The stock prices of memory semiconductor companies are fluctuating due to Meta's remarks regarding the leasing of AI data centers. Broadcom and Micron's stock prices are also being significantly affected.
https://bomspring.com/how-to-rebalance-in-the-market-crash-backtest-result/
Meta has experience in social media operations but lacks experience in data centers and cloud businesses. Therefore, their business plan to sell remaining infrastructure resources to operators better at AI, having built the infrastructure first, is, objectively speaking, the correct business direction for boosting operating profits.
The operator that recouped its facility investment costs within one year by leasing an AI data center is Elon Musk's Groc AI. It may simply be unfamiliar to us because we haven't seen it before, but in reality, it is a stable business strategy that can be employed by a company that has secured resources in the new AI era.
https://bomspring.com/how-to-rebalance-in-the-market-crash-backtest-result/
Since AI data centers are constructed by incurring significant debt, they are heavily influenced by loan interest rates. Bank of America (BOA) anticipates three interest rate hikes by the end of this year.
If interest rates rise, companies like Meta and Grocco will see their profitability decline as the interest on their loans increases.
Demand for memory, GPUs, TPUs, and power equipment remains high. For operating profit—calculated by subtracting interest and investment costs from revenue—to increase, interest rates must remain low.
In June, Merrill Lynch published a CIO report. They announced plans to reduce exposure to emerging Asian markets and rebalance their portfolio toward consumer goods and infrastructure investments.
This adjustment in weighting for semiconductors and memory is reportedly due to the fact that investing in US Micron stocks, as well as investing in Japan and Korea, both expose investors to severe volatility.
From the perspective of long-term individual investors, it is worth considering rebalancing strategies aligned with asset allocation ratios, such as selling 10% of profitable semiconductor stocks whenever they fall by 2.5%, or selling 10% of holdings when they drop by 5%. Please read the articles below and try adjusting your asset allocation ratios.
Strategic Rebalancing and Backtest Analysis
https://bomspring.com/invest-calculator/
This backtest result demonstrates how a disciplined rebalancing strategy during market crashes can secure an annual return rate of 8.0 percent while strictly managing the MDD at -15.0 percent.
https://bomspring.com/how-to-rebalance-in-the-market-crash-backtest-result/
Retirement Portfolio Defense and Asset Allocation
By following these global economic trends and asset allocation rules, you can safely protect your retirement funds, targeting a return rate of 9.0 percent with an MDD of -20.0 percent.
https://bomspring.com/global-economic-trends-that-portfolio
https://bomspring.com/how-to-limit-max-draw-down-mdd-15-for-retirement-portfolio/
https://bomspring.com/how-to-limit-max-draw-down-mdd-15-for-retirement-portfolio/
Sector Specific Investments and Alternative Assets
This strategy utilizes the Clarity Act and HIVE ecosystem to capture a stable return rate of 15.0 percent while keeping the portfolio's MDD extremely low at -6.5 percent.
https://bomspring.com/clarity-act-hive/
This structural fix method leverages Big Tech and infrastructure stocks to generate an aggressive annual return rate of 24.0 percent while keeping the sector risk MDD capped at -14.7 percent.
https://bomspring.com/strl-fix/
This practical manual explains how US residents can buy Korean stock ETFs, targeting a steady return rate of 10.0 percent while effectively limiting the account MDD to -15.0 percent.
