Jacob, I'm reminded of the decline in these stocks back in the spring last year when all the news was incredibly good, yet the prices, inexplicably at the time, kept declining.
Now we seem to have the reverse, the news is incredibly bad and getting worse, and the prices keep going up, (or at least holding in a range) inexplicably (at this time).
I think that at least the experience last spring of stock price behavior vs reported "news" indicates that most of us don't have access to the news that matters. So, we are left with TA (or reading entrails, etc) or trying to do what Cary is proposing.
I like Cary's entry prices, and he sure had it nailed in past declines, but I wonder... I remember participating in another deep cyclical industry, namely the oil service/E&P runup out of the disasterous oil/gas price declines in early '99. No news, but the stocks started to creep up in an extreme FUD environment. Climbing that wall of worry, as everyone just *knew* that OPEC couldn't get it together and prices were headed lower because the Economist said so on their front page! (I wish I had kept that front page for framing!)
That said, we aren't anywhere near rock bottom price for AMAT on a fundamental level, like the OS stocks were in January of '99. However, there was a considerable concern for bankruptcy in OS at the time, even though the stock prices were trading at historical lows based on P/BK. It seems in retrospect a no-brainer on the OS, but the bankruptcy kept the level of FUD high, so adding in that factor may make the two situations not so far apart. (Ie; fundamental valuations seem way too high now for semiequips given the reported business picture.) |
