Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Cary Salsberg who wrote (48997)	7/10/2001 12:39:02 PM
From: Ian@SI	Respond to of 70976

deleted [eom]

To: Cary Salsberg who wrote (48997)	7/10/2001 7:01:29 PM
From: Sam Citron	Read Replies (2) \| Respond to of 70976

Cary, Since you are so prepared for this exam, perhaps you can help me answer a few more questions. You seem to base your investment strategy on the rather simple premise that the semiconductor sector will be as dynamic and lucrative for investors in the future as it has in the past. In a world where only the paranoid survive, how can you be so certain? In a competitive economy, above-normal profits tend to get squeezed out by competition. You may well argue that barriers to entry are large here, but what is to prevent price cutting by existing firms from eroding profits? I don't know enough about this industry to know how much actual price competition exists and I would imagine that switching costs are extremely high, but I find it hard to believe that this is an industry that just keeps reinventing itself to accommodate every new tech fad and never faces maturity itself. Even arms merchants eventually get old and die. Is there a limit to the si content of the average consumption basket? Is there some theoretical point at which the marginal propensity to consume silicon trinkets may actually decline? If not, isn't it at least plausible that in the aftermath of the internet infrastructure spending boom that boosted all ships Si to euphoric heights, the $10 AMAT "nightmare scenario" may not be the 5% tail of the bell curve of scenarios but the natural reversion to the mean, expected hangover and all? How else are go-go investors to learn temperance? For extra credit:<g> In an efficient market, securities of the dominant firms in their industries tend to be "priced for perfection", especially when prudent bears for one reason or another abstain from speculative actions to profit from excessive valuation levels. Given the tendency of "darling stocks" to lose their luster, how can you be sure that your favorites will not suffer the same fate as many of their leading customers?