trilobyte and Dick Weigel:
1. I think that the turn in bookings has a better correlation with bottoms than tops. I'm not sure why that is.
2. AMAT stock price is controlled by institutional investors, not individual investors. I think the average Fidelity Fund manager is, as always, still focused on the quarterly performance of his fund. That's one of the few advantages individual investors have, that we can (and sometimes do) have a longer time horizon.
3. I don't think anyone (you, me, Fidelity Fund managers, analysts, semi-equip execs, anyone at all) knows what bookings are going to be in the second half of 2001. Anyone who is buying/selling today, because they think they know when bookings are going to trough and start heading back up, is overconfident. To a large extent, it depends on events that haven't happened yet, and are impossible to forecast.
4. To a large extent, AMAT stock price simply follows the market. The chart of the last 3 years of Nasdaq and AMAT look remarkably similar. AMAT is an excellent proxy for the Semi index.
5. all the semi-equips go up and down together. Buying and selling at the right times in the cycle is far, far more important than which stock in the sector you pick.
6. I think that, at a price of 49, AMAT is pricing in the best possible future (among the various possible futures)for the second half of 2001. That is, it is pricing in: no recession, a trough (and then strong uptick) in bookings during the summer, technology buys continuing through this downturn. If (and only if) that happens, today's price is justified.
7. I am surprised at the relative strength that AMAT has shown over the last 2 months. Since the end of the Nasdaq's January false rally, QQQ (Nasdaq 100 index) has retraced completely, now back to the early January lows, while AMAT is still flying near the January highs. Since the Nasdaq 100 is mostly AMAT's customers, (or customers of customers), how can AMAT be doing (relativley) well, when their customers aren't? That is, if the outlook for INTC, MU, CSCO, SUNW, EMC, etc. has gotten suddenly worse, how can that not impact AMAT?
8. I am not at all confident in my reasoning above, and am prepared to change my position (and my portfolio) quickly. In particular, if the market starts to rally, and AMAT goes above 50, my shorts will be squeezed real quick. Until then, every time the stock tries and fails to breach 50, my confidence (in shorting) increases a little bit. |
