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To: Andrew Vance who wrote (11261)	2/4/1998 1:31:00 PM
From: Andrew Vance	Read Replies (2) \| Respond to of 17305

AV -- This was addressed to me from another Thread, titled "General Lithography" that I started awhile back. It is devoted to some "boring" technical stuff and was meant as an archive of gooduseful information. I gotta get back to using this thread since it does provide a great set of hostorical references. Anyway, the second to last post I hadn't responded to was from 12/10/97 and I would like to share some (excerpts) of its insights which proved to be correct, given what happened subsequent to that date. To: Andrew Vance (714 ) From: Mason Barge Friday, Dec 12 1997 9:36AM EST I know we're all hoping for at least a little rebound this year, but the mid-term picture took another bad turn today: techweb.cmp.com I hate to be the doom and gloom guy all the time, but it doesn't look like the Taiwanese DRAM shops are going to have capital to spend. No matter how much theoretical sense it makes to stay on the cutting edge, the realities of finance could impact some capital spending. How would you like to be a banker and have a DRAM fab come to you and say, "well, not only have we not recovered the capitalization of our current state-of-the-art facility, we're losing money on it, but we need a new one to stay on the cutting edge and remain competitive?" I have a feeling that some of the Asian financial crises have been caused by governments or consortia pressuring banks to finance capital expansion under just such circumstances, and the IMF isn't going to allow it any longer. Well, it's great for us consumers. I'm going to upgrade to 64mb right after Christmas. Funny thing is that I also upgrade my PCs with DRAMs after Christmas, along with some larger hard drives due to falling prices. Good for the consumer as was pointed out and the sector was thrashed more after the post. Only now are we seeing some of that coming back. "Those that do not take heed of history may be doomed to repeat it." I am taking some more profits to today. I would also like to call out to an early December poster who chastised me for my "buying on the way down" strategy that, if you have the backing, it does pay off. Practically all of my "poor investments" that tanked and I bought on the way down, have recovered to the original entry points. This just makes me regret not waiting for the absolute bottom so I could have puirchased more shares. However, most of these ill timed puirchases are now in the black and the lower priced stuff is mucho mucho in the black. This strategy works only if you are invested in quality comapnies. All these companies were quality to me. BTW-more specifically, the reference was to ASYT dropping another $4 after I bought in at what I thought was a low. Well, buying down here has paid off twice since the original post was made. I only mention this because an ill timed investment in a majority of the stocks we talk about here is nothing more than a longer term investment. Taking losses or being chased out or away may be imprudent when holding on for the eventual recovery may pay off handsomely. These stocks are cyclical so catching a cycle or miscalculating a cycle just adds a time penalty for reaping the gains you were after. The post in question is listed below with no names attached. I disagree with what is stated there since I do not earmark certain dollars to an investment, rather a certain return on my investment. Therefore, I will overextend myself into an investment not to justify a losing position but rather to accomplish getting my return on investment that much sooner. Since the post below was posted I have been in ASYST twice with both options and long shares that also needed to be "averaged down" and have sold or are in the process of selling (waiting for some confirmations) for the return on investment objectives. Yep, the ASYT roller coaster has been going up the hill once more and it is time to take some profits again. I may be delusional on this but I do not view them as separate investments nor do I ever set a dollar limit as to how much is invested somewhere. The author has some valid points if your strategy is to commit a finite amount of funds to a specific stock. My strategy is to invest enough funds to generate the kind of return I want. Most recently, if the confirmations clear, I will have yet another 20% gain in ASYT. If there were not an interim buy/sell of ASYT, the $23 dollar shares and the $19 shares would be an average of $21 per share as of Dec 10th. As of today, the $27 price would have fetched roughly a 30% gain in less than 2 months. That is not bad any way you look at it. fortunately for me, I had an interim profitable trade that allowed this return to be higher. ASYT is a quality company and I may be exiting too soon but when profits on the order of 40% can be genrated in a 2 month timeframe, why take a chance on it being stripped away by a flakey environment. The flaw in "Averaging Down". ASYT down another $4 this morning. ASYT 10:31AM 19 1/16 \| -4 1/32 \| -17.46% The truth is, averaging down is an illusion created to justify holding a losing position. True "averaging down" is this: you earmark "x" number of dollars to invest in XYZ stock, and plan to buy "x" number in "y" number of increments. For instance, I want to buy $10,000 of MSFT in 2 equal increments. So I buy $5,000 worth at $100. When it goes to $90 I buy another $5,000. THAT is averaging down. If the stock had gone up, it would be "averaging up". Otherwise, each investment is a seperate event, graded on it's own results. Buying 1000 shares of AMAT at $25 does nothing to "save" an earlier purchase of 1000 shares at $35, anymore than buying 1000 shares of a different stock could. They are two totally seperate and individual investments, unless the addition buy-ins were planned. I know that you, Andrew, will not be changing your investment style because of this post. This is designed for other readers. Andrew