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

To: Tom B who wrote (13247)	12/14/1997 10:07:00 AM
From: Robert Schling	Read Replies (2) \| Respond to of 70976

I don't think we're there yet, either. Looking at the historical highs and lows of ratios that are downside "value barriers", there is a scary amount of downside left, considering the negative Asia related sentiment, if not panic: Price/Book Price/CashFl. Price/Sales Low High Low High Low High 92 1.3 3.2 8.8 21.4 0.7 1.9 93 2.1 5.4 9.5 23.7 1.0 2.7 94 3.1 4.8 11.2 17.0 1.6 2.6 95 1.8 6.1 6.1 19.8 0.9 3.0 96 1.6 3.5 5.2 10.8 0.9 2.1 97 2.1 6.9 9.6 30.3 1.5 4.9 Now 3.3 14.5 2.3 (boy, are these tables a pain to get right) This clearly shows us how extraordinary the 97 bull run was, and how much downside there is if pessimism leads people to believe that Asia related business is about to evaporate. I got out too early this year and started nibbling at EGLS (too early, again) because its price to book started to look attractive. I am waiting now until AMAT, the industry leader, has clearly touched bottom. We may see 20 (pre-split 40, which was an important support level), and we may see 15. I can't help but to remember the old saying: it's never too late to short a stock... Playing the short side of the semis would take some guts right now, but might be the right thing to do. Any comments out there about the level at which we should see bottom (price-to-book, price-to-sales)? Looks like a trading strategy built around these ratios would have generated some nice profits (hindsight...). Robert P.S. We may also want to speculate about the effect of lower capital spending in Asia on DRAM capacity utilisation, and therefore prices, 1-2 years down the road???

To: Tom B who wrote (13247)	12/14/1997 10:37:00 AM
From: David R. Colby	Respond to of 70976

I've got to believe - and this is just opinion - that there is much tax selling going on. As one sage Californian said to me, "show me an investor who hasn't made money in the market in the last 5 years and I will show you an idiot." If I bought AMAT at 29, have tons of capital gains for '97, why not sell the 25 March or April put and unload the shares at 26 or 27 to offset losses? Unfortunately the techs - being more volitile than most stocks - get hit more at year end. We are in a short term phenomia and will recover, again, just IMHO. One of the terrible falacies of our tax system allows is the concept of creating a loss to preserve gains. We badly need, not code revisions and a kinder, gentler IRS, but a total overhaul of the system. dave colby