Made a Killing on AMD

I had the fastest gains I ever had on Advanced Micro Devices (AMD) since I first started a position on 16 Jul 2020. Currently I’m sitting on nearly 33% profit, or almost USD $20,000.

As this is the first time I really hit a home run, I’m pretty happy.

It also led to to thinking how I made the decision to buy it.

Decision-making Process

I didn’t scroll through forums asking what to buy and is the price good. I didn’t use a stock screener to filter “good” companies. No financial statements or ratios were looked at.

The main reason I bought was because I loved my new USD $600 laptop. It might sound cheap, but the performance and specs beat laptops here that cost twice or three times as much.

I wasn’t the only one who felt it was a great deal. AMD laptops were reaching #1 on Amazon charts. I read user reviews and Youtube videos on CPU benchmarks. Gamers were cheering the CEO, an Asian female engineer, for lowering prices and increasing their FPS. The overwhelming consensus was that AMD was blowing Intel out of the water. Intel was being soundly beaten in both cost and performance. I saw there was a tremendous opportunity as AMD’s products were superior, and were eating into Intel’s 80% share of the CPU market.

I took action pretty quickly, and bought 370 shares that night. I kept accumulating till I reached 1010 shares at an average price of $58.96.

Experience

One reason I could commit USD $60,000 was that I had become more comfortable handling large sums. I used to avoid placing too much into one counter, to have diversity. That’s what all the books say you should do right? Diversify, diversify, diversify.

But I have been punished when I dabble outside of tech. Things like Disney, Johnson & Johnson, etc. I don’t feel like I know a lot about them, and I get shaken out due to a lack of confidence. When the customers love the products, the stock price is rising, and the company is quietly under the radar, it’s a very strong signal to buy for me. And I’m willing to bet big money when the right opportunity comes around. Otherwise, think so much for what?

I don’t want to buy what everyone else is buying. While people were talking about Tesla or gold, I was looking at the relatively unknown AMD. Though I have strong FOMO like everyone else when prices keep rising, the crash usually comes quickly too. Avoid the greater fool game. When the auntie on the street is buying, it’s time to get out.

Becoming more decisive was also a factor. I don’t agonise over a few percentage points loss, and laggards are quickly sold to go into new opportunities or cash.

Buying at the highs

Every time I bought, AMD’s shares were reaching new highs. I kept on buying. This is contrary to what most people do, which is purchasing more when their stocks go down, to “average down”.

I prefer the opposite tack. I buy more when the stock price is increasing. This is contrary to many people’s views but that’s why most people don’t make money in the stock market. Chasing a declining stock price is a loser’s game.

Btw, buying low and selling high is the dumbest advice ever. Anyone who believes that doesn’t know what they are doing. Who’s to say what is the high and low? There is no way to tell.

Will I sell?

No. I have found something good and will stick with it. The market is huge, and Intel has yet to give up most of their market share. As I am very picky, it’s really difficult to find such a gem. It will inevitably go down and experience bad days. But as long as the business is intact, I’ll still hold.

Final Thoughts

I believe in sharing my experiences honestly. Unlike most other stock market “experts”, I don’t post only after I made profits. I post my transactions within a few days of making it, along with my bought price and quantity. I face the same unknowns as anyone else. If I made a loss, everyone can see it too. I also post my unedited portfolio, taking out only personal details.

It’s debatable if I simply got lucky. Yes, luck plays a role. But isn’t that true for everybody? No matter how much you study or research, luck always has a part. I kept learning from my mistakes and trying not to repeat them, creating the best possible odds to hit a home run.

Profits can be fleeting. That’s just how it is. Life is like that too right?

But for now, I will enjoy the moment a little longer.

4 comments

  1. Hi FI35,

    Congrats on your winnings! Hope you continue to huat….

    When I first decide to buy my very first computer more than 20 over years ago, AMD was a super hot choice together with Intel. I think my first computer was AMD. Assume this is the same AMD you r referring to?

    Love your brutal honesty……. about buying high, chasing losing stock and diversity. Love your statements below:

    “I prefer the opposite tack. I buy more when the stock price is increasing. This is contrary to many people’s views but that’s why most people don’t make money in the stock market. Chasing a declining stock price is a loser’s game.

    Btw, buying low and selling high is the dumbest advice ever. Anyone who believes that doesn’t know what they are doing. Who’s to say what is the high and low? There is no way to tell.”

    I think over-diversify is also no good as it depicts the lack of faith in a particular sector. If you have a very strong faith in a particular “thing” goes for it…..

    1. Hey Rolf, appreciate your congrats. Yes that is the AMD I’m referring too. Last time it was always seen as the cheap and less good option, but things have changed now.
      I read your post about your wife’s job search, glad that she has good options in front of her.
      Hope we both continue to huat!

  2. > Chasing a declining stock price is a loser’s game.

    Just because it does not work for you does nto mean it is a losers game. Seems like a fundamental momentum trader in the making.

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