re: investors are upset by cyclicality:
The sawtooth pattern of over-and-then-under-investment in chip fabs, means that I have the opportunity (every two years, like clockwork) to buy AMAT really cheap. Having bought it, I could do LTB&H, and do very well. Each cycle bottom is a lot higher than the last one. Any purchase when the industry is out of favor, held longterm, will outperform the market.
However, I've done much better than that, by being a cycle-timer, for 3 cycles now. I buy when it is out of favor, wait till I have LT cap gains, and then sell into strength, trying to be out of the stock (or LEAPs) by the time the consensus is, "this industry is no longer cyclical". It is amazing how, over and over, an immense amount of thought goes into trying to prove that the industry is not cyclical, just as the cycle peaks. Smart people are not immune to wishful thinking.
so, I am an investor (or cycle-timer-trader, if you prefer) in AMAT, precisely because it is cyclical.
Yes, you can get a fab built today without them. But it is getting harder and harder, each cycle, to do that. And you have to mix and match components from various vendors, to build a fab without AMAT components. As the fabs get more and more automated, this also gets harder to do. |
