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

To: still learning who wrote (6319)	7/21/1998 4:22:00 AM
From: Q.	Read Replies (3) \| Respond to of 10921

still learning, re. <<More likely that, as the clear leader, AMAT gets a premium not accorded to any others. >> My point was that AMAT's multiples, compared to AMAT's own historical multiple range, is not low, whereas other equipment companies are near the bottom of their own ranges. AMAT was the clear leader in 1996, and it's the clear leader in 1998. So if nothing else were different, I would expect that the multiples of AMAT to fall to the botton of its own range just as the other stocks fell to the bottom of their own ranges. I think that given these things, the real question is what is different this time? Others have posted, in effect, that "it's different this time", because the stock market as a whole has had a multiple expansion. Maybe that's true. But then why hasn't the multiple expansion of the market applied to the smaller equipment players, too? They are, after all, still trading near the bottom of their historical multiple ranges. So then, what is 'different this time'? I suspect, given the close tracking of SOX and AMAT, that what is 'different this time' is simply that the market cap of AMAT grew enough in the last cycle to bring it into the radar of more fund managers, who don't have a clue what semiconductor manufacturing equipment is. They lump AMAT into the 'semiconductor industry' when they weight their portfolios into the biggest cap stocks in each of the various industries. So when they rotate sectors in and out of semiconductors, AMAT gets rotated too. In other words, * AMAT has become just a proxy for SOX, whereas * the smaller semi equip players reflect what is happening to equipment. FWIW, that's my guess at what is different this time.