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

To: robert b furman who wrote (42743)	1/16/2009 12:04:02 PM
From: Pam	3 Recommendations Read Replies (3) \| Respond to of 95531

William O'Neil doesn't believe in diversification. Diversification is need based. If one desires stability of a portfolio, there is no way out of diversification! Diversification doesn't come free as it lowers your upside, but at the same time it provides protection on the downside. It is an insurance policy. In its simplest form, a diversified portfolio could have just 2 negatively correlated assets and it will do a fine job of providing stability to your portfolio. William O'Neal: It is not that he doesn't believe in diversification, he just has a different style of investing with strict Stops on the way down. Most investors would have a hard time following the discipline he wants investors to adhere to. There are positives and negatives to every investment strategy. One should pick the one that closely meets ones requirements and is practical enough to be implemented. Most people evaluate investment decisions in one dimension. They focus on rewards but pay no attention to the risk. Volatility is the other name for risk. You cannot lower volatility without proper diversification. If you have an extremely long holding period, volatility may not affect you (in fact it might work in your favor) as much as it would to an investor with shorter holding periods. If you invest in value - fits this sector quite well. Most stocks in this sector are trading below book value,have no debt and sit on large hordes of cash.Quite comforting in the world of banks needing billions from the government.A very good reason to embrace this sector - they make real products ,have no debt and huge cash balances that will pay for future equipment R&D. I agree. Most semiconductors stocks are beaten-up badly and those that survive this slowdown, will do well when the economy improves and should become stronger than before. If one wants an excellent long term investment, then I'd say jump in the water is fine. It depends on what you jump into. For example, knowing what we know about Intel, a jump into it is pretty safe for the long term. The company is trading at multi-year lows, have an excellent B/S, operating in a near monopoly with very high GMs, has a good dividend yield, need for their processors is not going away over your investment horizon, etc. So it is relatively safe to conclude that if you jump in, you will be able to make decent money sometime in the future, provided you sell when you meet your objectives! Would I be be able to jump into something like EGLS or ASYT for example? I doubt it. Both these companies have net negative tangible assets and have wiped out shareholders equity since inception!