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Don't chase analog chip stocks!

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Paul Sakuma / AP

(Read caption) A sign at the headquarters of the National Semiconductor in Santa Clara, Calif., is shown on Monday, April 4, 2011. Texas Instruments Inc. is buying National Semiconductor for $6.5 billion, in a marriage of two of the world's premier makers of analog chips. But don't expect to see another deal like this any time soon, writes guest blogger Joshua M. Brown.

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Y'all know this isn't a how-to investment site, I have no interest in getting my Suze Orman on here. But! Every once in awhile I feel I should throw out a tidbit here and there that may keep people out of trouble.

It's quite literally the least I can do.

So here's today's Public Service Announcement: DON'T CHASE THE ANALOG CHIP STOCKS!

The articles are already rolling off the presses in the wake of the Texas Instruments ($TXN) - National Semi ($NSM) deal. TI is paying a Texas-sized premium for the chipmaker and now everybody is compiling their list of "who could be next".

Nobody will be next, at least not any time soon.

Instead, the analog chip stocks will jump up 5 to 7% apiece today and then give it back over the next 5 days. Then you'll be looking at your portfolio one day and you'll be all like "What the heck do I own Maxim Integrated Circuits for?"

Analog semiconductors are important, they are everywhere. Your voice is an analog signal, not a digital one, unless you are actually a robot with only a human exterior like Katie Holmes. Semiconductors that convert the analog signal to a digital one are a key part of the wireless growth story. I'm oversimplifying here becuase this isn't Seeking Alpha, I'm trying to make a quick point not do a book report. The companies making these chips are mostly not high-growth or sexy. And there are way too many of them. Not worth chasing one way or the other.

Miller Tabak is talking up Fairchild ($FCS), Avago ($AVGO) and Microchip tech ($MCHP) this morning at Barron's Tech Trader Daily.


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