Recently, a lot of fans and bros have been asking me: Can SMH be held for the long term? 1/ Long-term investment value and allocation advice for SMH Here’s my take: SMH is worth holding as a satellite allocation for the long term, but it’s not suitable as a core position in your portfolio. 2/ Let’s first look at historical performance: Since its inception at the end of 2011, SMH has delivered an annualized return of about 18%, compared to around 12% for the S&P 500 over the same period. But high returns come with high volatility—about a 40% drawdown in 2018 and around 45% in 2022. Its volatility is roughly twice that of the S&P 500. 3/ The logic is actually pretty clear. Semiconductors have evolved from electronic components to economic infrastructure. AI, data centers, robotics, autonomous driving, and even space exploration all rely on continuous improvements in computing power. This isn’t just a one- or two-year hype cycle; it’s a structural trend for the next decade. 4/ Of course, the semiconductor cycle isn’t going away. Peaks in capital expenditure, inventory corrections, and valuation compressions will occur every few years. We’ve seen similar stories with Cisco in 2000 and the solar industry in 2010. SMH can diversify individual stock risks, but it can’t avoid the beta pullbacks of the entire industry. 5/ My allocation strategy is: Core positions should be in broad-based indices like the S&P 500 and Nasdaq 100, with SMH as a satellite allocation. For investors who can stomach a 40% drawdown, allocate 10%-15%; for those with lower risk tolerance, 5% is enough. 6/ As I always say, buying SMH isn’t about betting on a single company—it’s about positioning for an era where more chips and computing power will be used to solve more societal and everyday problems. It won’t give you peace of mind every day, but as long as this trend continues, it deserves a spot in your portfolio.