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Technology Stocks : Semi Equipment Analysis

SOXX 312.18

-0.2%

Dec 9 4:00 PM EST

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To: Cary Salsberg who wrote (10398)	7/4/2003 2:56:53 PM
From: Return to Sender	Read Replies (3) of 95541

I think the market is pricing in a recovery. Not discounting it. But of course I could be wrong, as you could be, as well. Here is where we agree. First Cary, you invest in some of the best semiconductor and semi equipment companies around. I have no argument with your stock picking abilities. I also agree with buying stocks at fair value. Buying a stock at historically low P/S (price to sales ratio) is an excellent tool for quantitatively attempting to do just that but there are many others that you feel do not apply. When I first came to this thread I was as bullish as anyone could possibly be about lower interest rates igniting an economic recovery which would be reflected nowhere better than among those best companies of these industries. I wanted to throw my money at stocks like AMAT and ALTR believing that they had an excellent opportunity to benefit from what I thought would be a short economic downturn. You told me then that you were waiting for better buying opportunities at lower prices. I bought anyway. I lost money. The stocks fell and you began to buy again. They fell even further. I became bearish while you remained patient. The stocks eventually rallied and have made your entry prices look pretty good. However the real recovery has yet to happen. Neither of us know when it will happen. We may get another sell off in these stocks. We may not. But one thing I notice for sure is that there are very few readers of this thread throwing anything more than short term dollars at going long right now. So why do we disagree? The reasons are myriad but they are best explained by Don's own tables. The btb has remained stagnant at best. Earnings estimates are falling and most likely far too optimistic for next year. In addition AMD, NVLS, TXN and many other companies have warned about the upcoming quarter. Me personally, I don't think SARS is much of an excuse for the failure to make accurate guidance. The failure is plain and simple too much optimism at a time when we have far too much capacity online. Capacity that is producing far too many chips at far too low a price to support the valuations of these stocks. And I mean all these stocks not just your favorites but the POS stocks that also have taken a ride higher since March. Now once again I will state that I could be wrong. But what if I am right Cary? What if technology stocks were actually valued like blue chip stocks where P/E ratios and dividends truly matter? Do you think these valuations are justifiable if that happens? Ken Fisher aside, think for yourself, expand your horizons to include all the possibilities, not just those supportable by bubble day mentalities. I'm no longer bullish or bearish. I think it is possible for the market to rally further. It could also fall hard. What I am is careful because until we see a true business led economic recovery this is no market for a long term investor. We could be trapped in a trading range for a long time. If we are in a trading range then for all we know and the best way to profit from it will be to trade both long and short at the various discernable tops and bottoms. And yes I do still think that they are by in large discernable. Even if they are not I believe that an investor armed with short term trading tools can pick off a few percentage points in gains nearly every week. That's all I have to say and as always these are just my opinions. I know you will not agree with at this time but I hope one day you will see the wisdom in other viewpoints, including my own, which has changed so drastically these last three years. RtS

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