Opening a new position in AMAT.

music selection:  “Psycho” — Puddle Of Mudd

weigh-in:  193.8 (2.0)

The market is swooning today, so i’m not opening a new bull spread until tomorrow at the earliest.  Instead, I have a new long trade for my tIRA account.  I keep growth and small cap moonshots there.

But first, the weekend’s closed trades.  My bull call spread in CCI closed over the weekend in the money. I had 4,759 in capital risk.  My short term gain is 4,241 over 40 days which is 89.1% or 813% annualized.  My bull call spread in WELL closed in the money.  I had 4,900 in capital at risk.  I closed over the weekend for a 3,850 gain over 26 days.  That is good for 78.6% or 1,103% annualized.

Today’s market drop has all four of my August bull call spreads threatened, with project short term losses of 2,491 at expiry.  I’m hopeful today’s market action is just indicative of some weak hands getting shaken out or perhaps some institutional profit taking.

Now the case for Applied Materials (AMAT).  The short version of the thesis is the global supply chain of semiconductor chips is concentrated in Taiwan.  With China increasingly threatening to take military action to re-integrate the province with the mainland, China stands to at least temporarily disrupt the supply chain, the take control of more than half of the world’s supply.  Importantly, substantially all of the 5 nanometer capacity is in Taiwan.

The manufacturers are now scrambling to build new foundries.  Many of these will be located in the US.  Also, there will be next generation 3 nanometer capacity built out in the latest round of capex.  Many billions of dollars will be spent over the next 5 to 6 years and AMAT has the best (and for some tools, only) tools for the task.  Most of the capex money will be for tooling and AMAT stands to have very strong revenue growth with high margins over this time.  I rate AMAT a STRONG BUY.

My standard position size in the tIRA is $5,000.  I bought 39 shares this morning for 126.75, deploying 4,943.25 in capital.  It is entirely possible the bubble is finally bursting and this position could end up deeply underwater in short order. My intended holding period is 6-7 years though and this is in an account I will not be withdrawing funds from until retirement age.  I feel content to ride out a market crash.  At any rate, the Fed has made it clear they have gone “full retard” on stimulus and I expect the bull to keep running.

Devour your prey raptors!

The case for Applied Materials (AMAT)

Never miss another opportunity to devour prey!

2 thoughts on “The case for Applied Materials (AMAT)

  • July 19, 2021 at 8:48 pm

    Bear spreads on the VIX are on sale. The 26/27 is historically unlikely and yields 25% in a couple of weeks.

    • July 19, 2021 at 9:03 pm

      That is an interesting idea. I typically don’t like spreads with strikes one dollar apart. Have to buy too many spreads, pay too much in commissions to get up to my 5,000 exposure target.


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