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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Teddy who wrote (28253)	8/24/1998 9:00:00 PM
From: marc chatman	Respond to of 95453

Teddy, the fundies absolutely suck, and you are right that they should continue to suck for quite some time. But does that, in and of itself, mean there is an additional 30-50% downside based on 5 year charts? (By the way, what is the significance of 5 years, as opposed to 3 years, or 12 years?) Look at the semiconductor capital equipment business, as an example. The fundamentals there have been terrible for as long as I can remember; more than a year, right? But they are nowhere near the bottom of their 5 year charts. In fact, they have had significant rallies from time to time this year in anticipation of a recovery at some unknown point in the future. And if the terrible fundamentals actually drove the prices of the stocks in this sector, why has FGII dropped from the 40's to 13 while continuing to exceed estimates and showing a growing order backlog? I guess it's partly in response to the entire sector selling off, and partly in anticipation that business may not be so good in the future if the drillers, making less money, stop ordering equipment. Well, if stocks can drop on anticipation of bad news far in the future, can't they rise in anticipation of good news far in the future? Of course; semi capital equipment is not the only sector to prove that point. I am not suggesting there won't be more bad news in the sector. I'm also not suggesting there isn't considerable downside risk. But I feel at this point the downside risk for the stocks in the sector is tied more to the risk in the broad market than it is to the news in the sector itself.