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Diary of a Dumb Investor: I’m eyeing up investment perfection

It will come a high cost, but I'm not sure I can keep my hands off this fine prospect.

Diary of a Dumb Investor: I’m eyeing up investment perfection

I want a piece of you, ARM Holdings (ARM.L), you lithe little chip designer.

I’m smitten. Head over heels. Problem is, this alluring British beauty doesn’t want for suitors; practically everyone has had a go. Its stock has risen by about 570% in the past few years.

What’s to say I’ll be spurned? Why wouldn’t that thrilling upward curve continue?

The unenamoured can throw all of their fancy ratios at me, showing the overpriced shares are off-limits, a honey-trap. But this siren is benefiting from the unstoppable march of Apple, with its own hordes of devotees. Not to mention other desirable smartphones and tablets, most of which use ARM-based chips.  

The shares really erupted last week after ARM investors luxuriated in a steamy bath of estimate-beating sales and profits. They revelled in statements about ‘record’ backlogs and ‘robust pipelines’. I wanted to be frolicking in the bubbles with them.

City analysts were just as captivated. Salivating over their ARM-powered smart phones I imagine. The company is ‘in the sweet spot for nearly every product launch’, drooled one. ‘An investment case this strong is hard to value, but it is definitely a Buy,’ purred another, adding that the business model was ‘close to perfection’. Jesus, count me in.

The Cambridge-based company is even flirting with the PC market, jostling with Intel.

Barring possibly Apple itself, this is the most hyped-up share around. Number one in the Top 100 FTSE Beauties. And I want a piece. After all last week I jilted TR Property Investment Trust, which just couldnt satisfy my investment needs.

Like Hutchison China Meditech  (HCM.L), I’m waiting for a small dip and then I’ll fulfil my desires – and I’ll provide every sordid detail for you, readers.

My portfolio: Click to enlarge

12 comments so far. Why not have your say?

Karl Smith

Oct 29, 2012 at 13:30

DI, you've not really got the hang of this investment lark have you? The point is to enter the market at the bottom of the curve, not the top. If you didn't know, Intel are fighting back (albeit weakly) in the smartphone market and Apple are notorious for seeking discounts from suppliers. When everyone's saying buy, sounds like a good time to take profit & sell!

Surely there are better investment choices out there, (even in the FTSE100)?

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P Morris

Oct 29, 2012 at 14:11

D I.,

A high growth smaller companies speculative ride is available for little effort via MFM. SLATER GROWTH, stuffed full of such TEN BAGGERS as ARM & China Meditech. Purchased when they were overlooked growth bargains long ago.

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Anonymous 1 needed this 'off the record'

Oct 29, 2012 at 16:25

Underperforming the market nicely with zero diversification. Well done you. Just buy an ETF and stop the guesswork

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Oct 29, 2012 at 16:58

I'm sorry, but I've never got my head around this idea of waiting till a share's price drops before you buy.

If it does drop, and you pile in, how do you know the price isn't going to drop further? Because if it does, you lose out big-time . . . .

If you've worked out the share's true value mathematically, how do you know the market will agree with your maths?

It all sounds too logical to me.

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Oct 29, 2012 at 17:12

"Maverick" is absolutely right.

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Anonymous 1 needed this 'off the record'

Oct 29, 2012 at 17:17

Spot on Maverick. The market isn't logical. People who assume the market is efficient all the time are people to whom the truth is not important.

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Anthony Tinslay

Oct 29, 2012 at 17:21

Yes of course ARM has had a wonderful ride and made lots for many. It may well do even better but logistics mean that bubbles will always burst sometime. Perhaps a take-over or a rich competitor or even another cheaper product. You are probably too young to remember other 'investments' praised as inevitable continual risers e.g. Polly Peck, Trafalgar House, Slater Walker or that certain mine in Western Australia where the share price went from 50p tp £14 and back to almost nothing .

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wayne roberts

Oct 29, 2012 at 19:03

ARM has as much a chance of going up as down, one thing is for sure, it will definitely do one of those things or go sideways, managing trades/money is what matters, DI would have been richer by now if he had put his money into an index ETF and spent the hours wasted on 'researching' the market flipping burgers in Burger King..

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Oct 29, 2012 at 20:10

Buy low and sell high..

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Oct 29, 2012 at 20:58

Hopefully you will not lose an ARM and a leg, but I'm not betting on it.

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P Morris

Oct 31, 2012 at 11:14

Anonymouse 1 ; Gueswork ???

Perpetual market underperformance is assured by low cost ETF tracker funds minus expenses, no guesswork included. After 14 yrs. of mkts going nowhere, accepting ETF tracking to match that, seems unproductive. Passive funds hold the indexes worst & most overvalued companies, & can never beat the index, after costs, however exceptional.

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Anonymous 1 needed this 'off the record'

Oct 31, 2012 at 11:24

True but then most market participants will underperform the index. After 14 years of markets going nowhere if you think equities are going up, the probability of participating in any rally is greatly improved by just holding an ETF as opposed to choosing your own stocks or picking a fund manager. I'm not actually a fan of passive investing but picking a few stocks like DI is doing is beyond pointless.

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