GV,
re: "Intel's all time high is an irrelevant piece of data to everyone but the buyer and the seller at that all time high."
Heard that many times. At what price a willing buyer and seller exchanged shares of Intel in the past, when the market place was strong, is relevant information. Where a stock traded five minutes ago, a week ago or a month ago is also relevant.
re: And take a look at Intel's valuation coming out of semi cycles. In previous down cycles, Intel's valuation compressed along with earnings. That was what provided the opportunity to make some good gains in the subsequent up cycle.
Valuation is in the eye of the beholder. There are any number of issues that go into the relative discounting valuation equation. Is Intel a larger, more stable company now? What's Intel's valuation in comparison to it's peers, is the entire sector more valuable in relation to the economy? Does the company have a broader portfolio of products than in past cycle recoveries? Was it a coincidence that the end of this semi cycle coincided with the end of a broader business cycle, and will both kick in to high gear at the same time? I could think of a dozen more valuation variables, both positive and negative for Intel.
The thing we do know is that in the past Intel's stock price has always gone down at the end of the semi cycle and always up at the start of a semi cycle. You can argue that the market is already discounting the next semi recovery, in Intel's stock price, but that would be a first time departure from past market behavior. Could happen, but I think the odds are that market will repeat the established pattern. Certainly a reasonable person that understands the market could conclude that it might happen again.
John |
