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

To: Gottfried who wrote (44924)	4/2/2001 7:32:38 PM
From: Shoibal Datta	Read Replies (1) \| Respond to of 70976

If the company is so terrible, why buy the stock at any price G, that statement can be interpreted as follows: No matter how bad the outlook AMAT should always be fairly priced. If I understand your outlook correctly, you think that AMAT is undervalued now. What would you consider fair value now (given the data you have)? Do you think it should not get worse? If all stocks were always fairly priced, there really would not be a significant buying opportunity at any time. By and large, I do think the semi equips have been a safer refuge for the past three months as compared to other sectors. It remains to be seen if Greenberg's gloom and doom cronies are correct. I certainly didn't think that the companies in this sector would be as hard hit when I bought into them. And I do think that we did not anticipate the news getting this bad (in all the sectors) back when we were seeing our lows in November/December. Of course, at this juncture, we could see a recovery or a further deterioration. Time will tell. But bagging on the naysayers just because they are still harping on the gloom and doom would not be prudent - they have as reasonable a chance of being correct as the optimists at this time. There was an interesting moment on the Street.com in Jan when Cramer went ballistic at a reporter on TSC who called for NAS 1500 in Jan after Greenspan cut for the first time (around NAS 3000). Just because things have gotten so bad is not a good enough reason to think they cannot get worse. Until there is hard data to support a recovery, it is pointless trying to anticipate it. As an investor, I see my task to be protecting my assets to the best of my ability. In an uncertain environment, that would mean writing covered calls on these stocks (and occasionally buying puts with the proceeds) to reduce my basis. I do think that there is a pretty good chance that this sector will see more pain. As far as value goes, we are nowhere near historical trough valuations to justify a "can't go wrong" mentality. I am pretty sure that the three year outlook justifies buying the sector now with my eyes shut. Even if we see a 50% downdraft from these levels, we stand a pretty good chance of a good return three years from now. But the question now is whether to commit my money here or to save it for another day. And as far as the money already committed goes, do I keep hedging it with a covered call strategy or should I just take my lumps and let it be?