#SOXLUSDT
SOXL has taken quite a beating lately. I did some research of my own, and here’s how I see it.
I don’t think there’s anything fundamentally wrong with the semiconductor industry. TSMC’s profits are still hitting record highs. This downturn is mainly about valuations.
There are a few reasons:
First, prices had risen too sharply. Everyone was sitting on paper gains, so at the slightest bit of bad news, people rushed for the exits.
Second, interest rates and oil prices. The 10-year U.S. Treasury yield is close to 5%, and oil is at $116. The higher interest rates go, the less valuable tech stocks become.
Third, the market’s expectations were too high. People are starting to wonder whether all the money being poured into AI can actually earn a return.
One more thing that a lot of people overlook: SOXL uses 3x leverage, so volatility itself can eat away at your returns. For example, if the index first falls 15% and then rises 25%, the index ends up higher, but the 3x leveraged fund would actually be down.
SOXL has taken quite a beating lately. I did some research of my own, and here’s how I see it.
I don’t think there’s anything fundamentally wrong with the semiconductor industry. TSMC’s profits are still hitting record highs. This downturn is mainly about valuations.
There are a few reasons:
First, prices had risen too sharply. Everyone was sitting on paper gains, so at the slightest bit of bad news, people rushed for the exits.
Second, interest rates and oil prices. The 10-year U.S. Treasury yield is close to 5%, and oil is at $116. The higher interest rates go, the less valuable tech stocks become.
Third, the market’s expectations were too high. People are starting to wonder whether all the money being poured into AI can actually earn a return.
One more thing that a lot of people overlook: SOXL uses 3x leverage, so volatility itself can eat away at your returns. For example, if the index first falls 15% and then rises 25%, the index ends up higher, but the 3x leveraged fund would actually be down.