Wednesday, May 17, 2006

Dear Shorts and Bears

I sincerely hope you are also having a nice hard laught at my latest public ridicule. I advised you to run to cover, because there were coming three major good news for AMD: The Core2-killer power efficient processors, the launching of Dual Core Turions and Hewlett & Packard results above expectations. Nevertheless, the stock you took bearish positions in is down. Congratulations on the money gained.

Well, I must be a fool, because I haven't understood what is going on, I still want to put more money on bullish positions in AMD. My (surely) damaged brain tells me that:

  • AMD has a number of partners to develop platforms, that means competition which will, compared to Intel's centrino duo, trio, quartet,...:
    • Push down costs and prices
    • Improve quality, performance and appeal. Remember that we are talking about the combined competitive creativity of nVidia, ATI, Broadcom, Hewlett & Packard, Sun Microsystems, IBM, even Gateway, Acer and the whole channel too
    • Offer variety to suit every customer need
    • All those companies acquiring products from AMD even if they are inferior to Intel's just because they can add much more value to them
    These all are benefits of having a real ecosystem: AMD allows partners a lot more aggregated value potential.
  • Silicon On Insulator will give them always the edge on power efficiency, and possibilities such as Z-Ram memory gigantic caches
  • The integrated memory controller (Direct Connect Architecture) coupled with I/O connectivity through Hypertransport, and the glueless, single-space memory model that Cache Coherent Hypertransport offers for n-way systems and coprocessors guarantees not only
    • Superior 2, 4, N-way performance
    • Coprocessors
    • but also pervasive advantages in new crucial features such as Virtualization (as I explained here)
    • It takes ages to design, debug, develop, mass produce, thus it is as long term an advantage as it gets
  • Simple, straightforward and sound designs such as K8 are always better than over complicated and pompuous designs such as Core2 for obvious and non-obvious reasons.
  • Repeated abuses by Intel are reason enough to opt for AMD.
Please, laugh, I am telling you that I am dumbfounded by my losses in the stock market, I just put my money in my foolish opinion that it should account for something that AMD has right now better products than Intel, and even if Intel's promised pies in the sky are actually better than AMD's, anyway AMD:
  • Has superior products in mass production, mass marketed
  • APM allows AMD to react swiftly to changing market preferences or strategies, such as concentrating today everything on dual core mobiles, and two months down the road in n-way servers
  • All financial indicators in AMD have been steadily improving
You know, I am becoming crazy, because I see news like Intel crashing because they can't sell their products with AMD overcompeting them all across the board and instead of that being a reason for confidence about AMD in the stock market, it has been a reason for fears!, it also makes me crazy that the single most important differentiator among Hewlett & Packard and Dell is that the former is a slave of Intel processors, and yet Dell going down the toilet takes AMD with it... I wonder, "how come"? Dell is *not* a customer of AMD!! It is weird, but my faulty logic tells me that since Dell has less credibility in general, the fact that it is refusing AMD must have less importance than when it was a successful company...

Keep laughing, because to tell you the truth, Dr. Ruiz, the wetback CEO, and the Engineer President, Mr. Meyer, really inspire a lot of confidence in me, but Mr. Otellini and fellows really make me laugh, truly!

It has been so repetitive that I see financial institutions downgrading AMD such as the Deutsche Bank, Merryll Lynch, Bank of America, and at the same time increasing their long positions; and similarly, pumpy&dumpy with Intel that I don't know what's the meaning of a downgrade anymore. It is so utterly confusing to see the greatest news I have seen about AMD in a while, you know, the justification of the whole power efficiency campaing which made me do the effort to inform you, dear shorts and bears, with all of my sincerely, writing this article that you should cover; and then realize that while I was writing the article Bank of America was downgrading AMD as if instead of good news there were bad news. It makes me wonder, what are good news for AMD? If it sells a lot with the greatests margins, it takes a 6% hit. If it does great products, it goes down because it is in a collision course with Intel, if they increase production, that's bad because they have larger depreciation expenses, etc.

The weirdest thing of all is that I am consistently making predictions about the technology market and they fulfill, but my interpretation should be wrong because the stock market seems to understand them exactly the opposite.

The laughs don't end there. I am being contrarian to my instincts. In the first manifestation of schizophrenia in my life, being totally optimistic about AMD, I took moderately bearish positions such as writing in-the-money (covered) calls, and WON MONEY!

I expect the quality of my posts to get down, like I said, I am becoming crazy, not because I am losing money, but because I see the stock market world upside down. Since I am heading for a margin call, probably I won't be able to pay a Psyquiatrist who could help me be clear minded enough as to keep the quality up. Perhaps my friends and family should move to declare me legally incompetent.

My public ridicules are so pathetic that even I am having a blast!


Anonymous said...

You doing a great service to the public, keep up the good work you not going crazy.

Anonymous said...

You know. I just want to say that you have the general concept figured out. You need to play for the longer term. Short term is more of an art than a science. Anything can happen when you think you try to time the market to the tee.

For example, the market took a dive in the past few days in general, taking AMD with it. That's is not something that you can easily anticipate. Long term, AMD is going to be a great buy.

Anonymous said...

Sometimes the market goes up, sometimes it goes down:

Thou shall not gloat!