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

To: Mason Barge who wrote (4492)	1/18/1998 11:43:00 PM
From: Gottfried	Read Replies (1) \| Respond to of 10921

Mason, historic (1991-1997)btb chart is at geocities.com GM

To: Mason Barge who wrote (4492)	1/19/1998 2:02:00 AM
From: William Nelson	Read Replies (2) \| Respond to of 10921

Mason, What is your analysis of the previous semi-equip downturn? Did the semi companies not need new technology then? I would think there is always something new they need to buy, but it doesn't mean they're going to buy as much of it as they were buying of the old stuff before they overbuilt....so btb can still take a hit. BTW, I'm very ignorant of this market but am trying to learn fast. Looking at the last downturn, this one looks mild so far; blood (i.e., red ink) is not running copiously that I know of. There was a big price fall, but on the other hand the high was maybe unrealistic. >That said, semi equipment investment is in the odd position of being >overcapitalized (i.e. the > Koreans shutting down DRAM lines) but needing major new capital >for new technology. This > could be the biggest winning sector in the market, unless >something really powerful happens in, > say, the oil or finance sectors.

To: Mason Barge who wrote (4492)	1/19/1998 3:07:00 AM
From: Jess Beltz	Read Replies (4) \| Respond to of 10921

Mason, I would bet on more havoc coming from Asia in the next two quarters. Understand that I say this as all the Asian Markets are currentlly putting on stunning rallies. The reasons are (1) Japan and (2) China. Let me deal with China first. They have said that they will not devalue the Yuan. I think their hand will be forced, particularly if they stay on track to dismantle their inefficient, money-losing state run enterprises. There is a black market in Yuan and it is already losing value there. The result of not devaluing will be increased unemployment as their export industries suffer by no longer being price competitive against neighboring countries that have seen substantial devaluation of their own currencies. Look for the Yuan to sink in value at an accelerating rate as China makes the same mistake as Thailand, trying to support the price level of the Yuan by buying its own currency by exhausting its foreign reserves. Far worse however is what's going on in Japan. The Japanese Banking Sector is like a leg that is gangrenous from the ankle to the hip. What the Japanese have done is sprayed some Bactene on it and put a band-aid on it. Hashimoto and the LDP have no will to force the banks to write off the bad loans and clean up the sector. What they do is cut one deal after another with the banks to keep them limping along, rather than deal with the problem. I listened to a seminar by Merton Miller today, who traced about all of the woes in the entire region to the Japanese banking sector. One thing he pointed out was the conscious effort by the Japanese Central Bank to allow the Yen to lose value against the dollar by lowering interest rates so that it would (1) lower the Japanese banks' cost of funds, with the hope that (2) the simultaneous stimulation of the Japanese economy would allow the banks to make profitable new loans, and the sector could work its way out of its problems. What it ultimately did was make the Dollar very strong against all currencies in the region, hastening the collapse of the regional currencies. I asked him if, in an era of recession in Japan with declining GDP and a declining stock market, if the slide in the value of the Yen could be stopped. He didn't think so. Until the Japanese show the resolve to face the problem and write off the bad loans, and implement changes forcing transparency and the efficient allocation of capital, there will be a steady worsening of the situation in Japan. You can see a couple of my recent notes on the Cymer thread for some other observations on the situation in Asia (ie Indonesia, S. Korea and Thailand.) See also the latest Barrons Roundtable for an intereting discussion with a complete spectrum of competing views. One thing that nobody has really talked about so far is the possibility that there is a lot of exposure to the Asia Crisis on the part of European Banks that may not yet have reported the damage to their balance sheets, but which may be revealed in the next quarter or two, perhaps with disasterous effects on the upcoming economic union. jess.