Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 270.13

-1.8%

Dec 11 3:59 PM EST

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To: Cary Salsberg who wrote (61804)	3/10/2002 8:47:13 AM
From: Berk	Read Replies (1) of 70976

OT Cary, I don't know if we can meet on common ground here since your methodology is different than mine. You are a true fundamental investor whereas my orientation is much more toward trading. My experience has been that technology holds too many surprises even for those who appear to have a grasp on it. As you know there are many dead or near dead tech bodies out there (WANG, Honeywell, etc.) and that has caused me to trade them rather than to invest in them. Whenever I have made investments in tech it has typically brought losses or at minimum severe swings in equity as the market goes through its love/hate relationship with them. With regard to EMC my guess is that we are at or very near the end of the hate relationship, at least temporarily. The news is bad but that is what bottoms are made of. The market is disgusted with them and in Jacob's initial post which started this discussion he was expressing this. My comment to him was simply tweaking him on it. If the stock can turn up on volume, this disgust and more bad news of an ephemeral nature will cause more shorting which will help drive the stock up. Specifically, why buy or trade today rather than a little later? That is a market question in my mind, not a valuation issue (trading not investing again). Two points come to mind: insider buying and institutional ownership. First, one of their directors bought about eighteen thousand shares in January and was the first insider to buy in close to a year at prices almost fifty per cent higher than today's. In the original insider buying study done over thirty years ago one of the conclusions was that buying by insiders is far more significant than selling and especially so in technology companies. Second, I think institutions were caught flat footed in this rally and will need to put money in big caps quickly before the end of the month since cash is readily absorbed in them. Now if they loved EMC at the top in 2000 they have a real problem explaining to their investors why they passed up the buying opportunity at one tenth the price today. This is not to say that all institutional investors are stupid since they are not but in the aggregate they are the "crowd" and this is a game of anticipating what the crowd will do. They will be forced to buy what they know best and pray that they are correct. Finally, the EMC LEAPs which I own represent about 5% of my trading portfolio and will be hedged off and on with short calls to reduce my exposure on rallies if we get them. My bet (and it is obviously not a large one) is that we do but as I said in an earlier post I have been wrong before.

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