Raymond,
You seem to have completely missed the point of my analogy which doesn't surprise as you seem to be missing what everyone says to you, you just keep going on and on about past bubbles and economic downturns. Here's a simple lil Mark Twain quote that maybe you can remember, history doesn't repeat but it does rhyme, meaning of course it's never exactly the same. It's a complete and utter waste of time to me for people to overlay charts of today with Japan 1990 or 1914-1916 or whatever, there's waaaay too many variables that have changed, it's as junk science as it gets. There's of course some similarities to past periods, but that's all. Get out of the past, study the present.
You stated
In you parable, you say that AMCC would maintain it's value because it made the vehicle more valuable and therefor maintained its stock price.
Noooo. I said it made a piece of a vehicle that was half the cost of a current vehicle, buuut, the new vehicle is a must have, no one would be fool enough to buy the old vehicle. Again the point of my example is, Fords capex could stay the same or even go down but AMCC's would skyrocket as they make the parts for the new must have. The companies that go down in value would be the ones that make the parts for the old obsolete vehicle as their maket is suddenly dead.
You've stated that AMCC and other companies can't keep growing because the people they sell to are not going to be growing or growing little. This is remarkably narrow sighted. Do you not understand that telecom is going through a huge transformation? Do you think all the capex is to expand into new areas? They're out there stringing new lines, putting in new equipment? Nooo, they're self-cannibilizing, ripping out stuff that's been there for decades and replacing it with new equipment, because the old stuff can't do the job any more, only the stuff AMCC makes the pieces for can. Do you not see that capex could not only slow, it could be cut in half, but if what they're spending that half on is the equipment that AMCC makes parts for, well then AMCC's business is not hurt. The street doesn't see that. They all look at it the same simplistic way you do. Mongo sees spending slowing, therefore Mongo think spending to everyone slowing.
Bottom line is that's great, people like you will throw out the baby with the bath water, smart people will buy the good stuff cheap.
As for AMCC, i'm not a buyer today, it's still a very expensive stock. Doesn't mean it might not go straight up as I am a cheapskate and doubter by heart, it just means it's not cheap enough for me right now, no matter what it's growth, too many people that think like you will likely take it lower. The herd is often wrong in it's thinking, but being right won't keep a fella from getting gored.
I wish I could find the post, somewhere there's one from Trader Dave several months ago where he figured PMCS could get hit hard as people would take the downturn in semi stocks to be across the board and not realize that chips go in one or two other things besides computer boxes. Hats off to you Dave, your ahead of your time, and unfortunately all too right.
CMB |
