Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 235.13

+2.2%

Nov 10 3:59 PM EST

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To: Jacob Snyder who wrote (22319)	7/31/1998 5:53:00 AM
From: Justa Werkenstiff	Read Replies (1) of 70976

Jacob: Re: " I don't see any of these things happening before early 1999. Until these start happening, all rallies will be false rallies. There is a huge amount of momentum money watching this sector eagerly, trying to time the upturn. Any shred of good news incites a flurry of eager buyers. Then, if momentum isn't sustained (because the fundamentals won't support it), the stocks will slide back down." Your analysis seems good on the surface unless a change in fundamentals is preceded close in time by a false rally that holds in which case the rally will have been a real rally by virtue of the change in fundamentals and then stock prices will not slide back down to their former level as a result. You are correct on your read of institutional motivation. They have itchy trigger fingers now and they can and will move at any point in time and without good reason. But if they happen to be right whether by chance or good analysis in moving this sector before a change in fundamentals which does occur after a false rally which becomes real, you will be left holding air or chasing a rising market. That is the risk in your analysis and as time marches on it becomes an even greater risk. Unfortunately, your analysis presupposes a rational market every step of the way and that is not always a safe bet.

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