IBM (NYSE: IBM) has helped keep Moore’s Law of ever-increasing processor performance on track for more than four decades. Big Blue is at it again, now, researching how to make processors that use light instead of electricity.
The latest in a string of photonic computing breakthroughs, IBM’s nanophotonic avalanche photodetector could be produced with standard tools of semiconductor manufacturing, using common materials such as silicon and germanium. It aims to replace copper wires between computer chips with circuits that use pulses of light. No more than “a few tens of atoms” in size, the detectors could decode signals with so little power that a 1.5-volt battery might one day power a fully functioning computer. Oh, and IBM created the requisite ultrafast light diodes way back in 2007.
If you’ve been holding off buying semiconductor stocks, thinking they can’t get any better, think again. As long as there’s a company building electronic gadgets that demand more computing muscle with less power draw, a drug maker running incredibly complex computer simulations of chemical and biological processes, or a government somewhere doing demographic analysis, there will be a market for faster, more efficient microchips.
Ask the Fool
Q: What are “balanced” mutual funds, and should I invest in them? — S. G., Nashua, N.H.
A: Balanced funds invest in both stocks and bonds, letting shareholders profit from stock appreciation and stock dividends, as well as giving them income from bond holdings. Many fund families offer balanced funds, often with different asset mixes. The Vanguard Balanced Index Fund, for example, was recently 60 percent in U.S. stocks and 40 percent in U.S. bonds.
You don’t necessarily need a balanced fund, since you can always just invest in one or more stock funds as well as one or more bond funds. Remember, too, to devote some of your money to international investments, so that you don’t keep all your eggs in the U.S. basket. (Many foreign economies are growing much faster than America’s.)
Q: I own a stock that has gone up 150 percent. Should I sell it now, and buy another attractive stock? — A.T., Annapolis, Md.
A: It depends. Is it your only stock? If so, you might sell at least some and invest in a few more, so that not all your money is tied up in one stock.
Next, don’t look backward at what the stock has done. Always look forward at what you can expect.
Do you believe it still has a lot of room to grow? If so, consider hanging onto all or some of your shares. Some stocks rise 150 percent and then keep growing for many years. If, after doing some research, you’re not so sure about it, you might sell some, or half, of your shares, thereby locking in at least some gains. If you just don’t understand the company’s business, you’d do well to sell all your shares.
My dumbest investment
I’m a printing broker. Back in April 1999, while printing something for a customer in wireless communications, I learned that a company called Qualcomm landed a big contract with China. I called a broker, eager to invest in it, but the broker said that it was overvalued and I’d do better investing in Microsoft. I listened to him, unfortunately. Qualcomm became the best-performing stock of 1999. I had a good feeling about the stock, but never moved on it. — Mike Y., via e-mail
The Fool responds: You would indeed have done well investing in Qualcomm that year — though it dropped over the next few years, along with many other technology-heavy companies. Remember that “a good feeling” or a contract with China should never be enough on which to base an investment decision. Its price that April might have already reflected investors’ expectations about the China deal. Great companies are sometimes overvalued. Always examine a bunch of factors, such as profit margins, growth rates, cash and debt levels, trends and competitive advantages. And seek a margin of safety by focusing on undervalued stocks.