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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (35333)	5/23/2000 6:13:00 PM
From: Philip W. Dunton, Jr	Respond to of 70976

Cary, By most technical measures, especially breadth, the general market topped out in April of 1998. We have been in a stealth bear market since that time. Tech was just late in jumping on the bandwagon. To say that we are only two months into a bear market is just not true. While the tech bear phase has been vicious in damage, with many stocks losing 50 to 90% in value, it may not be long lasting. I would suspect we are much closer to an end of the fed tightening than the beginning. Look at the charts on the bank stocks and they will support my contention. Remember, this is an election year and while it is prudent to be cautious right now, it might be a mistake to get too bearish. Just my opinion, Phil (I am 50% in cash)

To: Cary Salsberg who wrote (35333)	5/23/2000 6:58:00 PM
From: Proud_Infidel	Read Replies (4) \| Respond to of 70976

Did someone say something about a wealth effect?!?! Cary, As I am sure you know, I am very Bullish on AMAT and the sector as a whole. Not a blind Bull however. The current downturn has more to do with interest rates and fears of future fed increases than anything else. Any talk of a downturn in the semis is very premature IMHO. We are seeing shortages in DRAM, Flash, MPU's, TFT's and many more areas. As you well know, making a semiconductor is not akin to turning on a faucet- there is a lag between the decision to build/add capacity, and the resulting supply it creates. Much of the equipment needed to regain equilibrium in these areas has not even been ordered yet. And we still have not seen the first real 300mm chips shipped yet; this will be the next real catalyst for the sector. There is also the unkown....how many mp3 players will be shipped, along with upgrades.....and will the next generation of mp3 players have more memory than my desktop? I sure could use a half Gig in my Rio.....my desktop would perform probably pretty much the same. Also, only about 5% of the servers are in place for the internet of 2005, according to some calculations(Tony Viola??). The world is about to change as we know it. There have been many scary moments over the past decade when selling out of the techs seemed to make sense........this is precisely the time it has made sense to be buying the Tech Leaders. I believe we are witnessing one of those moments, though there is no argument that we are closer to a top than we were a year ago for the sector:-) Regards, Brian(still fully invested.....am I still the only one?)

To: Cary Salsberg who wrote (35333)	5/23/2000 7:02:00 PM
From: Wes	Read Replies (1) \| Respond to of 70976

Hi all, Now we all know that the long-term prospects are bright for this industry, but looking out at the next couple of years: About the cycle, outlook and business prospects (as well as talk that we've finally escaped the cyclic nature of the semi-industry) are always the brightest at the peak of the cycle. Certainly that's when the stock price peaks: when investors start looking beyond the current business condition, and when no amount of good news about the "now" can lift the stock. Now this sounds like the situation these days. :( And with a slowing economy, that could easily kill a further upswing in business. I don't care if you're talking 300mm or cell phones or Sony Playstations. So I agree that we are in a bear market. But how far do we fall and how long? In terms of valuations, keep in mind that the average TRAILING PE for decades before 1995 was around 15 (just before the 1987 crash, PE was at 22 and that was considered stratospheric in those days). Since 1995, we've seen an a "secular" change in the way stocks are valued. We've had an inflation of PE ratios, and investors started looking at FORWARD PEs. Of course I think part of that is justified given the "New Economy" and the fast growth rates some of these high-tech companies enjoy. But of course, the question is How much of an inflation is justified? Certainly not what we've been seeing earlier this year & late last year, and hence the relentless declines in stock price. The "re-adjustment", so to speak. So what I'm wondering is whether we're again in one of those "secular" shifts in valuation metric--this time to the downside. Can we be partially returning to the pre-1995 way of valuing stocks. If so, then yes, we do have a while more to fall...and man, we could easily lose 50% or more from the peak in March. Just as the climb of stock prices in the last few years have been unusually impressive, the ensuing decline over this bear market can be equally "unusual". Cary, are you doing any selling even as the market declines, or are you sticking with the +/- 25% rule you set forth after the April 14 decline? Wes

To: Cary Salsberg who wrote (35333)	5/23/2000 7:19:00 PM
From: Jacob Snyder	Respond to of 70976

Cary: 1. I am 40% cash and falling. Buying high quality companies at PEGs<1. No semis or semi-equips. 2. the bear market started in April 1998, when the NYSE A/D line started to fall. A few stocks quadrupling since then, have hidden the 2-year-long grinding decline of most stocks in most industries. We are much further into the process than you think, and closer to the end. a. the bear market will end when the economy slows enough so the fed quits raising. Follow consumption, unemployment, wage/benefit costs, commodity prices for signs of the turn. No sign yet. We have at least 3/4% more to go from the Fed. b. significant slowing of the economy is a certainty, because Greenspan has explicitly said he will make this happen. Recession in 2001? Too many variables to even make an educated guess, but I will anyway. 6 Fed raises over 11 months so far, and no sign yet of lower consumption or less-tight labor markets. So far, they have erred on the side of too much liquidity and too-few raises. That may be changing now, to a too-aggressive posture. Strange that they would do that going into an election, though. c. Again, too many unknown variables. My guess is that the market bottoms sometime in 2000, Greenspan gets his soft landing, and the bull market resumes in 2001, with semi-equips a bit past mid-cycle. Semi-equips then will hit new highs before the cycle ends in 2002 or 2003. We are right on the verge of 300mm, which should prolong this cycle. If we get a hard landing in 2001, then the semi-equip cycle may end just as the general economy starts to pick up. That would make these stocks about the worst possible investments in 2001-2002. 4. I will buy semi-equips, if stock prices get low enough. I'm not really smart enough to know what the Fed will do, or whether we'll have a recession next year. But I am smart enough to recognise value. Guessing that the peak cycle price will be about 125 (=5$/sh. X 25PE), I need to get in at about half that price, to have enough margin of safety. However, I'm seeing a growing list of quality stocks that I think will double from current prices, over the next 2-3 years, so I may not buy much AMAT even if we get to 62. Probably buy some, just for sentimental reasons, because AMAT was responsible for the first doubling of my portfolio, in 1997.