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Politics : Formerly About Applied Materials
AMAT 261.90+0.4%Dec 26 9:30 AM EST
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To: Gottfried who wrote (42047)2/11/2001 6:34:20 PM
From: Donald Wennerstrom  Read Replies (1) of 70976
 
Gottfried, That's true, the big bubble last spring (AMAT 115.00) was "irrational exuberance", but what right "value" do we assign to that number? We can look at it and make some estimates in several ways.

Cycle 1 - High 14.97(1995) Low 5.44(1996) Percent Change -64 percent

Cycle 2 - High 27.09(1997) Low 10.78(1998) Percent Change -60 percent

Cycle 3 - High 115.00(2000) Low(so far) 34.13(2000) Percent Change -70 percent

1. Let's say Cycle 3 was like Cycle 2(60 percent down), and lets assume then 34.13 was the bottom. Then the high instead of 115 would have been 85. Using the same approach, and assuming Cycle 3 was like Cycle 1(64 percent down), then the high instead of 115 would have been 95.

2. Now let's go the other way see what percent decrease we need to get to your price of 27.5 starting at 115. That would be a loss of 76 percent. Assuming the starting price should have been 95 instead of 115, the loss to get to 27.5 is 71 percent and starting at 85, the loss is 68 percent.

Now what does all this mean? - probably nothing at all really, except that whether the low turns out to be 34.13 or 27.5, we are really much closer to the bottom than the top. The time to sell was in the 110 to 115 area and the time to buy is probably now for another 3 to 4 bagger in the next year or so.<gg>

Don
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