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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: Don England who wrote (875)	3/2/2001 11:17:11 PM
From: energyplay	Read Replies (4) \| Respond to of 23153

Shorting ... Watch the Earnings drop ! Don England wrote - <if amat has a p/e of 17 and has been trading in a range of 40-50, more or less, for 2 months, and now sits in the middle of that range, is this really a low risk bet? > Maybe, maybe not. The view is that the "E" Earnings, drops by say, 75%. Then the new P/E would be about 68. IF the P/E stays up at say 35, that means the stock drops about 50%. Add in a little overshoot and you got a nice short play... Problem is that AMAT is a pretty good, well run company (as well a it can be, semi equipment is a tough business). KLAC is pretty good to. What makes a better short is a non-leadership company (maybe Novellus), or one where their market space gets crowded (like Inktomi INTK with competion from Google & Akami). If you have dumb/weird/flaky management, that's even better. (Oracle without Ray Lane) I made good money shorting INTK, which had a P/E of about 140 at the time. I shorted both Ariba (ARBA) and Commerce One (CMRC) in late April. Ariba is #1 in this space, Commerce One is #2. Both have pretty good management, but Ariba got traction much earlier with a simpler biz model. I made good money shorting Commerce One. I broke even / gave some back shorting Ariba. Picking stocks for shorting is tough - you need to to the opposite of almost every for longs. Seems to require a lot of mental flexibility. I now tend to buy puts on stocks or indexes - limits my risk. Best of Luck.

To: Don England who wrote (875)	3/3/2001 3:46:43 PM
From: William JH	Read Replies (1) \| Respond to of 23153

Don, you asked why I shorted AMAT. To answer that I need to tell a story to illustrate how I think about trading. On 7/31/00 I saw that there were $7 in puts for each $1 of calls on AMZN. It appeared a short squeeze was imminent, so I bought it (I hate AMZN, the stock). Over the next 30 days it rose from 30 to 43 before beginning its collapse to $10. To me, that rise to 43 was strictly a ploy for distribution to bottom fishers. On 2/14/01 AMAT issued an earnings and profit warning. (The Street.com described the CC as dreary and confused). The stock rose over 5 points on >2X ADV, and >2 1/2 the next day. I believed the stock was being artificially advanced to prevent massive selling, so I shorted it (1 day too soon). It made a high of 50 on that move, before falling as low as 39 over the next few days. I covered just above 41, and re-shorted yesterday at 47 3/4. I believe the stock is under distribution, but timing is everything. 2. This is also a market call. 3. I don't like to short flaky stocks because of my fear of manipulation. It exists everywhere in the market, but is much worse in some areas. These are my thoughts only, I don't expect anyone to agree with me. My life won't change much if this works or not, but I think it is a good speculation. Regards,