range 153%
IBM $181 - EGF +14%, +7%, PE 18.9, PE range 337%
Lam Research - $870, EGF +8%, +16%, PE 31.8, PE Range 173%
Google $156 - EGF +8%, +25%, PE 26.8, 89% of PE Range
INTEL $34, EGF R29%, R62%, PE 34.2, PE Range 1300%
Microsoft $399 - EGFs +4%, +12%, PE 36.1, PE Range 82%
KLAC $628 - EGFs -2%, +9%, PE 19, PE Range 164%.
WD $66, EGFs -83%, -154%, PE -11
AMAZON $175 - EGFs +30%, +68%, PE 62 , PE Range 69%
AMD $147 - EGFs +3%, +60%, PE 55, PE Range 95%
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By Nadeem Walayat

Copyright © 2005-2023 (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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