UBS published a list of tech stocks to buy after semiconductor prices collapsed. The reasoning: fundamentals remain strong despite the selloff. Revolutionary stuff.
Imagine working at UBS. You wake up. You put on a suit. You spend eight hours identifying companies whose stock prices fell while their business stayed the same. You write "buy the dip" in a 40-page report with charts. You collect a bonus. This is what your guidance counselor meant by "follow your dreams."
The semiconductor pullback happened because chip stocks went up too much too fast and then corrected like every asset in history. UBS analysts looked at this pattern and thought "we should tell people about this." They charged institutional clients for the privilege of reading "prices fell but companies still make money." The clients paid. Nobody involved felt shame.
Retail traders will read this report and immediately buy call options on the stocks UBS mentioned. They will not notice that by the time a bank publishes a stock pick, seventeen hedge funds have already entered and exited the position. They will not care that "resilient fundamentals" is a phrase that means nothing. They will see the words "tech stocks to buy" and reach for their Robinhood app like Pavlov's dogs reaching for a food bowl that was empty the whole time.
The funniest part: UBS is probably right. The stocks will likely bounce. The fundamentals probably are fine. But the analysis required to reach this conclusion could have been performed by a motivated eighth grader with a free TradingView account and thirty minutes. Instead it came from a Swiss bank with a research department and a compliance team and a legal disclaimer longer than the actual report.
Somewhere a day trader is buying semiconductor stocks at market open tomorrow because a bank with "resilient fundamentals" told him to.
Photo by Stuart Frisby on Unsplash
Leave a Comment