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

To: Sam Citron who wrote (44454)	3/23/2001 8:31:41 PM
From: Gottfried	Read Replies (1) \| Respond to of 70976

Sam, [edited] for me there's nothing rigorous about entering the stock. Remember the SEMI data arrives with a time lag. If I used it for timing, I'd be a little late - or a lot in case of exiting near the last peak. The btb curve gave a better signal for exiting THIS cycle. We have discussed the possible bottom here and now it seems we've seen it near 35. We know bookings should fall for another month or three, simply because of similarity with past cycles. After bookings turn up I would not expect the stock to go lower. So we have a couple of months to worry. What could happen to the industry in the absence of a real recession? Many customers have already announced capex cuts. If Intel officially cut their $7.5B, then we'd get a quick down spike. But I do not expect Intel to announce that before the SEMI bookings curve bottoms. Why should they? They can announce it later when overall conditions look better, if at all. Richard said >Two approaches that could have been used are (a) wait for bookings to fall by 50% from their peak, or (b) wait for two consecutive months of increasing bookings.< Maybe buying a month after bookings are down 50% is even better. But price has meandered near the V bookings bottom. There is time to get in. The biggest danger is trying to be too smart.<g> [edit] PS: Richard mentioned he likes to rely on fundamentals because they drive price. I would like to remind that those fundamentals mainly consist of estimates of future events. That's what caused so many to miss selling near the top last year. Take FA into account - certainly - then enter or exit by TA. Gottfried

To: Sam Citron who wrote (44454)	3/24/2001 3:45:25 AM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

re: leading indicators for semi-equip stock prices: When chips were mainly for PCs, and the chip industry was a far smaller part of the world economy, the semi-equip cycle was not correlated with the general business cycle. Now, with chips in everything (cars, kitchen appliances, toys, cell-phones, etc), I think the chip (and semi-equip cycles) are going to increasingly follow general consumer demand. So, the earliest leading indicator may be consumer sentiment, and consumer spending. As long as consumer spending is declining, chip demand will not rebound. In past cycles, where demand for chips was increasing, but capacity was increasing even more, as soon as inventories got cleared, chip ASPs would firm and then head up, and soon chip companies would be ordering new equipment. In the current downturn, when chip inventories get cleared, but demand among end-users continues to decline, no one is going to be ordering any semi-equipment. Well, maybe a few brave chip companies who are sitting on piles of cash will do tech buys, but everyone else will be steadily cutting expenses, including capex. Result: no upturn in semi-equip bookings, and no upturn in semi-equip stock prices. In addition to the above, as long as the general economy is slowing, the bear market will continue, and valuations will continue to get compressed. The stock market may lead the economy, but there needs to be some signs that the economy will be turning 6-12 months out. So far, I see few signs of that. So, I think we've got to wait until inventories clear, and then continue waiting until consumer demand picks up. Only after that point will ASPs for chips firm. And only after ASPs firm, will bookings turn up. Or, just wait till bookings are up for two months, which means probably giving up the first leap off the bottom for the stocks.