Paul: price targets:
I have a limit buy order for INTC at 69, to put to use everything I took out of AMAT, plus my reserves. If the stock stops its slide on heavy volume at 70 or 71, I'll buy there. This is a support line going back to early 1997, and has held on repeated bad news. My discipline is 100% stocks 100% of the time, so I won't hold cash like BB. But I have been nervous enough to eliminate margin. I expect to get my INTC price very soon. Then:
If AMAT never gets below 32, I just stay with INTC. That's the risk I took when I bailed out at 37 1/2. I expect INTC will be less volatile, and also have lower long-term returns, compared to AMAT.
If AMAT slides below 32, I start buying in increments.
27=January lows, just above P/S of 2, I'll move most of my money back (but no margin buying) into AMAT.
I'll sell everything else, be completely into AMAT, and fully margined, at P/S=1, about 13 . Actually, my broker won't like it if I'm heavily margined with a portfolio of just one stock, so I'll add enough KLAC, NVLS, and ASMLF so AMAT is only half the total. This won't really decrease my volatility (or my returns). I'm guessing 90% chance of hitting 32 with AMAT, 80% chance of 27, and about a 20% chance of hitting 13.
The 2001 LEAPs become available in mid-May, and I'll also be buying the INTC 100s (if INTC is below 80), and the AMAT 40s (if AMAT is below 32).
All this will happen (if it happens) by October 1998. I think 1998 will be an atypical year, in that AMAT will bottom in the summer or fall, and rally at year's end. Usually AMAT peaks in the fall and fades by year-end.
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