what risk do you think there is in AMAT today?
Risk can be divided into 3 kinds: in the stock, sector, and market:
1. Stock risk. None. AMAT has gained market share during the last downturn, and is even further ahead of its rivals.
2. Sector risk. Almost none. The current upturn will probably last at least into 2001, maybe even 2003. I don't think I need to start closely following semi inventory levels and ASPs till then.
3. Market risk. Lots. This is what the thread should be discussing, because here is where the risk is in the stock, today.
I'll make a very specific prediction:
As long as:
1. the yield on 10 year Treasuries is over 6%
2. the Fed has a tightening bias
3. we keep getting warning signs of impending inflation
then the S&P 500 will not set new highs. We could, possibly, have one more blow-off rally in high techs, but I don't think the Nasdaq 100 can go more than 5% above the highs set October 11, or hold the gains, as long as the 3 conditions above exist.
As long as those conditions exist, I think it is prudent to hedge downside market risk. If they change, then I'll change my opinion, and sell my puts. |
