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

To: Jacob Snyder who wrote (19240)	5/9/1998 11:28:00 PM
From: akidron	Respond to of 70976

IRONY... LIKE SILVERY AND GOLDERY... IS RARE... Jacob... I was jabbing... obviously as you can buy 30% more AMAT at 28 it is important and for me it is critically important as the quality of the opportunity defines the investment for me

To: Jacob Snyder who wrote (19240)	5/10/1998 12:49:00 AM
From: Gottfried	Respond to of 70976

Jacob, One important item was missing from your analysis of when to buy: the investment goal of the individual. Allow me to illustrate: Investor A wants to sink 50% of his portfolio into the stock of a solid, undervalued company. To justify the risk of having such a large position in ONE stock, he waits for a PSR near 1.0 and a price that is very unlikely to go lower (say, less than 25 for AMAT). He expects gains of several hundred percent if his buying conditions are met. He risks being left behind if the stock does not drop to his buy target price. In this case he must find another of these very rare stocks. This search could cost him considerable time, during which period his funds might be underemployed. Investor B never invests more than 10% of his portfolio in one stock to spread the risk. He wants to beat the indices over time. He realizes that AMAT may drop considerably before rising enough to meet his goal. But he is quite confident the stock will at least double in 24 months, giving him over 40% annually. I won't quibble with either one of these approaches. These two investors will proceed quite differently, though. And I think we have both kinds represented on this thread. Gottfried

To: Jacob Snyder who wrote (19240)	5/10/1998 2:18:00 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 70976

Jacob Re:Another rationalization for buying high was recently made by Brian. Use trailing 12 months earnings, and today's PE looks uncomfortably high. No problem. Just use 1998 earnings. Don't worry about the fact that those estimates seem to change a lot. And if that isn't good enough, just keep on going into 1999 and 2000 and...... Eventually you can calculate a PE that allows you to believe the stock is undervalued. Let's see, they will earn $9.00 a share in the year 2010, so they are an incredible deal at a PE of just 4! I think you took my post out of context. Yes, I did say that in a low interest rate/low inflation environment stocks warranted higher premiums. I also stated that DELL was trading at ~25X YR00 eps and compared that to what AMAT was likely to make for their same fiscal year. This IMO is slightly different than looking to the year 2010 as you did in your post, I assume as hyperbole to make a point. I do not think it unwise to begin to look at YR00 eps since AMAT's 2000 begins Nov. 1 of next year. On my calendar, that is not too far away. BK

To: Jacob Snyder who wrote (19240)	5/10/1998 4:37:00 PM
From: Justa Werkenstiff	Respond to of 70976

Jacob: Re: "If you are going to hold AMAT for several years, your entry point is critically important. A few points difference in the buying price makes a huge difference in the final percentage return. Lets assume you sell AMAT at 120 in the year 2002. Buy at 30, and you made 400%. Buy at 40, and you made 300%. The "odd 10 points" made a 100% difference." You could have made the exact same argument logically in the summer of 1997 when AMAT was at $50 post split by saying that you were not going to sell until AMAT hit $60 post split in order to enhance your return to some predetermined imaginary level. Problem is, the market did not cooperate with that vision and greed would have been the identified culprit of that plan. Same goes for your plan. Nobody knows for sure when and at what level AMAT will bottom if it has not already done so. Anybody who thinks they know is guessing and may or may not get lucky. And just as greed can get you at the top, it can make a fool of you at the bottom. Logically, there is no difference. But it makes a fun game anyway and keep posters occupied 24 hrs a day. : )