good luck, Paul:
You'll do OK buying on margin at these prices, as long as there is no chance of a margin call if AMAT hits 13 and the S&P 500 hits 750 in 1999. This could happen if the U.S. has a recession (30% chance), Latin America has a Malaysian-style credit drought (70% chance), and Japan continues to do nothing (80% chance).
In February 1998, you guessed 1998 hi 70, lo 28, and end 60. All far too optimistic guesses. Your guesses for 1999 continue the pattern of overconfidence. Are you prepared to hold if the U-shaped downturn continues for most of 1999, and you don't get your projected prices till 2000 or 2001? If so, you will (eventually) do well on today's purchases.
My estimate is that the longest we'll have to wait for an upturn in semi-equip orders, and a doubling of semi-equip stocks off the bottom, is 3Q 1999. Too much equipment will be obsolete by then, and technology buys alone will require a lot of new equipment. The soonest it could happen in 1Q 1999. Therefore, I plan to dollar-cost average over about the next 6 months into the sector.
BTW, what made you decide to start buying? Value alone? The first news of a new planned fab in a very long time? Margin improvement at Micron, and sales improvement at Intel? |
