It's especially instructive that, in early 2009 as stocks were bottoming, negative earnings were expected. The brief time that was true, was the best time to buy the stocks.
It is probably impossible to chart it, but I'd bet a clearer pattern, would come from charting actual gross margins. They would graph in the same sine-wave pattern as stocks and semiequip bookings do. It would be interesting to see how correlated the waves are, and what the lag time between stock peaks and GM peaks is. One of the things which convinced me to sell my long positions in the runup from mid-2010 to early 2011, was that margins (for semis, semi-equips, and the overall economy), were at the top end of the LT historical range. When KLIC had 48% gross margins for 1FQ11 (reported end of January), I thought (and posted), "things can't get any better..." |
