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Technology Stocks : Semi Equipment Analysis

SOXX 296.74

+1.8%

Nov 28 4:00 PM EST

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To: Cary Salsberg who wrote (10411)	7/4/2003 10:01:29 PM
From: Return to Sender	Read Replies (2) of 95487

>It will drive my stocks much higher. Why? They provide the technology "picks and shovels" (basic technology, participants and enablers of many markets). They are leading edge. They dominate competition. They are well managed. They will be very profitable.< It does not work that way! Your stocks will not go higher without the market moving higher too. Cary, your companies are indeed dominant competitors. I have however seen nothing in the course of the way they have traded historically that would indicate to me that these stocks can rise 3, 5 or 10 times without a major market move of tremendous proportions. None of these companies is the next Microsoft, Walmart or anything even close. They are great companies but we can find numerous company stocks that have outperformed them these last few months in the semiconductor industry alone. You will need a business led economic recovery more than you are willing to admit to get those buy and hold returns. Furthermore I have read enough of your political viewpoints to know you are more worried about the state of this nation than I am. If we are in a current bull market within a secular bear market, as I believe we are, then Cary your returns will be severely limited by a buy and hold investment strategy. I hope for your sake that you are right. I like you. I like your stocks. There is much to admire in your dogged investment perspective. But even if you do get 3, 5 or 10 times from your stocks in the next few years I guarantee you that many a stock that you would never consider investing in at all will do better than your stocks. Your stocks are not undiscovered. They are widely owned and traded by many an institution. CREE which you mentioned about 1 1/2 weeks ago might be a stock that could give you your expected return due to their use of silicon carbide. Expand your horizons. Take a smaller gain when it is available. Embrace technical analysis and use some sentiment indicators to let you know when markets have reached extremes of bearishness or bullishness. If you do not make all the money you should it will simply be because you refuse to look at the bigger picture. There is more than one way to make money. There are more than eight stocks. There are better ways to trade those eight stocks than expecting the market to make a similar bull move(s) to the post 1998 and 2002 bear market bottoms. This is not 1999! You will not get your 1998 returns from the 2002 bear market bottom. At least I believe that to be true until your returns prove me wrong. Once again, if they do, then we will still have POS stocks like YHOO and AMZN that will have outperformed your portfolio for no other reason than continued bubblemania. No offense intended to YHOO. I use your portfolios every day. No offense intended to AMZN as I buy from you online a few times each year. But on a valuation basis I like Cary's picks 100 times more than these stocks. Where does I guy find a resonably valued technology stock? How do I know if that company is not cooking its books just as bad or worse than the blue chip stocks Cary was concerned about that have lower P/E's and pay actual dividends? What will happen to these earnings when options are fully expensed? Oh my so much to worry about for a buy and hold investor. JMHO, I realize these last few posts may seem a little extreme for me but I could be right. I just could be right to be so worried. Secular Bear vs Secular Bull Market Returns: From a historical perspective since 1900 there have been 3 Secular Bull Markets and 3 Secular Bear Markets as shown by the tables below of the Dow and S&P 500. As you can see during a Secular Bull Market the Average Annual Return (highlighted in red) is considerably higher than during a Secular Bear Market (highlighted in blue). Thus the long term Buy and Hold strategy that worked well in the 1980's and 1990's for investors may have not worked very well during the Secular Bear Markets of 1906-1921, 1929-1949 and 1966-1982. The big question is now are we in the beginning stages of a 4th Secular Bear Market which started in 2000. The average length of the previous 3 Secular Bear Markets was 18 years with a minimum of 16 years and a maximum of 21 years. Thus if you add 18 years to the year 2000 and take + or - 3 years on either side then the next Secular Bull Market may not begin until sometime in the 2015 to 2021 time period if we are now entering a 4th Secular Bear Market. However I would like to point out that even in a Secular Bear Market there can still be Bull Markets lasting a year or two as the longer term charts of the Dow show below. Notice after the Secular Bull Market of 1922-1928 which was followed by a Secular Bear Market from 1929-1949 that the Dow still had impressive gains during the early to mid 1930s (points A to B) before going through another Bear Cycle prior too and during World War II (points B to C). This was then followed by another Bull Cycle from 1943-1946 (points C to D). However from the early part of 1937 (point B) until the end of 1949 (point E) the Dow virtually had a net gain of 0% as its basic overall pattern was a series of up and down movements which pretty much cancelled each other out. Meanwhile after the Secular Bull Market from 1950-1965 the Dow once again went through another Secular Bear Market from 1966-1982. Notice after the Dow peaked in early 1966 (point F) that it had a lot of upward and downward movements from 1966 through 1982 but it basically went nowhere and actually was lower at the end of 1982 (point G) versus its peak in early 1966 (point F). Looking at the current chart of the Dow shows that it has been exhibiting a choppy pattern similar to previous Secular Bear Market environments after experiencing a Secular Bull Market from 1983-1999. One has to wonder during the next 10 years or so whether the Dow will continue to exhibit a similar pattern that occurred from the mid 1960's through the 1970's in which it had a lot of downward and upward moves but the overall net gain was negligible. amateur-investors.com Click on link to see the charts and more. RtS

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