My Intel ideas have certainly come good and now Intel is trading at $37 well above the $20 it was trading at when I first started calling its strategic importance as the big player in US and European established fabs.
Chip fabrication onshore in the US is of the highest strategic importance. In a nutshell not chips, no economy and no national defence. Gone is the world of comparative advantage, hello to a world of ‘maximum lethality.’ That’s AI and drones and all things high tech and you have to be able to make them if you want to have them to project power let alone actually use them.
So much is now pivoting on this axis.
So what now for Intel.
I hold Intel, from about $20, so I like this wild guess my chart doodling suggests.
I like to think of the stock as a multiple of sales. It is up from 2 to 3 times sales and 4x seems to me conservative. Of course this is the US market where NVDA and ARM trade in the 30s, but let's not get carried away.
So this is how I judge the progress of stocks when they reprice, or as the crypto degens say, ‘moon.’
The idea is stocks trade in ranges and these ranges are equilibrium levels. The greater the uncertainty the wider the range. Then something happens and they reprice, which can be slump or rally. They trend sharply until they hit a new comfort zone and then trade sideways at equilibrium.
So the trick is to watch your stock as it travels between these two situations. When it breaks out of an equilibrium you draw a trend line under the move and you wait for that move to stop and go into a sideways channel. You put a line above and below the range you think represents the volatility of that range and then you wait.
So here is Intel.
So the way to play this is:
If you are a buy and holder.
Then follow that theme. It’s a very solid way to go.
If you are a market timer:
You can follow this method above to give you guard rails.
Get out or take some profits once you can't sleep at night.
Set a sell target and stick to it.
If and when your reason to buy is no longer relevant.
When the price seems sensible.
This is solid advice but I’ve never been able to take it.
Sell if you would not buy this position at the current level. It’s totally logical but you need Vulcan logic like Spock to do it.
Personally I’ll do 2 e. because I'm OK to leave something on the table for the next fellow and I’ve been buying in the bottom quartile and selling in the 3rd for many years and it works out just fine.
Intel at x10 sales, maybe. Intel’s business doubles, who is to say no. However, I buy stocks that are contrarily priced and Intel will fit that bill for some time to come. When the price is fair, I'll struggle with the future potential then. As for now it will be interesting to see how far it will run on this initial repricing.