Financial markets and trading

Originally Posted by Jeff

Can you briefly describe what Lam Research does as its core business?

Lam makes semiconductor equipment for large chip-making firms.
Lam grew its share and now is the leader (45% and growing) in so-called etch market. Lam mostly sells etchers but also has recently introduced new products in couple other
processes, cleaning etc.
Etchers are special machines with low pressure plasmas that allow to carve in very narrow features in different materials on Si wafers. I won't go into more details, since it is very technical. All i will say It is very tricky to etch 40 nm channel or via in depths of 3 micron, for example in flash memory chips.

Customers are some or all of the following: AMD, ST Microel., Texas Instruments, Samsung, IBM, INTC, TSMC, UMC etc.

I'm going to have to break down what you are saying here.

Originally Posted by Jeff

I beg to differ with you here. From my own investment experience, Investment is not gambling as a result of risk;

If it clears your conscience to not consider it gambling, let me clue you in on a number of definitions.
1. to play at any game of chance for money or other stakes.
2. to stake or risk money, or anything of value, on the outcome of something involving chance.
3. to wager or risk money or something else of value.
4. to take a chance on; venture; risk.
5. any matter or thing involving risk or hazardous uncertainty.
6. a venture in a game of chance for stakes, esp. for high stakes.
Now I think six reasons is enough to weigh against your stance. I was born at night Jeff but I wasnt born last night. Besides I can tell you someone smarter made these sets of definitions... not me.

But let us put your definition in consideration further....

Originally Posted by Jeff

there are, I believe, successful formula in investment. The question is how you manage risk.

Could I come up with a succesful formula of risk management to cut the odds my way in a certain game in a casino and consider that "not gambling"???

Look I do this for a living. Call me a hedger, trader, broker, principal investor, venture capitalist, etc, etc, etc. It is gambling.

Originally Posted by Jeff

Unless you would like, I will not go further into this now.

I really hope you will go further into this.

Originally Posted by Kui

I really hope you will go further into this.

I'm not going to, it takes too much time (literally, not because I Can't convince you). But my bottom point is clear.

Investment is a lot harder, but at the same time easier, than many people thought. Hard because it takes a lot of time to do an analysis; hard because it drives your feelings crazy; hard because it requires some honest thinking..

easy because it's less complicated than a lot of people thought. I'll rather go back to the original purpose of the post to discuss the definition of investment. But I beg to differ with you investment = gambling.

Originally Posted by ukrainian_CA

Lam makes semiconductor equipment for large chip-making firms.
Lam grew its share and now is the leader (45% and growing) in so-called etch market. Lam mostly sells etchers but also has recently introduced new products in couple other
processes, cleaning etc.
Etchers are special machines with low pressure plasmas that allow to carve in very narrow features in different materials on Si wafers. I won't go into more details, since it is very technical. All i will say It is very tricky to etch 40 nm channel or via in depths of 3 micron, for example in flash memory chips.

Customers are some or all of the following: AMD, ST Microel., Texas Instruments, Samsung, IBM, INTC, TSMC, UMC etc.

Get back to you later. Just for your information though: I know a lot more about the Hong Kong market (Hang Seng Index is the major index) than the US, but let's chat about the US market here too!

Later, I'm goign to watch the Reggina game now

Originally Posted by Jeff

I'm not going to, it takes too much time (literally, not because I Can't convince you). But my bottom point is clear.

No you wont convince me about something I actually do for a living Jeff.

Originally Posted by Jeff

investment is a lot harder, but at the same time easier, than many people thought. Hard because it takes a lot of time to do an analysis; hard because it drives your feelings crazy; hard because it requires some honest thinking..

easy because it's less complicated than a lot of people thought. I'll rather go back to the original purpose of the post to discuss the definition of investment. But I beg to differ with you investment = gambling.

You dont say???

Originally Posted by Jeff

Investment is a lot harder, but at the same time easier, than many people thought. Hard because it takes a lot of time to do an analysis; hard because it drives your feelings crazy; hard because it requires some honest thinking..

easy because it's less complicated than a lot of people thought. I'll rather go back to the original purpose of the post to discuss the definition of investment. But I beg to differ with you investment = gambling.

I have got to go back with what you've just said because I'm shaking my head with a little laughter. Is THIS your reasons why you consider it not gambling???? ... cause its a lot harder.... BUT easier.
You know what you've said above can be applied to any person walking in a casino and and coming out with more than what he came in with.
I wonder why you want to change the subject when you were 1/2 part in starting it??? Again some more definitions for you to ponder on.
Investment.... the putting forward of money or capital in an ATTEMPT to gain profitable returns, as interest, income, or appreciation in value.
note the word ATTEMPT...meaning risk involved.
Yeah change the subject. PLEASE.

Kui is right, gambling is gambling, whether you are investing in business or particular football results if you are taking a financial risk on something that isn't a certainty then it is a gamble!

You can certainly narrow the odds through research but no matter what you invest in there are variables beyond your control..

Originally Posted by Kui

No you wont convince me about something I actually do for a living Jeff.

oh you are an investment banker or something along this line?
And for doing for a living, I think I'm doing it for a living, for now at least, too, since my main stream of 'income' comes from investment?

But no; from my philosophy of investment in the stock market, investment is not a gambling. You may laugh me off, but I don't consider 'put' or 'call' or 'long' or 'short' as a siginfiicant way to earn in the stock market. I Consider them as hedges, (from a persoal investment point of view, of course) and most of the time I do not beleive in Technical Analysis. Headline like, "Buy ABC now for it hit the bottom" never appeals me. If I invest in a stock, then I have enough (more than enough) reasonings to buy the stock. I have recent success with a stock that rose by 40% (not blue chips, nor <HK$10) and I still believe that it's very undervalued right now. So what people call as 'risk' to buy the stock, I think it's a bargain.

Ultimately, of course, you (investors) make the decision. If i don't know anything about the company then yes it's a gambling. But if you know enough about the company (its financial statement, management etc) then you are in a better position than a lot of people in the stock market.

Originally Posted by Stezagud

You can certainly narrow the odds through research but no matter what you invest in there are variables beyond your control..

I definitel agree with you becaues not all risk can be reduced. So that is the side of the 'gambling' that they are talking abuot. I'm talking about the 'research' side, because it can significantly reduce your risk, (i.e., degree of gambling). i don't think we are on a different ground here, but I think a lot of people underestimate of just spending an hour or so looking at hte financial statements of a stock and to decide whether it's a good one or not.

Jeff... if you dont consider it gambling, I got no problem with that. It is what it is. No matter how good any investor out think their stratagem models are, whenever there are outside forces beyond the control of human intervention (CHANCE) you have whatever you want to call it (gambling, investing, etc).

Originally Posted by Jeff

(i.e., degree of gambling).

you mind explaining what you just posted here? Did I not just see you explain a reason because you're reducing your risk (i.e. degree of gambling) that it isnt GAMBLING? LOL!

Originally Posted by Jeff

I definitel agree with you becaues not all risk can be reduced. So that is the side of the 'gambling' that they are talking abuot. I'm talking about the 'research' side, because it can significantly reduce your risk, (i.e., degree of gambling). i don't think we are on a different ground here, but I think a lot of people underestimate of just spending an hour or so looking at hte financial statements of a stock and to decide whether it's a good one or not.

When you're talking about a research "SIDE" what other side are you leaving out? The gambling side perhaps? Otherwise... research is just research dude.

Originally Posted by Kui

When you're talking about a research "SIDE" what other side are you leaving out? The gambling side perhaps? Otherwise... research is just research dude.

research is just research, of course; I"m just surprised (and I'm not saying you of course) that a lot of people underestimate the power of research and go for the peripheral route. I do believe that knowledge is the key in our life. Gambling side, of course. Insider information side? Knowing about the industry side? etc...

And perhaps, I never have luck in gambling; so I rather rely on something more concrete than just leaving it to the God of Luck, although I can only agree with you that luck is part of our life...

Again, all I"m saying is the mindset. If you treat investment as a gambling, then it's a gambling. But if you treat investment as something that requires time, energy, emotion etc., then it's certainly more than just gambling.

Arrr.. one more thing Kui, when I say research I'm not talking about Goldman Sachs or Morgan Stanley's analyst rating...

Anyway.. back to financial market... I have never really had any interest in hte US market, although I did try. The problem si that I'm a foreigner and I find it difficult to succeed in a market where you do not have an understanding of the culture; when I say culture I mean things like how things work, what works best... say everyone in America knows about Walmart but I'm not at all familiar with the company, even from my personal experience as I just do shopping. But say if you are talking my home place (hong Kong and thus Hong Kong stock market) I can tell you how good this restuarant, which is listed, is in Hong Kong, its reputation, its improvement (or no improvement) etc...

To Ukarinian: It sounds like Lam Research is one of the top companies in this area. I'm not at all familar with teh tech market, so I never imagine myself investing in it. But here are the things I usually consider:

1) Financial statement: Does it have a healthy balance sheet, income, and cashflow? Does it have debt? If income or EPS jumped significantly in one year, is it because of the expansion of business or one-time profit? Is current ratio an acceptable one in this area?

2) Management. Do they have a lot of turnover recentlyl? Did their CEO / Board buy back stock? Did their CEO stick to what they said a couple years ago about their strategy? In other words, do they stick with what they say?

3) What's the future about the company? is it a monopoly, or there are many competitors? What makes the company competitive in the future (e.g., able to consistently introducing new technologies).

4) Is the price (and I mean PE) too high? Is it acceptable to buy now? Chinese Insurance (2628) is a great stock, but it's currently trading almost 60 times of its EPS. is it worth THAT much, even if it's a great one?

Cheers....
j

Originally Posted by Jeff

3) What's the future about the company? is it a monopoly, or there are many competitors? What makes the company competitive in the future (e.g., able to consistently introducing new technologies).

4) Is the price (and I mean PE) too high? Is it acceptable to buy now? Chinese Insurance (2628) is a great stock, but it's currently trading almost 60 times of its EPS. is it worth THAT much, even if it's a great one?

Cheers....
j

These are all quite typical questios things on has to consider before investing into a comp.
I will get back to you later. We are having a birthday party tonight, need to get ready.
P.S.: what do you think of PEG number and the 3 questions I left above in respect to GOOG. I know one guy for is retiring from Google and he is only 40+ or so.

I see two questions, not three?!

3) Future is positive if not bright. The management is definitely very competitive, as recently seen by the acquisition of youtube. This is also consistent with their strategy to acquire other smaller 'companies' or 'firms' early to edge out their competitiors, such as yahoo!. I don't consider it monopoly, but they have been very quick in snatching acquisition opporutnity. Some say that acquiring youtube is a failure because of the litigation issue, but I believe that GOOG has made the right move because 'watching video online' IS the trend now, and technology is all about trend.

Who's the Person of the Year, according to the Times magazine? YOU. not the Chinese president, nor Bush. YOU. We are the Person fo the Year because of our ability to communicate faster, and upload videos and to get first-hand information. Police abuse? busted. Best moment in your life? Shown. attract potential employers by makinga video? no longer a dream. With youtube, you can do everything.

And GOOG got it, first.

If the line of record that GOOG shows is not enough to convince people that they can remain competitive in the years to come, I don't know what willl.

4) Good question. PE ratio = 64.26 ( Idon't have the PEG ratio with me here ,but I imagine it to be quite high as well?) and that's 127.25% above the industry. Does this mean that it's expensive? No. It simply reflects the potential that Google has. Yoru question about retiring from GOOG and he is only 40+ or so, that I don't know, but I know that GOOG has just been selected as the best company to work with. What does this tell you about Google? They take care of their people, and Human Resource, in my opinion, is an extremely important asset that again will give them a competitive edge. Research (in business about organization and management) shows that there is a positive correlation between job satisfaction and job performance, job satisfaction and commitment, and a host of other positive outcomes such as organizational citizenship behavior. GOOG in this area thumbs everyone.

In terms of recent price, GOOG is trying to beat the resistence again. Should it break, it may be a good time to buy. I hope that this will answer people why GOOG is 160% up a year ago while Yahoo down by 20%? The high PE (or PEG) ratio doesn't mean that it's expensive as a result of people betting (or gambling) on the future; it's a truthful reflection of their competitive edge.

J

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