John, this is a time of testing all right <g>. Hard to say how much bad news is already discounted into the current price, but I believe Lam will find a way to continue being profitable - even if only marginally so - during the 2-3 difficult quarters ahead. If I'm right, their book value of around $20 should keep the stock price from falling below that level, altho I've read where 80% of book during a bad market is also very possible.
Still, I agree with you that there could be merit in trimming back. In my case, I'm on margin, so reducing my holdings to some "core" level might be very prudent if the overall market risk is getting high. For my core holdings, I am writing covered calls to at least collect some time premium while I wait. I'm very concerned about Sept-Oct period for the market, and even more so for most of 1997, partly depending on the election's outcome. (I think the worst case for the market would be a Clinton reelection and Dem recapture of Congress, but I don't think both of those events happening is likely).
A year ago I would have bet the farm that Lam would not see $20 in 1996, but as we both know, it did (and may do so again). What to do now kinda depends on how well we sleep at night, right? <g>
Paul |
