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Semiconductor Sector: A Tale of Ups, Downs, and Mouth Watering Mean Reversion

On July 31st, NVIDIA (NVDA) stock experienced a significant rally, outperforming other leading stocks in the semiconductor sector. While other semiconductor stocks also saw gains, none were as pronounced as NVDA's surge. However, the very next day, NVDA led the declines, offering a perfect scenario for those who sold on July 31st and repurchased their shares on August 1st. Such a dramatic swing can seem illogical, but it underscores the volatile nature of the semiconductor market.

Despite these fluctuations, I remain bullish on NVDA. They appear to have a massive edge over competitors, with soaring demand for their products. NVIDIA's technological advancements, particularly in AI and graphics processing, continue to drive their market position and investor confidence.

In my research, I came across an ETF that piqued my interest: Columbia Seligman Semiconductor and Technology ETF (SEMI). This ETF caught my eye due to its well-curated top holdings, as presented on E*TRADE:

  1. Lam Research Corp (LRCX) - 8.12%
  2. Broadcom Inc (AVGO) - 6.92%
  3. NVIDIA Corp (NVDA) - 6.39%
  4. Applied Materials Inc (AMAT) - 4.94%
  5. Semtech Corp (SMTC) - 4.66%
  6. Analog Devices Inc (ADI) - 4.54%
  7. KLA Corp (KLAC) - 4.31%
  8. NXP Semiconductors NV (NXPI) - 4.13%
  9. Marvell Technology Inc (MRVL) - 4.04%
  10. ON Semiconductor Corp (ON) - 3.82%

The holdings reveal a lot about the ETF's analyst optimism, and I must say, I like both the selections and the order in which they are presented. This ETF pays a modest dividend, but it’s not particularly appealing compared to other options. However, the fund shows great potential for growth given the robust selection of companies. It’s important to note that ETFs do not always offer tax advantages, especially under current tax policies. (Thank you, Joe Biden, for raising taxes rather than reducing spending – a bit of sarcasm here, and let's not exclude New Jersey's Governor Murphy for similar actions.)

Back to the ETF, I expect this fund to grow quickly, but technology remains a hot potato. A new company could emerge and steal the spotlight at any moment, adding to the allure of a diverse fund like an ETF.

It's surprising to see Intel (INTC) excluded from their top holdings. Intel, the pioneer in semiconductors, seems to have lost its appeal among investors. Personally, I still prefer Intel chips in my computers. The only computer I ever bought with an NVIDIA chip was an HP All-in-One, a massive tablet for an ex-girlfriend. She had a small apartment and valued space, but that computer was terrible. It would freeze often, making it almost impossible to use. I always noticed the NVIDIA sticker on the front. I've had plenty of HP computers over the years that performed well. I can't believe NVDA is rallying as it has over the years; I always felt they were a flop. I think Jensen Huang owes me a refund or a computer with their improved chips!

I am not a professional and this is not investment advice. I am a hobbyist investor with extensive knowledge of computers, managing funds passively for myself and my family.

Investor Relations Links:

Lam Research Corp: https://investor.lamresearch.com/
Broadcom Inc: https://investors.broadcom.com/
NVIDIA Corp: https://investor.nvidia.com/
Applied Materials Inc: https://www.appliedmaterials.com/us/en/investors.html
Semtech Corp: https://investors.semtech.com/
Analog Devices Inc: https://investor.analog.com/https://investor.analog.com/
KLA Corp: https://ir.kla.com/
NXP Semiconductors NV: https://investors.nxp.com/
Marvell Technology Inc: https://investor.marvell.com/
ON Semiconductor Corp: https://investor.onsemi.com/
Intel Corporation: https://www.intc.com/
AMD: https://ir.amd.com/

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