Market's tanking. Time to buy?

[ChapInTokyo]

Further to the FOMC news and the tanking of the US stock indexes, the Tokyo market's tanking this morning too.

Could be a good time to buy, say Tokyo Electron at a nice price, as a long term buy and hold? What do you reckon?

[Tsumitate Wrestler]

Further to the FOMC news and the tanking of the US stock indexes, the Tokyo market's tanking this morning too.

Could be a good time to buy, say Tokyo Electron at a nice price, as a long term buy and hold? What do you reckon?

What is your thesis? Why would you buy such a small segment on the semiconductor market in Japan?

If you want exposure to semiconductors in Japan Global X Japan Semiconductor ETF 2644.T would at least give you some diversity. But still....

[ChapInTokyo]

Further to the FOMC news and the tanking of the US stock indexes, the Tokyo market's tanking this morning too.

Could be a good time to buy, say Tokyo Electron at a nice price, as a long term buy and hold? What do you reckon?

What is your thesis? Why would you buy such a small segment on the semiconductor market in Japan?

If you want exposure to semiconductors in Japan Global X Japan Semiconductor ETF 2644.T would at least give you some diversity. But still....

I guess my thesis is that it’s a world beating market leader with a proven track record and due to the market tanking this morning trading at a slight discount to fair value.

It’s also the second largest holding in the Japan Global X Japan Semiconductor ETF 2644.T so as a part of my sector diversified Japan stocks portfolio, it seems to be a good one to have now that it’s somewhat cheaper.

Incidentally, Bing had this to say about it:

### Investment Thesis for Tokyo Electron (TEL)

**1. Market Leadership and Competitive Advantage:**
Tokyo Electron (TEL) is a leading player in the semiconductor equipment industry, holding dominant positions in several critical segments. For instance, TEL has a 100% market share in the EUV lithography coater/developer segment¹. This strong market position provides TEL with a significant competitive edge and pricing power.

**2. Growth Potential in the Semiconductor Sector:**
The semiconductor industry is poised for substantial growth, driven by advancements in AI, increased demand for high-performance computing, and the expansion of 5G technology. TEL, with its comprehensive product portfolio, is well-positioned to benefit from these trends¹.

**3. Cyclical Industry Dynamics:**
The semiconductor equipment industry is cyclical, with equipment makers typically performing well during upcycles. With the anticipated increase in wafer fabrication equipment spending, TEL is expected to see significant earnings growth in the coming years¹.

**4. Strategic Geopolitical Positioning:**
TEL's significant revenue exposure to China places it advantageously to benefit from the country's push for technological self-sufficiency. This strategic positioning is likely to contribute to TEL's long-term growth potential¹.

**5. Financial Health and Valuation:**
While some valuation metrics suggest that TEL may be overvalued³, the company's strong financial health and growth prospects make it a compelling investment. Investors should consider TEL's robust market position and the positive outlook for the semiconductor industry when evaluating its valuation.

**Conclusion:**
Investing in Tokyo Electron today offers exposure to a market leader in a high-growth industry with strong cyclical dynamics and strategic geopolitical positioning. Despite potential valuation concerns, TEL's competitive advantages and growth potential make it a promising investment opportunity.

Would you like more detailed financial analysis or information on specific aspects of TEL's business?

ソース: Copilot との会話、 19/12/2024
(1) Buy Recommendation for Tokyo Electron: Market Leadership .... https://markets.businessinsider.com/new ... 1033684032.
(2) Should I buy Tokyo Electron (TOELY) - Zacks Investment .... https://www.zacks.com/stock/research/TO ... yle-scores.
(3) PEキャリアを目指す：③Investment Thesis （投資仮説）の立て方. https://note.com/kamenekoneko/n/ncadbe1baa9fe.

[Deep Blue]

TEL is a world class company and one of the best in Japan with respect to their competitive position. For the long term (10 years+) it should be an excellent investment.

However, for the short term (1-3 years) I have concerns they are over-earning due to their Chinese exposure, where China has aggressively ramping their semiconductor spending in an attempt to build out their own domestic chip fabrication capacity. This has two big risks - if this spending does reduce their TEL's orders and profits are going to take a nose dive and the valuation will follow.

Over the medium term, China's huge investment is going to impact global supply/demand negatively and this is going to mean TEL's other, non-Chinese customers are going to spend less too. Big splurges in investment are typically followed by a long digestion period as demand has to grow to meet all that new supply.

So personally I wouldn't buy Tokyo Electron now - it is a great company but I think not a great investment for the coming few quarters.

[ToushiTime]

Further to the FOMC news and the tanking of the US stock indexes, the Tokyo market's tanking this morning too.

Could be a good time to buy, say Tokyo Electron at a nice price, as a long term buy and hold? What do you reckon?

I don't own Japanese stocks but am curious, do you also invest in US stocks?

For my fun portfolio, I spent some spare cash on a handful of quantum computing stocks including IONQ a couple of years ago.
Thanks to recent media coverage, they have gone through the roof recently.
I regard them as "moonshots" that are just a small part of my investments and that will be interesting to watch to see if one of them blossoms.
I am not a Boglehead puritan and have to scratch that itch sometimes

I was thinking of accumulating more today, but resisted the temptation as they are already on a tear, and I set myself limits.

[ChapInTokyo]

TEL is a world class company and one of the best in Japan with respect to their competitive position. For the long term (10 years+) it should be an excellent investment.

However, for the short term (1-3 years) I have concerns they are over-earning due to their Chinese exposure, where China has aggressively ramping their semiconductor spending in an attempt to build out their own domestic chip fabrication capacity. This has two big risks - if this spending does reduce their TEL's orders and profits are going to take a nose dive and the valuation will follow.

Over the medium term, China's huge investment is going to impact global supply/demand negatively and this is going to mean TEL's other, non-Chinese customers are going to spend less too. Big splurges in investment are typically followed by a long digestion period as demand has to grow to meet all that new supply.

So personally I wouldn't buy Tokyo Electron now - it is a great company but I think not a great investment for the coming few quarters.

Thanks for your take on TEL! I think it’s one of the few world class winners in the TOPIX too. Definitely. I see also your reasoning for saying it’s not appealing for you for the coming few quarters.

I am currently mixing and matching a Japan stocks portfolio for the next ten years so I thought that TEL will be good to have in the mix.

[ChapInTokyo]

Further to the FOMC news and the tanking of the US stock indexes, the Tokyo market's tanking this morning too.

Could be a good time to buy, say Tokyo Electron at a nice price, as a long term buy and hold? What do you reckon?

I don't own Japanese stocks but am curious, do you also invest in US stocks?

For my fun portfolio, I spent some spare cash on a handful of quantum computing stocks including IONQ a couple of years ago.
Thanks to recent media coverage, they have gone through the roof recently.
I regard them as "moonshots" that are just a small part of my investments and that will be interesting to watch to see if one of them blossoms.
I am not a Boglehead puritan and have to scratch that itch sometimes

I was thinking of accumulating more today, but resisted the temptation as they are already on a tear, and I set myself limits.

Same here. I’m generally risk averse so quite happy to have a core portfolio aligned with boglehead-ish conventional thinking, but also like to have a satellite portfolio of good companies rather than entire market of the good and bad companies.

I don’t do stock picking with US stocks though. Seems to me that beating the S&P500 will be much more difficult than beating TOPIX…

As for moonshots, I suppose my holding of drug discovery outfit Peptidream comes closest to being something which might go really big.

Other than that, I’m drawn to Japanese companies like Ulvac, Keyence or Tokyo Electron who are already at the top of their game, but trading at a discount due mainly to the cyclical nature of their sector and the uncertainty about the recovery of China as a market.

[captainspoke]

... the tanking of the US stock indexes, the Tokyo market's tanking this morning too.
...

could you spare the hyperbole?

[ChapInTokyo]

... the tanking of the US stock indexes, the Tokyo market's tanking this morning too.
...

could you spare the hyperbole?

My sincerest aplogies! First thing in the morning though, it did look quite serious even though by mid morning the market had recovered quite a bit.