Applied Materials No-Politics Thread (AMAT) Message Board

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Technology Stocks : Applied Materials No-Politics Thread (AMAT)

AMAT 230.15

-3.2%

Nov 4 3:59 PM EST

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To: Cary Salsberg who wrote (8553)	1/23/2004 8:18:44 AM
From: robert b furman	Read Replies (1) of 25522

Hi Cary, Those of us - who've read thousands of posts on this thread have in general different positions. Cary has the longest term recovery and has had it way back in 00 and 01. I have always been the most optimistic and least patient.I've proudly called the bottom in every one of the three to four dips (and I probably called each of them two to three times)GG Most here have been steady accumulators thru the 00-03 multi-bottom bear market. I think it is key to understand that bull markets have several waves of price advancement. If you look at monthly charts of the SCE companies - you'll see a nice recent price advance that is in the process of reaching the same price levels achieved back in the late April 2002 time period. These prices didn't hold as the April 02 Rally fell apart due to an incorrect expectation of earnings resumptions. This recent Rally naturally promps one to take profits - for fear of a failed earnings scenario.I'm currently fighting the urge to clip profits its only a natural emotion.Right now I'm fighting that emotion - I'd just as soon not go thru a dip - but I'm pretty sure I'm going to have to.ERG It is nice to lock in profits.Especially after so many failed Rallies over the last 3 years.I think that has a huge mistake potential however.(I'm a long term positional trader- not a day trader) I'm seeing most stocks completing a multiyear "W" formation. As price highs approach the April 02 levels - it is "to be expected" that price weakness will create handles.These handles should give us 10-15% price weakness on lighter volume. If this is a true capital reinvestment cycle - earnings will prevail out into future quarters. Holding the "easy gains of 03" thru the initial indecision of 04,is my guess of the right thing to do. I believe this is the real thing.It is capital expansion into newer more eficient equipment.Most of the old equipment has been working at reduced levels for 3-4 years.Much R&D has evolved better machines.The old machines are depreciated down to zero. Do you refurbish or reinvest into more efficient equipment?That's the unproven direction that most chip makers are at right now - I believe they will upgrade - forced to by relentless competitive pressures. The proof of this expansion being the real thing is not Intel's Capex. Their unique leadership investment cycle was the source of 02's incorrect expectation everybody could keep up with the strongest chip company in the world. This expansion is much healthier as it includes the Japanese(a huge laggard and a new player China. This expansion is also end user demand driven - we've waited years to write those words. I believe the mistake made most often is following the minutia TOO CLOSELY. Let this thing prove itself. When prices get up to April 02 levels - watch the volume -if it is light on 50 day moving average and we have a 10-15 percent dip in price - that will be a great "ADD TO" spot. If price pops over April 02 price levels on big volume - Buy the breakout - another good place to "ADD TO" your core position. It is the footprints of the institutional investors that will make our fortunes.If they are wholesale selling at The April 02 price levels - I'm joining them. SCE stocks are good for 6-8 baggers from trough valuations - most often with splits. We're far from that now. I've argued with Cary frantically trying to get the recovery to occur sooner than his depressing 07 scenario.GG I haven't done much to accelerate it - I'm listening to his opinion with much more credibility - but I'm still thinking it will pop much faster than we all expect - IT ALWAYS DOES. So I'm hoping for 05 but it could well be 07. All along this 00-03 bottom I've been hoping that the time duration gets us the respect of at least a sideways consolidation - one that doesn't give us new lows (like the October of 02 did). Maybe 04 gives us a consolidation.I'm hopeful it will, as it will build more technical strength in the chart patterns. After the 00 distribution top - what we need is slow strength building price action. If we get sideways price action - the kind that requires patience - the picture will build for a higher high in the future. The best response to this scenario (if it occurs) will be to buy on dips. Don't bet the farm, but patiently "Add To" on scary down moves( cut your losses if it gets ugly). SCE's have always had multi-wave price advances.I'm a long term holder and expecting that to repeat on this cycle as well. The longer it takes - the higher they will go. I can be patient for that. We're WAY EARLY for a final top. Earnings must prove themselves! Those SCE companies who have invested wisely in R&D will become market share gainers and rise to higher levels of profitability. That has yet to be proven. One thing that is for sure.Today now requires more chips than the peak of 2000 did.Most never would have agreed with that in 00 or 01 - the bubble was over and it was never going to be that good again. We are investing in a Megatrend that is irreversible.The digital revolution quietly advances and we all are data junkies. We now are just beginning to be freed from the desk tops and can get our data mobile and wirelessly thru many more types of devices and networks.All dreams of 00 that took patience for the build out-just like braod band did. Hold with confidence! Buy on dips! This show is just getting going! The big winners are just getting over the breakeven point. Buy those with no debt and track records of market share growth and be patient enough to get at least a four bagger from the recent all time lows(October 02). JMHO Bob

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