re: BTB correlation with stock price:
I remember having an extensive discussion on this topic in 1998. My conclusion at the time was that bookings were a better number to follow than the ratio (BTB). The reason for that preference, was that: 1) the BTB could be changed by changes in either of the numbers that it's calculated from, and 2) the BTB is a "derived" number, one step removed from directly-measured reality.
Further, I came to the conclusion that bookings were, at best, a coincident indicator. First, a semi company sends an order to a semi-equip company. Later, the data is gathered and made public. Later, the numbers are revised. Later still, the numbers are revised for the final time. An investor using a peak (or trough) in bookings has to wait until bookings have increased for 2 months, to avoid acting on a one-month blip (noise in the signal). So, by the time the info is clear and complete, the turn happened 2-5 months ago. By that time, the stocks are probably 40% off their lows. So, after a lot of time looking at this indicator, I concluded that it wasn't all that useful.
JS@stilllookingfortheholygrail.com |
