As fast as the bookings and shipments have continued upward, the 33 stock index has been going downward.
Folks will look back at the 1998-2000 era of the SEM stocks and easily surmise that the perfect, sine wave-like pattern of cyclicity in the industry had completed yet another phase. What will be interesting to observe over the next 6-9 months is if the current swoon is accurately predicting a significant downturn. Or perhaps there is a hyper-awareness of history by investors and they are removing their money absent any real evidence of a slowdown.
Right now most evidence suggests the stock prices of the SEMs are completely out of sync with the sector. Well...not completely any more: a major player (TER) has now acknowledged a slowing in order growth for testing equipment. Perhaps we all should look back at some of the previous justifications by other companies in announcing their earnings shortfalls....and decode them to read 'slowing growth'.
Perhaps astute investors have been decoding the 'pushouts', 'supply problems', 'lithography bottleneck', etc as the actual 'slowdown' signals that they may be. If this is the case, then perhaps orders will fall significantly over the next couple months - a future now built into the sector - and the rebound will begin early next year.
Regardless, like it or not (read: like Jon Joseph or not) we've just essentially completed another two year cycle. And for those who argue the industry is in great shape, the fact is virtually every stock in the sector shows a completed cycle. And if the stock charts aren't the measure of cyclicity....what is? Whatever is given in place of the stock chart, a very powerful argument could be made that 95% of investors would disagree with it.
I find this situation fascinating since it remains such an enigma for all of us who want to see SEM cyclicity as a no-brainer way of investing. This is precisely why I named my portfolios 'Hubris'. SEM investors have learned humbleness the hard way this year. [IMO, biotech investors will experience similar vertigo in the near future (and they, as SEM investors, will blame everyone but themselves)].
Great thread...let's keep those stats a comin'. Now for my double grande strychnine. Sugar, Donald? |
