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

To: davesd who wrote (10675)	11/10/1997 10:29:00 PM
From: Jacob Snyder	Read Replies (3) \| Respond to of 70976

Lets review 1995 and 1996, because consistent historical patterns are the best predictors of the future: 2-95 Semi equip BTB peaks at 1.41 7-95 Intel and Micron price peak 8-95 AMAT price peak. At this point, every analyst is bullish on the stock. 10-95 Stock split. 11-95 First analyst downgrade: Whittington at Soundview. All others still positive. Company guidance is the Morgan Mantra: "In the distant future we will make huge amounts of money, but I can't tell you anything about next quarter." 12-95 First Call shows AMAT ranked 1.5 average by 19 analysts (1=buy, 5=sell) 1-96 Most other analysts downgrade, citing fab pushouts (Micron), and declining commodity chip prices. Whittington downgrades to sell. He correctly predicts 96 EPS (est. 1.75, was 1.68). Much more impressively, he also correctly predicts 97 EPS (est. 1.33, will be close to that). Stock price has already declined from 30 to 20. 1-96 Intel price low 5-96 EPS peaks 7-96 AMAT price low of 11 9-96 Semi Equip BTB low point, at 0.70 I've just read the first 300 posts on this thread, which was started just after the 1995 peak. Some thoughts: 1. Analysts, and SI thread sentiment, are lagging indicators. With one exception, the analysts did not downgrade till the stock had already completed half its decline. Noone, and I mean noone, picked the top. 2. Company guidance is useless. We already know AMAT is a good long-term hold, and that's all they say. 3. EPS is the most lagging of all indicators. By the time it peaks, the stock price peak happened a very long time ago. 4. Stock splits happen just after the peak, and right before a sharp decline. Probably just a coincidence. 5. The best indicators of a peak are: euphoria, a PE at the high end of the 5-year range, declining chip prices and fab push-outs indicating overcapacity. 6. The best indicators of a low are: despair, a trough in the BTB ratio. 7. Whittington did a great job of predicting EPS two years out, and was the first to downgrade.