Nice post....The Merrill call reeks of CYA in case there is a bottom, but they are totally guessing, and if one reads the find print, they admit there is no uptick in demand, and that a downturn in the economy could bring another leg down in demand..
What's funny is....before this semi downturn....even John Joseph used to say the semi stocks start to recover 3 months AFTER the bottom in demand is reached...perhaps all these pre-mature calls are needed to exhaust dip-buyers, so when analysts pound the table about the (real) bottom, most will go <YAWN> and react after the fact-g
IMO, its entirely logical that semi stocks would start to recover 3 months after a bottom is in, for you want to make sure the bottom is really in, and if you go on any one month's data, you are totally guessing (which seems to be the rage these days)..
Of course, NONE of this addresses the issue of: OK, so semi's are recovering, but if demand is picking up (while stocks have already priced in a recovery, and stocks are overvalued)...well, how much more upside is there? The bases (demand) of these companies has been dramatically lowered.....
Just looking at a post I printed out, and is posted next to my computer: In 1996 and 1998 (bottom of semi-downturn), most semis went for 1x, 2x book and sales.....many are still 5-10x (and even more, RFMD)....and these things are s'posed to zoom from here?
I'm getting ready to whack 'em! Good luck...stay patient, scale in on any big plays... |
