David Hay — Friday POW!: TSMC (TSM) — the hard art of taking profits
"There's much too much emphasis on buying and not nearly enough on gain-realization" — a worked profit-taking case on a four-bagger, with GOOG and XOM flagged as no-longer-cheap.
One-line take: An atypical "sell-side" POW! — the featured name, TSMC (TSM), is the subject not because it's a fresh buy but as a worked example of disciplined, incremental profit-taking. Haymaker first flagged TSM at ~$84 (Aug 2022), bought the dip to $70, then trimmed 25% at a time on the way up; now ~$303, a "four-bagger." It walks through a dollar-cost-average-out simulation (215% return on the original $12,500; ~46% IRR per Gemini) to show trimming still captures big gains at lower risk. The verdict on TSM today: "no longer the bargain it once was" — P/E ~20 is fine but 13× sales is "way up there" and "leaves scant room for disappointment," so exit the rest or do another partial sale (the "elderly Haymaker" keeps a modest position). Two other past winners are also "very spendy" and ripe for trimming: Google (GOOG) (~$140 Feb-2024 → ~$315) and Exxon (XOM) (even the long-despised energy sector now over-priced). The macro takeaway: raise 20–25% cash. (The post also introduces a revised, more concise POW! format with more buy/hold/trim/sell balance.)
1. Stocks & names mentioned
| Ticker | Name | Research | View | What he said | At |
|---|
| TSM | Taiwan Semiconductor (TSMC) | QT · SA · STK · FA | Neutral | Featured as a profit-taking case study, not a fresh buy — first flagged ~$84 (Aug 2022), bought the $70 dip, trimmed 25% at a time up to ~$303 (a "four-bagger"; the DCA-out sim returned 215% on the original $12,500, ~46% IRR). Verdict today: "no longer the bargain it once was" — P/E ~20 is okay but 13× sales is "way up there" and "leaves scant room for disappointment." Dominant in precision wafer etching (essential to Nvidia's AI chips) but richly valued: exit the rest or do another partial sale; the "elderly Haymaker is retaining a modest position." A trim/hold, not an add. | read |
| GOOG | Alphabet (Google) | QT · SA · STK · FA | Neutral | Trim — a past Haymaker favorite (written up at ~$140 in Feb-2024 alongside TSM), now ~$315, "on the very spendy side" on its 5-yr P/S and P/E charts. Already gain-harvested on the way up; cited (with TSM/XOM) as why "so many valuation charts look like this" warrants raising 20–25% cash. A take-some-off, not a sell-out. | read |
| XOM | ExxonMobil | QT · SA · STK · FA | Neutral | Trim / no-longer-a-value — a formerly value-type name "no longer an actual value," on its spendy 5-yr P/S and P/E charts. "When even the long-despised energy sector contains fully- to over-priced names," the contrarian Haymaker worries — reinforcing the call to raise cash. Take profits, not a fresh buy. | read |
References only (not picks): Bernard Baruch (the "middle 80%" epigraph), Warren Buffett (Baruch as "the Warren Buffett of the first half of the 20th century"), Nvidia (the customer TSM's wafers feed), Google Gemini (the IRR calculator). The Recommended-List footnote again cites the NVO (Novo Nordisk) timing miss — a text reference to the prior tax-loss package, not a fresh view. The post's image-only Equity/Growth Recommended List is not text-readable, so david-hay/portfolio.json is unchanged.
2. Talking points
The theme — the hard art of taking profits
- Baruch's line frames it: nobody nails the bottom and top — "I'll give you the bottom 10% and the top 10% of any move if I get to keep the middle 80%." This week introduces a revised, more concise POW! format with more balance across buy/hold/trim/sell so Haymaker can update existing positions.
Why selling matters as much as buying
- After two years of heavy bullish guidance, subscribers hold positions that are "more or less, our responsibility." "There's much too much emphasis on buying and not nearly enough on… loss-minimization… or gain-realization." Even the best investors admit selling is harder than buying.
The discipline — ease in, dollar-cost-average out
- With "no illusions of clairvoyance," Haymaker eases into additions and dollar-cost-averages out of winners — booking profits incrementally, "like 25% at a time." The worst outcomes are watching a winner round-trip to a loss, or fully exiting and then watching it double again.
The case study — TSMC, from $84 to $303
- First flagged ~$84 (Aug 2022), endorsed again on the $70 dip, back to $95 (early 2023, when a trim was advised), then ~$150 a year later. A six-year breakout (range-expansion) was flagged at the time. Webinar endorsement at $115 (Jan 2024); written up as a buy with Google at $133 (Feb 2024); a partial harvest near $200 (May 2025); now ~$303 — a "four-bagger."
The numbers behind the trimming
- The simulated DCA-in/DCA-out (initial $10k + 25% on the dip, 25%-of-value trims reinvested on the 2024 pullback): a 215% return on the original $12,500 — "roughly a 61% per-year total return," ~46% IRR per Gemini. The trimming approach delivered nearly the same net dollars as buy-and-hold (the original 119 shares = $36,652 today) but at lower risk — and outside a tax-deferred account, with taxes along the way.
TSM today — no longer the bargain
- P/E ~20 isn't outrageous, but "13 times sales is way up there." TSM dominates the precision wafer-etching that Nvidia and others need for AI chips, but the valuation "leaves scant room for disappointment." Holders should exit the rest or do another partial sale; the "elderly Haymaker is retaining a modest position."
Two more spendy past winners — GOOG and XOM
- Google (a "particular favorite," ~$140 Feb-2024 → ~$315) and Exxon are "on the very spendy side" on their 5-year P/S and P/E charts — both already gain-harvested on the way up.
- "So many valuation charts look like this," which "concerns us… considerably." Especially worrisome: "formerly value-type stocks like XOM are no longer actual values" — even the long-despised energy sector is now fully- to over-priced.
The macro takeaway — raise cash
- The pervasive over-valuation is a key reason to raise "a hefty amount of cash — like up to 20% to 25% of your portfolio." But "don't look a gift stock… in the mouth" — harvest the gains rather than refusing to sell.
3. In plain English
TSM — Taiwan Semiconductor Neutral (trim)
This week isn't really a "buy this" pick — it's a lesson on selling, using TSMC as the example. TSMC is the Taiwanese company that physically manufactures the world's most advanced computer chips (Nvidia designs AI chips; TSMC actually etches them onto silicon). Haymaker recommended it years ago around $84, and it has since quadrupled to ~$303. Rather than sell it all at once or never sell, Haymaker's approach is to take a slice off — about 25% of the position — each time it runs up a lot. The article works through the math to show that this "trim as you go" method captured almost the same total gain as never selling, but with far less risk of giving it all back if the stock crashes.
On TSMC specifically, the message is: it's no longer cheap. Its price is now 13 times its annual sales (a very rich level; price-to-sales compares the stock price to revenue), which "leaves scant room for disappointment." So if you own it, either sell the rest or take another partial profit (Haymaker himself is keeping just a small position). The same warning applies to two other past winners that got expensive — Alphabet/Google (GOOG) and ExxonMobil (XOM) — and the bigger-picture advice is that with so many stocks looking pricey, investors should raise a meaningful cash cushion of 20–25%.
Summary derived from the paid Haymaker newsletter (text in transcript.txt) for personal study. Not investment advice. © Haymaker / David Hay for source material.