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

To: Tito L. Nisperos Jr. who wrote (35389)	5/26/2000 5:18:00 PM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

you said: "Why do I have so much confidence in AMAT LEAPs even if I buy at 10% discount and not waiting for 50 to 60% discount?.....AMAT, like some other Silicon Valley stocks, Always comes back from a 10 to more than 60% decline to hit a series of New All-Time Highs!" Yes, Tito, AMAT does come back, eventually. But "eventually" isn't good enough, with any option, even LEAPs. Let me remind you of an example you may have forgotten: In mid-1995, AMAT hit a high of 30. Let's say you bought on a 10% pullback, to 27. Let's say you bought the longest-term LEAPs availble then, the Jan 1998 LEAPs, which had just become available. As those LEAPs were approaching expiration, the stock price appreciation during the 2 1/2 years you held the LEAPs was approximately........nothing. In fact, there are several 2-3 year time periods in the AMAT stock chart with zero stock appreciation. With the loss of time premium, you would be unlikely to get back your original investment. And, if you had bought out-of-the-money LEAPs, you probably would have lost most of your investment. AMAT LEAPs, even the very longest-term ones available, are always risky, and are likely to be poor investments unless you buy them when the stock is undervalued/out-of-favor, and sell them when industry conditions are excellent (and that outlook is in the stock). Valuation always matters. You ignore it at your peril. You can pay too much for a good stock.