John, to do valuations exercise, it is not sufficient to look at PEG (even if you believe doubtful forecast) reaching "value levels" of 1.00, you are not just in a semi down cycle, but in a general bear market, and in bear markets, PEG (real ones) of .5 are not uncommon. Bear market are known to create "uncommon values, and the art is to stay alive with your capital intact to buy these uncommon values when offered. In April last year, I was pointing out to the simple fact that the BTB in semi equip, then at 1.44 or so, just has not much more room to go on the upside, and thus a peak is not far, in October I argued with my colleagues on the "blood in the street" thread that we are now getting overcapacity in the chip business (tha last quarter of last year saw a 7% rise in chip capacity, and the capacity must have increased by 30% or more last year), now we learn from Akins at CYMI that at the current shipping rate (about $105 B/annually) the industry is working at 70% capacity, meaning that total capacity is close to $300 B annually. I think that a V bounce of the economy under such overcapacity conditions (and other sectors have endemic capacity problems, from cars, to aluminum, to steel and other basic metals, yes, gold as well <g>, bb, don't kill me for that ;last one <g>) may be too much to expect. You would better off, missing the first 20% or so of a turn rather than try and guess the bottom, unless, of course, you trade rapidly in and out of these risky techs.
Caution, here should still be the "key word" despite my call for a powerful rally to the 2650/2850 by April 16th (after a bottom late this week, I still have nominally, the 9th of March, and my turnips apologize for misleading about the 28th, the first mini-bounce took till March 1st...), since after that, I see a period of Chinese torture lasting possibly till late in June, before any meaningful relief is coming.
Zeev |
