Semiconductor Holders (SMH)

A comparison of the ETF SMH from 2007 and now 2020. The answer? Passive Investing wins in the long term. Always.

Semiconductor Holders (SMH)
Photo by Igor Omilaev / Unsplash

Howard wants to buy a put option on SMH. Me? I will wait and see which way she breaks from this narrow range, which started in mid-2005 before I do anything. Has it been trading in range for that long?

I guess that semiconductors aren't the technology darlings they once were, maybe it's because chips are more of a commodity now.

(c) Stockcharts

2020 update

Here's a perfect case for long term passive investing in an ETF. I wrote this post back in May 2007 and when I moved my blog to Hugo I put the post into the archive. Now that I hold a position in SMH again, I decided to revisit this post and update it.

Hindsight is always 20 / 20 and back when I wrote this post I wanted to be a day trader and make millions so that required short-term positions and selling after short-term gains. I ended up selling this promising diversified ETF for short-term gain instead of long-term appreciation.

Stupid. Stupid. Stupid!

Look at where $SMH is trading today, $203 a share!


Doing a rough calculation here (without factoring in the dividends), if I held just 100 shares of SMH from 2007 till now, I'd have a rate of return of 442%.

Reinvesting dividends it would've been higher. My DRIP account of INTC didn't perform so well, why? Because this ETF was diversified into other chip stocks like NVDA, the new darling of the GPU chip world. Just that stock alone is what pushed SMH to new highs!

My advice if you're starting investing is to buy diversified ETFs and Mutual funds that are low-cost and generate dividends. Then reinvest those dividends and hold on for the long term. Long-term always wins. Always.

2024 update

Here's a short price chart update on my long-term holding of SMH. It's nearing an all-time high (ATH) of $280. Now I will never say never, but SMH will likely remain in my portfolio for years to come.


A companion video

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