After the last semiconductor mini-bear market in July of 1996,
companies who just made their expectations for earnings saw their
stocks soar. During the next 6 months, I would guess that this same
type of dilemma will unfold. Small investors are running for the
exits because they're scared to death about the Asian situation (and
also to offset some gains they may have secured earlier in the year).
Institutions are running for the exits because they know the small
investor will drive stock prices down further (the institutions will
be there to catch the bottom after the small folks have lost their
shirts). And mutual fund managers, in addition to the previous 2
reasons, are also dumping for the so-called "window dressing"
concept (secure gains and don't hold the losers and collect fat
bonus checks for their performance). One thing that everyone should
realize is that after this "window dressing" period, there comes
an opposite event called, interestingly enough, the "January effect".
Here, the small investor who dumped in December wants to get back
into the good, but beaten down, companies. Institutions want to get
in before the rest of us. And mutual fund managers need to start
the search for stocks which have the greatest potential for rising
during the year (thus allowing these guys to collect another bonus
check at the end of the year again).
It may be surprising, but this cycle seems to occur again and again
every year (not a guarantee, just a pattern). How does it affect
Atmel? If they go on to meet estimates for Q4 (Asian crisis and
all), expect the stock to cycle upward to the 30s again. In my
experience, Atmel always meets or beats estimates if they don't
warn ahead of time...2 1/2 weeks left to find out if they do.
Vikas |
