Jacob,
In a recent post on the Blood thread, I proposed a plus/minus 25% strategy. It was the weekend after the worst week this year. I entered buy orders 25% below those market prices an sell orders 25% above. Most of the sell orders were executed during the subsequent rally, and my cash postion moved from 40%+ to 60%+. The percentage has increased with the recent move down and I cancelled all the buy orders.
The company I am employed at, TMT, has just been acquired by CMOS. I have newly vested CMOS options, and more will become vested each month. This new market exposure in semi-equips has caused me to pull back on more semi-equip purchases.
To answer your AMAT entry price question, I suggest that you estimate peak earnings for the cycle and multiply by a 20 PE (the numbers for the 95/96 peak). I believe I saw $3.68 estimated for 2001. With capacity constraints becoming an issue for AMAT at $12B in revenues, and a large number of fabs coming online in 2000/2001, $5-6 per share is not unreasonable. This doesn't provide much upside, from current prices, but it would mean the low of $22 in '96 would have appreciated to $480 (before 2 splits). If you believe in a long cycle (Ian) and a higher peak PE than 20 (Brian), quantify it, and, probably, $60-80 could seem attractive. I think "Buy low, sell high, but you can't buy at the bottom and sell at the top" will be more and more relevant as we move into 2001/2002. |
