Ian,
I was interested in your assessing possible bottom targets, and spent the weekend developing a plan of entry based on my own financial situation.
Weighing this upward move with very real possibility of lower prices eventually, I concluded the best tactic would be to buy at each dollar level from 28 to 14, with higher percentages towards the bottom.
This may seem silly to develop a plan for buying significantly lower with prices on the rise, however I think that is the exact mistake holders made on the ride up. A pe of 25X next years earnings was historically high, therefore you sell. A pe of 6-15 times this years earnings is historically low, therefore you buy.
To develop an individual buying plan, you have to determine a POTENTIAL bottom, and buy before then, because it probably won't happen. 14 is 6.7x this years e, 2x book, and 1.25x sales, all levels that are typical yearly lows. Of further note is the yearly bottoms are usually hit quickly and then pop up 10%. I've bought three times this past week, doubling my position. If AMAT hits 14, My position will have increased by 400% from here.
I would still expect AMAT to hit a minimum of 100 within 3 years.
Gene
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