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Technology Stocks : Cymer (CYMI)
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To: Joseph who wrote (12507)1/12/1998 4:07:00 PM
From: Elroy Jetson  Read Replies (1) of 25960
 
Why did Cymer fall without a change in earnings estimates? Why do analysts so often lower earnings estimates AFTER a stock has fallen?

People say the market is irrational. Yes it moves to extremes but it's a very accurate predictor of the future.

Tech stocks like Cymer have been falling due to increasing concern that earnings could not continue to grow as they have. The future is very bright for Tech companies, but their business experiences downturns periodically.

People who recognize the signs vote with their money and sell. Everyone else will scratch their heads and wonder why. When "everyone" realizes that earnings will not be as good as they expected there will be those who will purchase the shares at a discount, knowing that the long term outlook for Tech companies is unchanged.

Does this mean that Cymer will miss their earnings expectations? Probably, but not necessarily. Will most Tech companies miss their earnings expectations? Yes, most assuredly - they are and they will continue to do so until the downturn ends.

Rest assured that the Tech stocks will start rising in prices 6 months or so before their earnings actually stregthen. You can sit there and ask yourself why the shares are going up when the earnings are falling - or you can buy, knowing the market place is an amazing predictive device fed by the insights and wisdom of millions of participants.
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