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Politics : Formerly About Applied Materials
AMAT 220.28-6.4%Nov 20 3:59 PM EST
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To: Skeeter Bug who wrote (27309)12/20/1998 9:34:00 PM
From: Clarksterh  Read Replies (1) of 70976
 
Skeeter - What you are missing is twofold:

First historically cyclical stocks (and the semi equips are cyclical growths) often start getting close to new highs before they have really exited the recession. This is not just true of semi equips, but of other cyclicals as well. Hence a famous investor's (Peter Lynch?) quote 'buy when the PE is sky high, and sell when it is absurdly low'. Of course the quote is taken out of context, but it is just to show that this phenomenon is not new.

Second, you seem to blithely ignore the slope of the orders. Do you think the ramp in orders does not portend another big jump the next month. If so why, since there is definitely a correlation between the growth in month m and the growth in month m+1.

Clark

PS Having said all of that I agree that the leading semi equips have priced in a pretty optimistic assumption about growth over the next 6 months, and are thus pretty vulnerable if it doesn't happen.

PPS Another difference between you and I is that your time horizon is substantially shorter than mine. I care about a minimum of 6 months out. That is probably your max, but I am almost completely incapable of predicting short term movements.

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