Hi Harry,
Here's a post I wrote last night:
Message 15894375
Based on the comments being made by the CEOs in the various subsectors of the semi business, I get the sense that we are at least a quarter or 2 away from either a turnaround or, at the least, 'better future visibility'.
When comparing the individual companies against their past performances during tough times (Asian contagion and other previous downturns), I find many of the current price to sales ratios, in the mid to large cap companies, too high for the stocks to be in the 'value' range.
More specifically, looking back at the high end communications semi's last bottom of August/Sept of 98, these stocks continued to drop even when light at the end of the tunnel was visible (they started predicting in the third quarter that 1999 would show a significant rebound). I expect a similar situation to occur this time around but I will try to let the market dictate the timing aspect. If the stocks start to reflect the actual industry weakness and drop substantially over the next few weeks, then I might move up my timetable to start buying. As it stands now, I would prefer to keep the majority of my investment capital earmarked for this sector on the sidelines until either the future looks substantially brighter, or the stocks get significantly cheaper.
I believe that companies are not releasing as much good news these days, afraid of the implications of reg FD and the potential backlash from the street if things don't go exactly as they have publicly forecast. The last thing these companies need while their stock prices are falling (and/or depressed), while their industry is 'dropping off a cliff' , is to make the mistake of forecasting a rebound before one is taking shape (simply to prop up their stock prices). Better safe than sorry at this stage, IMO. |
