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

To: Jacob Snyder who wrote (40709)	12/11/2000 6:38:07 PM
From: John Trader	Respond to of 70976

Jacob, Thanks for your post. Good comments. Your comment about the lows in the stock price tending to correspond to the low in orders is significant, and may be extremely helpful to us going forward. Your point about the tech stock mania causing AMAT to get too high back in April is a good one. However, as I have pointed out, the decline from the high, by the Nasdaq at least, is something that you have to go back at least 24 years to see the likes of. So, we have had quite a run down as well, which should cancel out some of the mania effect as far as having to ignore that price of 115 as being the true top. AMAT itself, at 37.25 was down 67.6% from its former high, which was more than the percentage decline in the past two cycles, and significantly more then it declined from the peak in this amount of time, as compared to the two previous downturns. I was wondering, being that you bought recently at 40, as I did, what your "target", so to speak, is for AMAT over the next year or two? Another way to put it is, what caused you to make the decision to buy at 40? Was is from fundamental analysis based on past price/order data, or from analysis using expected future earnings/orders, or from the decrease from the high, or from technical methods, etc. It seems that you are mostly playing a bounce that you expected at around this point. I agree that these levels (close of 50 15/16 today), it is probably not best to buy, as it will probably go lower later on (though maybe a fair amount higher for a while at first). Certainly for those past two cycles it took a lot longer for the stock to make its low. One thing we will all be watching for over the next weeks/months is any news/hints of AMAT order cancellations. One thing I wonder about is how much the trend away from the PC is reflected in the price of AMAT. It used to be that the PC industry drove equipment orders, but now chips are being used all over the place (have one in my toothbrush, for example), so is it possible that the decrease in orders will not be as bad as many are expecting? I am thinking the market for non-PC chips will not take that much of a dip, maybe a little inventory correction for the internet infrastructure type chips, and some for the cell phones, but other areas don't seem like they will be much affected, depending of course on the extent that the economy overall slows down. Also there is the move to 300mm wafers coming up soon, if I have that right. I like your comment about diversification being something that many do not do well, and the confidence you have in AMAT. I am sort of hoping AMAT gets hammered early next year (maybe down to about 25-30) relative to the rest of my portfolio, as I plan to "back up the truck" if that happens. However, I am not really sure what the stock price is going to do, maybe we go up quite a bit from here along with the overall tech market, driven by a Greenspan and post-election rally, and then crash down at the end of January. On CNBC today there are lots of brokerage firms with bullish comments, some saying we saw the bottom in the Nasdaq already, and one being that comment from that UBS Warburg guy that this is the "best buying opportunity in 20 years" for the overal market. If enough of these guys make comments like that, we should get a pretty good short term rally at least. Regards, John