G,
One has to read the recent posts with good humor. I have been investing in and out of amat for 8 years now. I have put more time into analyzing it then I have doing things for my spouse, unfortunately. I suspect many here can relate to that. After all this time one thing is sure: amat does not trade on fundamentals. If you don't know that, you can still do well, but not as well as if you flush much of the news as noise and simply go with a combination of ta, and guessing a bottom in book to bill.
How can I say these things? Look at a chart. For 20 years, amat bottoms close to when book to bill bottoms and even closer to the 200 WEEK ma, or 50 month ma.
Who in their right mind thinks "big" money or "smart money" is doing anything other than trying to time a bottom? This is simply all about them trying to reduce risk and maximize gain by timing a bottom. Does timing a bottom in the stock price have anything to do with fundamnetals of the business? I say no. The stock price is disconnected from fundamentals: when fundamentals are at a peak, the price starts to collapse. When fundamentals deteriorate badly, the stock starts to recover, and is always much higher before business improves again.
There are different ways of thinking about this. For example, Buffett is thought of as a great fundamental, value investor. He certainly does not look at charts. But, he does wait for stock prices to deteriorate while fundamentals are still very good, and he pounces. Is he timing the stock price? Sure he is. He waits for the disconnection to occur. And waits. And waits. It has to be a great company with a short term problem that can be overcome.
Here we are.
Let's not forget another thing: the "big money" is running a game on us. The game is to drive the price as far up as they can, using everything they can. Then they drive the price as far down as they can. The farther the better. This process gives them the ability to maximize their activities and reduce the possibility of their own mistakes. Some of us can take advantage of this. Others get crushed in the ups and downs. The big money is their to take advantage of the weak ones, and but don't want to destroy the strong ones, for they will lose too many players. They can't kill off so many as to alter the monetizing of the game. Many will go down in flames, but there are always new players to step up in the next cycle. |
