Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 220.28

-6.4%

Nov 20 3:59 PM EST

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To: Big Bucks who wrote (17490)	3/10/1998 7:15:00 PM
From: Gottfried	Read Replies (2) of 70976

BB, you posted the link to a chart, requested by Tito, recently. chart1.bigcharts.com The earnings direction for each quarter is indicated. I think some take the view that decreasing earnings indicate it's time to buy the stock. But that signal is only true for the last runup in 1997. At other times rising earnings accompanied a rise in the stock. Today "The Street.com" has an article by Ted Murphy saying much the same thing. (Please see excerpt below). I'd appreciate opinions on this. To me there is a very shaky correlation. GM Ted Murphy in the street.com thestreet.com A more stable strategy was afforded by focusing on relative price to earnings breakouts. The rationale behind this strategy is that investors are great at picking industry groups. In fact, they are so good that a rise in prices accompanied by falling earnings should be interpreted as a positive sign. The intelligent stock market is anticipating a turn in fundamentals in the months to come. If you have a contrarian bone in your body, the statement above sets your teeth on edge. It is, however, supported by the data. As you can see in the chart below, buying industries with breakouts on relative P/E was a better long-term strategy than simple price breakouts, with higher excess returns and more stability.

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