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

To: Ian@SI who wrote (42322)	2/17/2001 4:36:42 PM
From: advocatedevil	Read Replies (1) \| Respond to of 70976

Ian, I expect you're correct in suggesting that "that there are many much better candidates for shorting than the leader in an already beaten down sector." And you are certainly correct when you state that "time is not on the side of one who shorts AMAT." But what the heck, someone has to short AMAT and keep excess optimism in check, right? <g> AdvocateDevil

To: Ian@SI who wrote (42322)	2/17/2001 5:55:24 PM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 70976

>>And unlike the 96-98 downturn, none of the gurus are whispering that growth in chip usage is a thing of the past - this is now a mature industry which won't grow faster than the GDP. << Yet. IMO, the downturn in chip sales is not yet over, and we therefore don't know how dire the forecasts will get. But then, paying attention to the self-appointed gurus has never been a good way to make money in this sector. Someone who bought when the gurus claimed the sector was dead, and sold when they claimed it was no longer cyclical, would probably do pretty well for themselves. Katherine

To: Ian@SI who wrote (42322)	2/17/2001 7:16:45 PM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

re: much better candidates for shorting than the leader in an already beaten down sector. You're probably right about that. Last Friday, AMAT went down less than other tech stocks. I would have done better shorting CSCO than AMAT. But I follow it, and know it. You are also quite correct that AMAT is not a candidate for a long-term short. Over any time-period of 24 months or more, a AMAT short will almost certainly lose money. But, over a time-period less than that, it's another story. The economy is slowing, and the rate cuts will not take effect until June, at the very earliest. Demand, for chips and everything else, won't improve till then. Until then, we will eat a steady diet of lowered earnings forecasts, falling margins, slashed capex budgets, rising inventories, downsizings, etc. Morgan has said, "there is zero visability". Yet investors have not capitulated, hope is still in the air. It feels about like it did in May 1996: the first leg down in stock prices has happened as everyone realised that capacity purchases have ended, but everyone is still hoping that tech purchases will continue. So the second leg down in stock prices hasn't happened yet. However, I'm not really sure that second leg down will happen. That is, maybe the tech purchases will continue through this slowdown. But I am quite sure that capacity purchases will not resume before summer, at the earliest. And I am quite sure that visibility will remain nill till then. Therefore, I estimate that, from now till June, there is a 60% chance of staying rangebound (40-50, maybe 35-55), 30% chance of breaking below that range (to 30 or below), and only a 10% chance of a decisive permanent break above 50. That makes shorting just below 50 a good bet, at this point in time. If my reasoning is correct. If, if, if.