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Politics : Formerly About Applied Materials

AMAT 262.92

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3:59 PM EST

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To: Cary Salsberg who wrote (49815)	7/26/2001 3:03:27 PM
From: Sam Citron	Read Replies (4) of 70976

Looking at those (split-adjusted) Oct. '98 lows in some of your favorite semi equips: LRCX $3 NVLS $7 AMAT $11 KLAC $10 We sure have come a long way, baby! They sure seem like delicious entry points today, but who here really thinks they are a possibility? A revisit of '98 trough prices would represent 75% to 90% further declines from current (depressed?) levels. As hard as it seems to imagine that we might sustain such further declines, it is even harder to figure out why things looked so bleak back then. My recollection is that the '98 trough was during the "Asian contagion" when Thailand and other former Asian Tigers were haing serious macroeconomic problems as they competed to devalue in order to maintain exports in the face of stiffening competition from each other and China. Outside of Asia, PC growth was still strong and internet boom was still in its heyday. Sure there was a typical boom-bust cycle in semis and equip at that time, but I do not remember anything resembling today's uncertainty or collapse of end-user demand. Of course, this might be just my own myopia or amnesia. Still something appears out of whack here. Either we were way too cheap in Oct. '98 or we are way too expensive at this juncture. You, however, seem practically alone on this thread in recognizing this latter possibility. Were the '98 trough valuations just a manifestation of pure FEAR and irrational momentum-driven selling, or were the markets reflecting something in the air for this sector back then that was far more terrifying than current conditions? Or could it simply be that portfolio managers had another choice back in '98 that is not present today, i.e., internet stocks? Sam

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