Semi-Equips - Buy when BLOOD is running in the streets! Message Board

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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!

LRCX 150.32

+5.4%

Nov 24 3:59 PM EST

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To: Ian@SI who wrote (4041)	12/20/1997 6:24:00 PM
From: Justa Werkenstiff	Read Replies (1) of 10921

Ian: The best possible strategy in my view if you have an iron stomach is to be margined to the maximum at the bottom of the cycle and then to lighten up at the times of maximum valuation so as to reduce your margin to nothing or your holdings to nothing as well . Now before I get reamed for saying such a thing, be advised I am making an extreme statement as to drive home a point. Each person has to achieve their own comfort level within this framework. This is definitely not for everyone. You must have a worst case scenario plan intact to cover your position. You must always ask, what will I do if it gets worse. The biggest two risks to this strategy (in my view in order of importance) at this point are (1) an overall bear market; and (2) the interest that accrues on your account. If you think there is the risk of a bear market (20% overall decline in the general market for six months plus), then this strategy could leave you an unhappy camper if that event were to ever occur. I do not see this as a probability at this point but ask me again on Monday <g>. As prices have declined in the semi equipment sector, I have moved assets from other investments into this sector and have begun to margin money at 6.75%. Options or LEAPS are another choice, but I hate the time constraints. As prices decline further in this sector as is certainly possible, I will continue to make this move. The lower the prices; the lower the risk in my view. I won't delude myself into trying to pick the absolute bottom for re-entry -- it may have been Friday or it might not be for six to twelve months. If the market wants to continue to give me better values, I will continue to take them. I imagine I will look and feel like a total idiot (if not already) if this semi equipment correction continues at the same pace but the majority of the damage has been done to many companies IMO in the absence of an overall bear market. The semi equipment sector is having a bear market right now; you don't need an overall bear market to compound things or at least drag them out. If the semi equipmet correction does not continue, I am happy with my allocation to that sector at this point as I am overweighted there for sure. Now, I will also attempt to trade this upward move for all its worth. Trading in an upward moving sector will be a trader's paradise, especially at the early stages. Theorectically, my account equity will also increase once the sentiment changes and it will. The only issue is when. I will trade some shares to maximize the cycle and provide some offset in case I miss the top in selling out. Most likely I will sell out too soon, but I hope to be around for the big move. I plan to sell out in stages. Brian can tell you more about margin calls as he has personal experience with same. I have never had one and hopefully my plan will allow me to avoid them in the future although there is no shame in having one. You can always sell some stock to meet the call. You will just to have to sit on the sidelines until the market turns and paynthe interest. I know I have not covered all the details of such a plan, but dinner is calling <g>.

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