Sit Back and Give the Markets Time: The Pain Trade Remains Higher
By far the best thing you can do now as an investor is sit back and give the markets time.
So far $Invesco QQQ(QQQ)$ and $SPDR S&P 500 ETF Trust(SPY)$ has seen no structural break so there's no reason to shift more defensive yet. You just need patience.
You've got optics plays at inflection point. As a reminder:
-> $Lumentum(LITE)$ sold out to 2029.
-> $Applied Optoelectronics(AAOI)$set to ~12x revenue in 2 years.
-> $Marvell Technology(MRVL)$ is set to 10x revenue by 2031.
You've also got all leaders like $NVIDIA(NVDA)$ $Broadcom(AVGO)$$Advanced Micro Devices(AMD)$ $Marvell Technology(MRVL)$ etc just showing incredible forecasted demand. We now have players like $Marvell Technology(MRVL)$ even forecasting ~10x in revenue through to 2031. That's the confidence they have.
The easy arguments and lazy takes to make now are bubbles / yields / financing etc. It's legitimate arguments but you have to ask yourself why.
-> Yields at this rate are ok if growth is very high which it is.
-> Financing is fair but likely doesn't change the outlook for the next 3-4 years. It also certainly won't effect demand for small percentages of the cluster (like optics for example).
The pain trade remains higher.
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