clark, when peter lynch made those comments he had never seen a market like this and, in fact, to take his statements from normal markets and to apply them to bubble markets is to lose all meaning and distort the intent, imho. we disagree on count one. the sky high pe he was talking about when he said this was not even close to the pes that these stocks trade at.
i don't ignore the slope of the orders. nor do extrapolate them into the future for eternity, either. why do you think whittington said mu would make $17 a share in 1997 way back in 1995 or 96? he erroneously extrapolated earnings. how much was this "professional" off by? why did mu run to the $60s late last year? b/c people erroneously extrapolated eps into 1998.
i do expect orders to increase. they have 100% more to go to justify $20 based on early 1996 mentalities. of course, rates are lower so amat should trade higher based on that mentality. consider inflation, too. just not 125% and they haven't bagged an increase of 100% on their orders yet.
btw, if i take extrapolate the growth from july through november (oh, you won't want to do it b/c that time frame isn't as beneficial as taking 1 or 2 months and zooming out for 3 years! ;-), how long will it take amat to to double their revs and be worth a 1996 $25 (factoring in inflation and lower rates)?
now, before everyone tells me the obvious, this isn't 1996. but then, amat was in the low $20s in 1998. views tend to come and go, come and go.
this will take time to play out, however, these are valid points to consider. they can be thrown out as "old school" in the "new paradigm," but they ought to be considered. btw, the current version of the "new paradigm" is about 2 months old ;-)
this will just have to play out. just understand that the ratio of stock price to orders is very, very close to the highest it has ever been in the history of amat and probably 100-200% above the long and medium term norm. of course, nothing ever regresses to the norm in the "new paradigm." or does it?
but, the market has 20/20 vision seeing the future so everything is just fine. otherwise, the stock price wouldn't be up. right? right? ;-) |
