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

To: akidron who wrote (24395)	9/18/1998 1:39:00 AM
From: Jacob Snyder	Read Replies (1) \| Respond to of 70976

aki: re: " let's say you buy at 26 and it goes to 12, isn't that pretty much the same disaster as buying at 54 and capitulating at 26" Interesting question. If I get scared and capitulate, then, yes, I'm out half my money either way. But there is 0% chance of that. I don't scare easy. In 1996, I began buying at 40, and kept right on buying as the stock went to 22, and kept right on buying till the stock went above 50. And then held. I'm not smart enough to time the bottom, then or now. The only mistake I made was holding too long. I sold everything at 75 , when I could have got 104 if I'd been as smart as you. (I'm using pre-split prices) It's a disaster if the stock never goes up after bottoming. Again, I think there is a 0% chance of that. Every piece of equipment in every fab on the planet will be junk within 5 years, and AMAT will sell more of the replacement equipment than any other company. And the equipment will cost twice as much, and the world will need twice as much of it. Gosh, I do sound like Brian. If I buy at 26, it goes to 12, and I hold till it goes to 54, then I doubled my money. If I buy at 54, hold (not capitulate) as it goes to 26, and sell at 54 a year or two later, then I have dead money for the round trip. Not counting opportunity cost and margin interest, I broke even. The price AMAT reaches at the next cycle top (where, hopefully, you will tell me it's time to take profits) will be the same whether I got in at 54 or 26 or 13. With every point AMAT declines, the potential downside decreases, and the eventual upside increases. The risk/reward balance swings steadily in my favor. I don't think there will be zero risk left in the stock till we hit 13, but I also think there is only a small chance we'll hit that price. If we do, I'll be buying. And then holding till 104.