AMAT has been in a trading range. The question is, will there be a further ramp-up in expectations, to create another step-up for the stock, or is this a topping formation?
Since I last posted here, the news seems to be gradually indicating that the 2000 chip shortages will result in a 2002 chip glut. I am making the (safe, IMO) assumption that the industry hasn't improved it's ability to predict future demand, and the current undersupply causes overbuilding which causes oversupply. 2002 is still a long way off, however, and another big new unforeseen need for chips (which seems to happen regularly) could push the glut out to 2003 or 2004.
news.ft.com
The money I took out of AMAT and INTC in January, is now in WCOM, QCOM, MSFT, BSX, and CMH. All those purchases were posted in realtime, and were made at or just above their yearly lows. In several cases, those were multi-year lows.
Obviously, I timed my AMAT sale poorly, continuing my pattern of selling too early. But I have not changed my opinion that AMAT is overvalued at any P/S above 6, and I feel a lot more comfortable owning quality out-of-favor stocks, rather than quality stocks selling at the extreme high end of their valuation range.
JS@thevoiceofdoom.edu
When my MSFT 2003 LEAPs are in longterm cap gains territory, it may be time to rotate back into AMAT. At the moment, I have no position in any semi-equip, and no price I'd buy at. I'll be back, but I'm prepared to be very patient, waiting for the next cyclical bottom. |
