To all the suddenly bullish:
1. DRAM prices are still falling
2. commodity semi companies are still not making money at current prices
3. Semi companies still have to make money today in order to invest for tomorrow.
4. the East Asian retrenchment has just begun. We have not yet seen the impact on earnings. The future beyond the first half of 1998 is still opaque. It remains to be seen if anyone will build the fabs that the Koreans will not be building.
So:
What has changed in the last two weeks? Nothing. Is there any fundamental reason why we are up from 26 to 33? Is this anything other than a rebound from year-end tax selling? No. Therefore, we will retest recent lows, and there is a probability of a further stair-step down. In the 1995-96 slide, AMAT went from 30 to 18, then stayed in a trading range for 6 months, and then plunged to the real bottom, at 11. I hope this doesn't happen, since AMAT is my largest holding, but I am doing things now (no new purchases, selling some stock that is up a lot in 1997), so I can be ready be buy at the (final) bottom. Reading various SI threads on tech stocks, there are too many people talking about their margin calls, and how they have no cash left to buy at these great prices. I'm hoping for the best, but planning for the worst. I'd advise everyone to ask themselves: if semi-equips go to one times sales, will I be able to take advantage of it? |
