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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: scott_jiminez who wrote (9343)	1/20/2001 9:56:07 AM
From: Qualified Opinion	Respond to of 10921

You probably should have waited for the next semi-equipment book-to-bill ratio before making some of your statements. IMHO, we have seen a rally from oversold conditions that was anticipated by many on this thread. Intel's news to increase its capital spending probably was known in the Industry and traded on. Intel is only one source of demand in a much larger market. Many in this Industry, including Intel, are "hoping" for a rebound in the second half of the year. Nobody knows. In my opinion. this is a big stock market with better opportunities elsewhere.

To: scott_jiminez who wrote (9343)	1/20/2001 10:06:21 AM
From: WTSherman	Read Replies (3) \| Respond to of 10921

I think you and most market bulls are over simplifying the economic situation and ascribing much too much influence to the Fed. The prevailing notion seems to be that the course of economic events can be rather easily manipulated by the Fed moving interest rates around. This is understandable, since it would seem that over the last 8-12 years this has been the case. However, if you look at it from a more global and historical perspective it ain't necessarily so. The current situation in Japan is a good example of the limits that interest rate changes can have. The current central bank rate in Japan is effectively 0%. Its been that way for quite some time and failed to produce any significant GDP growth. The reasons are many, but, the fact is interest rates alone do not make or break an economy. Moreover, there are many external factors, such as the price of oil and foreign exchange rates that have a big impact. Last year all the "talking heads" went on and on about how the dramatic increase in oil prices shouldn't have much effect on the U.S. economy since energy was a much smaller portion of the economy than it used to be. Well, that didn't turn out to be the case. Oil is back above $30 and a new round of price increases is heading towards consumers. Combined national debt is at an all time high(personal, corporate, gov't) as a % of GDP. This creates an overhang that makes a quick reversal of economic growth patterns problematical. There was an article yesterday about how the % of home equity has declined dramatically over the past 10 years as people have borrowed against their increased home values to spend on things. This was one of the main engines of the boom. A reversal in the price of homes would create huge problems as people realize that they can't sell their houses. I'm not saying there is going to be a long recession or a deep recession. But, its far from obvious what will happen. The market wants to believe that simply dropping rates will rapidly restore high growth. Its worked before, but, its also failed before. What I think is going to happen is that the market will continue to rally as the next Fed meeting gets closer and a 1/2 point cut will actually get OVER PRICED into the market. However, once we get past January, there are suddenly going to be doubts about how long and how deep the downturn will be. Unemployment(a laggin indicator) will rise fairly rapidly and a bout of doubt will set in on the market. The long term trend for the market will be determined by the actual course of economic events. When positive economic data starts to arrive the market will then move forward. When you still see lots of tech stocks that have trailing PE's of 30-50 and some with PE's still over 100 its hard to believe that the risk of events not moving as predicted has been factored in.

To: scott_jiminez who wrote (9343)	1/20/2001 5:40:24 PM
From: Math Junkie	Respond to of 10921

"I claim there is no 'textbook' downturn or recovery within the SEM sector." You could be right. I only used the term because you did. You have now clarified that you were not referring to this industry, but that still leaves the problem that there is no textbook for recovery in the overall economy either. Why? Because history shows that when the Fed has instituted a tightening program, a recession has resulted about half the time. So it's a crapshoot. "And how much data is there anyway...1, 2, maybe 3 cycles? " The boom-bust cycles in this industry go back much farther than that, and they have not always required a recession to produce them. Anyone who wants to claim that it's different this time has a heavy burden of proof. "I believe the SEM stocks fell in anticipation of an event whose severity and duration will be significantly more moderate than expected. Bookings may go down a bit more but by March or April they'll turn...The sector will recover without EVER having more than a ~20% decline in bookings. " I agree that bookings could bottom by March or April. But between now and then we still have to see the reports for December, January, February, and March bookings at minimum. And yet you say that we will see only an additional 10% decline divided between those four monthly reports. That's going out on one heck of a limb, my friend. The other problem with that argument is that equipment bookings lag chip sales, chip sales lag sales to the distribution channel, and sales to the distribution channel lag end-user sales. When economic growth starts increasing again, all those time lags pretty much guarantee that the pain will not be over for semiconductor equipment companies until months later.

To: scott_jiminez who wrote (9343)	1/22/2001 11:29:12 PM
From: EACarl	Respond to of 10921

Scott re "the equipment stocks were down 60-80%. This is as severe a decline that would have occurred if the evidence from the BtB/bookings indicated a severe contraction." That statement is true, BUT, there is more to it than that. Since the late 1998 to early 2000 rally was the fastest and strongest ever, and got this sector to higher valuations than they had ever seen before, even after the decline you mention, most stocks are still 100% to 200% above what would be "normal" for a down cycle. It wasn't long ago that the consensus was a quality semi-equip got about a 4X P/S ratio for a cycle peak. Look at AMAT now. It is NOW at 4X sales or more, but because it has dropped a large % it appears that it has fallen fo a cycle low. It all depends on what perspective you choose to view. Just food for thought.......... Regards, Eric.