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

To: michael97123 who wrote (46227)	5/4/2001 3:39:55 PM
From: Jacob Snyder	Respond to of 70976

re: if and when you do decide that the bottom is in......why wouldnt you get in? Because one of my most basic beliefs is ReversionToTheMean. I believe that most stocks (and especially semi-equips) have a range for P/S and other valuation metrics. These stocks are so volatile, the risk/reward balance tilts steadily against me, the higher the valuation is. Paying a P/S ratio over 4 for AMAT, for a longterm holding, means I may have dead money for 3 years. Remember, the 1998 low was lower than the 1995 high. Pick the wrong time (meaning the wrong valuation) to buy AMAT, and you may have to wait a long, long time for decent gains. I'm more certain of my ability to decide whether AMAT is over or undervalued, than I am of my ability to predict where we are in the cycle. Therefore, my longterm buys and sells had rigid, inflexible valuation boundaries. I remember, when I sold my AMAT LEAPs in January 2000, I did it entirely based on valuation. I did not see the upcoming turn in the fundamentals. I thought we were at the verge of the biggest upgrade cycle ever for semi-equipment. I was wrong, about where we were in the cycle, and I could easily be wrong again.