Studly Big Bucks:
I've read all of your posts over the past several months and admire your style, iceberg/Titanic analogies aside. I have agreed with a good many of your points, and even those that I disagreed with seemed well reasoned.
The one exception, however, is your prediction that AMAT's price at the end of 1999 will be a mere $40. Even assuming that we are at looking 3 upcoming quarters or so of subpar earnings, surely by early to mid 1999 earnings will start to pick up again, probably dramatically. Chip companies aren't going to take a two year vacation from capital equipment purchases, and once the first ones start buying again the others will follow. Add to that the fact that, as you know, AMAT's price typically discounts six months or so into the future. This means that in the second half of 1999, the Street will be looking into the year 2000 at an incredible buildup of latent demand and the continuing transition toward 300mm and other new technologies.
Given this scenario, its hard to see how you could possibly believe that at the end of 1999 AMAT will only be trading at $7 above its current level. Am I missing something? Is your $40 prediction merely an attempt to be provacative? Why would you have any longterm interest in a stock you expect to appreciate only $7 over the next two years? Has there ever been a two year period when AMAT's stock price fluctuated by only $7?
Because I respect your opinions, a detailed response to the above would be appreciated. Your predictions imply that you foresee a downturn, or some catastrophic macroeconomic event, of far greater magnitude than even most bears are predicting.
Thanks in advance. |
