Trading Vehicles, Stock, ETFs, Futures, and Forex 43

FIGURE 1.23
RealTick graphics used with permission of Townsend Analytics, LTD.

ripe as a buying opportunity or if the price is too high or overvalued and

should be avoided. Considerations that can never be determined are the
hidden demand for a company’s product and the way the company is run,
to see if the profit margins are high or if operating costs and deep discounts
to retailers cut into the company’s bottom line. Therefore, it could be pru-
dent to possibly play the sector through an ETF, which effectively would
eliminate the issue of selecting the wrong stock or the underperformer of
that specific sector.

The Hot Stock

Take, for example, one of the most amazing come-from-behind stories in
2005 and early 2006. Advance Micro Devices (AMD) triumphed, surpassing
Intel’s price level. It would have taken patience and discipline to stick with
this winner; but outperform it did, and what a hot stock it was, as the chart
shows in Figure 1.24!
For a specific ETF or iShare that would list AMD and Intel, you would
look at the iShares Goldman Sachs Semiconductor (IGW) listing. The top 10