KLINVESTOR: re: "I got a lot of "so what comments" when I posted a few weeks ago that semi prices were strengthening"
The fear is so great that good news is ignored. As the stock price declines, many of the people who have been correctly bearish on this stock all this year, keep lowering their buy prices, so they're never quite ready to buy. They may time it exactly right, and take their entire position at the exact bottom. Or, they may find themselves saying, "oops, the bottom was 2 months and 15 points ago."
I follow the MU and INTC news, because these two together can be used as a proxy for the semi industry. When the semis start doing well, it's only a matter of time before the semi-equips follow.
In June:
1. MU bottomed
2. INTC bottomed
3. DRAM prices for 16 mb stopped their freefall, and stabilized at 2$
4. DRAM prices for 64 mb stopped their freefall, and stabilized at 10$
Also,
5. MU's last quarterly report surprised on the upside, with margins better than expected
6. INTC has pre-announced a better-than-expected report.
7. rumors of Fidelity buying back the techs they dumped last year.
I started buying in September, because I thought the sector risk was now negligible. And, in fact, AMAT and the sector has not underperformed the market in the last 2 months. It has gone down only when the whole market sells off. With the market off 15%, I think there is perhaps another 15% market risk out there, and I can easily tolerate that.
re: "AMAT is a bit expensive given the valuations of the smaller niche players in the industry " One of the expensive lessons I've learned is to always buy the best. You pay for quality, and, in the end, it's almost always worth it. MSFT has about the highest PE of any software company, and is still the safest stock in the group. CSCO has always had a PE higher than its rivals (whether they were Bay or Lucent), and its stock has outperformed theirs. In fact, buying the company with the highest PE in the sector, when the sector is out of favor, is a simple and usually successful rule. |
