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

To: Wildstar who wrote (45337)	4/11/2001 12:38:26 PM
From: Jacob Snyder	Respond to of 70976

re: Why not simply buy in increments at PSR=2 on down, if AMAT ever gets there Until recently, that's what I had intended doing. That's the method Cary is using (set specific targets based on a valuation benchmark, and then buy in increments from there on down). I've (tentatively) changed my mind, because I have no idea where, even approximately, to set my valuation benchmarks. I think the valuation at which AMAT (and the whole semi and semi-equip sector) bottoms, is going to depend largely on macroeconomic events. If we completely avoid a recession, maybe the stocks have already bottomed. I'm betting that hasn't happened, but there is a not-small chance I'm wrong. On the other hand, if we get a severe recession, as bad as in 1973-4, and we get 3-5 quarters of negative GDP growth, and the economy (and demand for things with chips in them) doesn't pick up until late 2002, then we could see AMAT reach a P/S of 1, like in 1996. So, for now, I want to just watch and await events. At some point, the valuations may get so compelling that I buy regardless of the news, but we aren't anywhere near there yet. And, because I'm worried about the potential of a recession whose duration I have no ability to predict, I've(again, tentatively), decided not to buy LEAPs. I think I'll go with plain old stock.