I haven’t had the time over the weekend to give the topic of the 21st century stock market cycle will look like the time and attention it deserves–tomorrow, I hope. Fathers Day with my family and the wedding of the daughter of close friends have shattered my good intentions. A brief note about INTC instead.
INTC has been a pretty terrible stock in the two years or so I’ve owned it. Yes, it has gone up. But so has the market–and the latter by a much larger amount.
INTC made an immense leap from just above $19 a share in August 2011 to briefly stick its head above $28 in April 2012. But then it gave just about all the advance back as it became clear that no major manufacturer of mobile devices was going to take the chance last year of putting INTC microprocessors in its devices. INTC chips were still too big and too power-hungry, despite the enormous amounts of money the company had spent–and continues to spend–on R&D and new production facilities.
A year later, the story is basically the same, waiting for success in the mobile arena, with four differences:
–the market appears to be rotating away from high-dividend defensive issues toward the tech sector,
–INTC’s newest chips are smaller, much more powerful, generate less heat and use less battery than last year’s
–PC makers appear to be making a competitive response to the appeal of tablets (cheap + instant-on) by lowering prices and coming out with tablet-like devices that have significantly more power, and
–INTC has its first “real” customer for a tablet chip–Samsung.
It isn’t all clear sailing yet for INTC. Some holders, fearing a repeat of the price action of 2012, will be tempted to declare victory and sell. So far, they’re in the minority. As for me, I’m content for now to wait and watch.