I think all stocks are going to revert to historical averages in terms of valuations. In fact, I expect stocks to overshoot to the downside.
What do you think has been happening over the past 28 months? We now have an environment of corporate scandals and fraud, massive and unprecedented bankruptcies, investor cynicism, worldwide terrorism, recessionary expectations built into the equity markets, and a general hatred of anything tech. What more can you realistically expect outside of Armageddon? If shorts were asked to pick any scenario in 2000, the one we now find ourselves in would probably be it, and yet it still is not good enough! Greed works on both the upside and the downside, and I believe that is what we are witnessing here. If AMAT should fall to $3, I have no doubt that many would hesitate to buy waiting for $2, questioning the cash balance on the balance sheets or some other nonsense. In other words, they want the rewards of a fabulous company like AMAT without taking ANY risk whatsoever. |
