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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (2503)	3/29/2002 8:02:08 PM
From: Gottfried	Respond to of 95622

Cary, you're setting a bad precedent by posting your error. If all uf us followed you, there would be too many posts. :) Gottfried

To: Cary Salsberg who wrote (2503)	3/29/2002 8:04:45 PM
From: Donald Wennerstrom	Read Replies (4) \| Respond to of 95622

Just for "kicks", I went back to 8 October 1998, the "bottom" for the semi-equips at the last down cycle. Then I went forward 3 months to 8 January 1999 and looked at the values of AMAT, KLAC, NVLS, TER and the SOX. I then compared these in the table below. 10/8/98 1/8/99 CLOSE CLOSE PERCENT SYMBOL PRICE PRICE CHANGE AMAT 11.19 27.75 148 KLAC 10.94 26.44 142 NVLS 7.31 21.83 199 TER 7.82 24.53 214 SOX 189.90 391.43 106 Obviously, there were many differences between "then" and "now", but it is interesting to see the same pattern. Once a bottom has been found and a "recovery" begins, the semi- equip stocks in the SOX are way out ahead - leading the SOX upward. Why this semi-equip leadership is so I do not know. Maybe others can articulate the reasons. I, for one, would certainly like to understand the process. Don

To: Cary Salsberg who wrote (2503)	3/30/2002 10:50:40 AM
From: Sam Citron	Respond to of 95622

My conclusion is that the "other judges" are the "dumb money". Exactly. Returning to Keynes: (1) As a result of the gradual increase in the proportion of the equity in the community's capital investment which is owned by persons who do not manage and have no special knowledge of the circumstances, either actual or prospective, of the business in question, the element of real knowledge in the valuation of investments by those who own them or contemplate purchasing them has seriously declined. (2) Day-to-day fluctuations in the profits of existing investments, which are obviously of an ephemeral and non-significant character, tend to have an altogether excessive, and even an absurd, influence on the market. It is said, for example, that the shares of American companies which manufacture ice tend to sell at a higher price in summer when the profits are seasonally high than in winter when no one wants ice... (3) A conventional valuation which is established as the outcome of the mass psychology of a large number of ignorant individuals is liable to change violently as the result of a sudden fluctuation of opinion due to factors which do not really make much difference to the prospective yield; since there will be no strong roots of conviction to hold it steady. In abnormal times in particular, when the hypothesis of an indefinite continuance of the existing state of affairs is less plausible then usual even though there are no express grounds to anticipate a definite change, the market will be subject to waves of optimistic and pessimistic sentiment, which are unreasoning and yet in a sense legitimate where no solid basis exists for a reasonable calculation. (4) But there is one feature in particular which deserves our attention. It might have been supposed that competition between expert professionals, possessing judgment and knowledge beyond that of the average private investor, would correct the vagaries of the ignorant individual left to himself. It happens, however, that the energies and skill of the professional investor and speculator are mainly occupied otherwise. For most of these persons are, in fact, largely concerned, not with making superior long-term forecasts of the probable yield of an investment over its whole life, but with foreseeing changes in the conventional basis of valuation a short time ahead of the general public. They are concerned, not with what an investment is really worth to a man who buys it "for keeps", but with what the market will value it at, under the influence of mass psychology, three months or a year hence. Moreover, this behaviour is not the outcome of a wrongheaded propensity. It is an inevitable result of an investment market organised along the lines described. For it is not sensible to pay 25 for an investment of which you believe the prospective yield to justify a value of 30, if you also believe that the market will value it at 20 three months hence. [to be continued]

To: Cary Salsberg who wrote (2503)	3/30/2002 12:19:38 PM
From: Sam Citron	Respond to of 95622

Dumb and Dumber (continued) [a reading from Chapter 12 of Keynes' General Theory] "Thus the professional investor is forced to concern himself with the anticipation of impending changes, in the news or in the atmosphere, of the kind by which experience shows that the mass psychology of the market is most influenced. This is the inevitable result of investment markets organised with a view to so-called 'liquidity'... The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future. The actual, private object of the most skilled investment to-day is to 'beat the gun', as the Americans so well express it, to outwit the crowd, to pass the bad, or depreciating, half-crown to the other fellow. This battle of wits to anticipate the basis of conventional valuation a few months hence, rather than the prospective yield of an investment over a long term of years, does not require gulls amongst the public to feed the maws of the professional; - it can be played by the professionals amongst themselves. Nor is it necessary that anyone should keep his simple faith in the conventional basis of valuation having any genuine long-term validity. For it is, so to speak, a game of Snap, of Old Maid, of Musical Chairs-a pastime in which he is victor who says Snap neither too soon nor too late, who passes the Old Maid to his neighbour before the game is over, who secures a chair for himself before the music stops. These games can be played with zest and enjoyment, though all the players know that it is the Old Maid which is circulating, or that when the music stops some of the players will find themselves unseated. Or, to change the metaphor slightly, professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. It is not a case of choosing those which, to the best of one's judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth, and higher degrees."