Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Speedfam [SFAM] Lovers Unite ! -- Ignore unavailable to you. Want to Upgrade?

To: Peter Moyer who wrote (3242)	11/22/1998 11:32:00 AM
From: Mr. Sam	Respond to of 3736

Has the industry bottomed in stock prices and/or fundamentals? <<MR. Sam, is the semi recovery here? Many people feel the downturn is over and certain stocks will start to lead the recovery. Actually a few already have. I don't want to get caught in a 'head-fake'. What is your opinion on whether the recent blood-bath cycle we've taken is really over ?>> Pete, I'm not sure if your question concerns the stock prices or the fundamentals, so I'll touch on both, briefly. We have already seen the bottom in stock prices in this sector, in my opinion. Realize that the 41 semiconductor equipment stocks that Donald W. follows are up 73% over the past six weeks with increases every week. The SOX (includes some chip makers) is up 54%, SFAM is up 66%, and IPEC is up 82%. Keep in mind that the increases we've seen are only a small fraction of what we'll get at the peak of the next cycle. Ask yourself when the last time was that you heard a high-dollar Wall Street semiconductor analyst declare that the clever industry executives had vanquished the cyclical nature of the industry through saavy management of industry growth. When you hear such nonsense as that, you know we're closer to a top than a bottom. Listening to the pronouncements these days, any contrarian would tell you that we're clearly closer to a bottom than to a long-term top. The bears would point out that over the short term, six back-to-back weeks of increases may need to be followed at some point by some consolidation of prices or partial retracement of some of the recent gains. They would point out that the decreasing weekly gains for the average chip equipment stock (1% increase last week for SFAM and 6% increase for IPEC) represent a slowing of the upward momentum and that a short-term turn may be close. Regarding the fundamentals, most companies, I think, will/have bottomed in the chip industry between July and October and in the the semiconductor equipment industry between October 98 and April 99, depending on their particular market (e.g., CMP) and their customers' markets (e.g., DRAM). There will be some laggards and some leaders, of course, but I'm talking about most stocks. Regarding SFAM, fiscal 2Q99 is likely to be the bottom in fundamentals, in my opinion. I agree with the arguments about the short-term risk and the long-term potential, so my strategy is to hold my semiconductor stocks for the long term with the resolve to wait through any short-term volatility. For full disclosure: When I posted on September 19, my chip stocks and chip equipment stocks made up 38% of my portfolio. They now comprise 58%, and I've sold a few to keep the percentage from being even higher. Regarding SFAM, it was about 13% of my portfolio back then and it's 15% now. I bought SFAM most recently on September 18, 1998, at 9 1/8 and sold most recently February 9, 1998 at 25 1/2. I'll discuss the recent merger annoucement in a separate posting. Profitable investing, Mr. Sam