Today's weak analysis winner is....

Today's weak analysis winner is....

None other than Rick Whittington! Mr. W and his $17-regression-line-based-EPS-extrapolation for Micron back in '97 will stand in infamy as one of the all-time classic analyst outputs.

How soon we forget.

Today's piece, published in the Intelligent Investing (ahem) section of Forbes, ranks right up there! Containing only a couple of numbers Mr. W. makes a bold proclamation about the prospects for semiconductor stocks: "They've now bounced back about 55%, but history suggests another doubling."

Doesn't that sound great? I'm so excited. Should I go ALL IN?

The other number is just about as useful as the first: "This past year, U.S. companies picked up 5% of market share to 53% of global chip output."

Sounds peachy! Although, on second thought.... Some input as to why this happened and who the beneficiaries are might be helpful....

Arming the Forbes reader with these two iron-clad data points, a few clips about the history of semiconductor industry cycles, a less than heartfelt and data-less dart toss toward some minutely positive economic data, some verbal diarrhea about the plethora of uses for semiconductors, the fearless Mr. W concludes his missive by suggesting the purchase of three stocks.

Three stocks that he admits owning.

Allow me to say that I don't have an issue with the fact that semiconductor devices will continue to proliferate. All those things mentioned, the internet, broadband, wireless, media, security and a host of applications we haven't even thought of will drive growth in semiconductor content. Those that are remotely close to the industry, followers, investors and insiders, know all about this. It's going to happen. Clearly Mr. W. is not preaching to this group. This is the kind of stuff you hear in taxis, bars and coffee shops.

What I would like to see in conjunction with the previously mentioned fact is some solid, non-mo-mo, financial justification for owning the stocks. How about some metrics to assess present and future valuations? If one can not provide a suitable set of financial metrics one should, at the very least, qualify the recommendation by admitting that the vast majority of companies in the semiconductor space are beta plays. Invest in them using techniques you use to play video games. Nothing more, nothing less.

In a nutshell, when I read a piece like this it really jerks my bobber. And no, I did not wake up on the wrong side of the bed!

If these deeply profound and pithy observations appeal to your investment senses then by all means click the following link and read the rest of the story:

http://www.forbes.com/2009/05/05/semiconductors-technology-stocks-intelligent-investing-chipmakers.html?partner=yahootix

As for me, I'm personally going to dig a little deeper and do some research on the earnings prospects for the business - right after I give myself a swirly.

Oh! And if you are serious about investing in the sector and interested in getting any of my research feel free to subscribe to my mailing list. Details are here: http://www.infras.com

Carl