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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Ian@SI who wrote (10021)	8/26/2001 2:51:27 AM
From: James Calladine	Read Replies (1) \| Respond to of 10921

"pronouncements that the sector is dead forever" I agree, Ian! It has to get to the point that that is about all you hear. Pretty much everybody is convinced that it is so. Just about everybody who is discouraged with that prospect to the point that they cannot bear it, has sold out. Then, when pessimism is at its maximum, people start to ask: "How can that possible be so?" Then, things start to get interpreted in light of a different possibility, and the market starts to price things in light of that different possibility. The shorts realize they are living on borrowed time, and start to cover, as stealthily as possible. I don't think we are there, yet, though. How do the rest of you feel? Namaste! Jim

To: Ian@SI who wrote (10021)	8/26/2001 9:29:25 AM
From: WTSherman	Read Replies (3) \| Respond to of 10921

<These stories are one of the best leading indicators that we've seen the bottom. The other key indicator is having the sector called "dead money" by 2 or more gurus. Every cycle bottom has been met with pronouncements that the sector is dead forever; that there will never again be a sufficient growth driver to cause investment in new capacity to take off again. It's as if it's a necessary condition for the next upturn which will dwarf all prior upturns.< Ian, I'm not quite as sanguine about it as you are. First, the article didn't say growth wouldn't return. It said it is most unlikely that growth rates will reach the levels we saw at the height of the boom. I thought the more interesting point was the question of "semi content", the notions presented there seemed pretty well founded. I wouldn't be surprised if semi growth was somewhat higher than "electronic devices" growth, but, probably not a whole lot. The article didn't really address the infamous semi-equipment cyclicality, which will probably always exist and is much more severe than semi cyclicality itself. However, for those of us who follow this biz we have to answer a couple of questions about the semi industry itself: 1)What is going to drive semi usage over the next 5 years? Is it simply an expansion of existing markets for computers and wireless devices to 3rd world countries with much more limited growth in developed countries? Is there some major new product development that is going to sweep the world like PC's and mobile phones did over the past 10 years? 2)How do we sort out what the real long term growth rates of semi's are likely to be? There is no question that the late 90's represented a remarkable confluence of events that is not likely to repeat itself. While the explosion of the internet and parallel explosion of corporate computing requirements fueled a long expansion, there was an absurd bubble driven by the dot.com boom, Y2K and the telco boom. In both the case of dot.coms and telecos, huge expansions in infrastructure were made that simply were not needed and could not be supported. The Y2K phenomena was a one time event. Unfortunately, all of this was made much worse than it might have been by a flood of cheap money that the Fed made possible in response to the Russian crisis and the Fed's overblown fears about Y2K. That the telco bubble, dot.com bubble and Y2K all crested about the same time and were funded with funny money is why the NAZ got to 5000 and is also why its now 1800. For semi mfg. capacity was increased to support these three phenomena's and now there is huge excess. Eventually, the excess will be used up or retired in favor of newer more efficient production systems. How long this will take isn't clear to me...