Forced Equity Buyers?

As markets and pundits are now sorting out what the election results mean for markets, Bloomberg had an interesting segment early in the day that the results could be good for event driven investing which includes mergers and more relevant to my interests, merger arbitrage. 

We'll see how that pans out but one interesting idea put out in that conversation what that Qualcom (QCOM) might try to buy Intel (INTC). I am not trying to speculate on whether that might happen but I am intrigued by the idea that INTC going out in a takeunder as being another example that nothing last forever. 

The chart provides some context of what has been going on in the chip industry. SOXX of course has been driven by AI which is not where QCOM is and INTC has been a basket case for much longer than five years, it is down 60% from its internet bubble high. If you were around back in the 90's, you know that Microsoft, Intel and Cisco ruled the world. Any of those three becoming obsolete or becoming irrelevant was inconceivable. Microsoft is of course still dominant after languishing for a long stretch and Cisco languished for even longer before starting to go up again. General Electric is another example. The GE conglomerate of 25 years ago is gone which is another one that would be inconceivable back in the 90's.

Will Apple "die" in a similar manner? It already did and then famously reinvented itself. Long term investing is absolutely valid but it is important to understand that no company is immune from obsolescence. 

Bloomberg had some interesting reporting tied to Wednesday's big lift in stocks. Coincident to the gains on Wednesday and then Thursday after the article was posted, the VIX fell considerably. Bloomberg said there are systematic funds that would be forced buyers in reaction to the drop in VIX. They pegged the demand at $50 billion over the next month, then more in January, and that these funds could contribute to pushing indexes higher for a period. 

It could happen or, VIX could spike up and then would these guys would be out of the picture for a time? This sort of stuff is interesting but if you are a longer term investor or have some sort of longer time horizon then stories like this are noise. There's a lot of noise out there. Of course, there are changes and tweaks that need to be made to any portfolio that goes narrower than three mutual funds/ETFs but far fewer changes need to be made than most media outlets would have you believe. You don't need to buy or sell something ahead of earnings and I would avoid articles with the word play in the title as in how to play such and such now. 

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