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

To: Q. who wrote (7359)	11/25/1998 2:41:00 AM
From: geoffrey Wren	Read Replies (1) \| Respond to of 10921

Is the SOX weighted? I believe that the NASDAQ is, and a few stocks like Microsoft with very large capitalizations are a large part of the index, which would mean that the index price would show a correlation to the large cap stock price beyond the expected correlation of sector strength and general market forces. Just a thought. Who knows? Geoff Wren

To: Q. who wrote (7359)	11/25/1998 4:07:00 AM
From: Math Junkie	Respond to of 10921

Re: <<well, AMAT is an exact proxy for the SOX. Smaller semi-equip stocks are not. Why not ask the same question about them?>> I do ask the same question about them. The large cap members of the sector largely track AMAT. The smaller cap members do too, somewhat, although they tend to recover later. I don't see what the big deal is about short term differences in performance, given that the overall cycles are the same. It makes sense to me that the largest cap member of the group would match the SOX the most closely. Maybe, as you say, there are some fund managers who don't know the difference between AMAT and INTC, but it is also true that the prospects for AMAT are inextricably linked with those of the semiconductor industry. <<Besides, why should AMAT's stock price show perfect correlation with the stocks of its domestic customers, when foreign sales have been so much higher in peak years, and when Asian sales are doing something vastly different from domestic sales?>> That is somewhat the problem that the Semiconductor Industry Association's Global Billings Report was designed to solve. Unfortunately, it is fairly old news by the time it comes out, and if there's anything Wall Street hates, it's old news. There's really only one thing that matters to the recovery of the semiconductor equipment business, and that's when and how quickly the semiconductor industry recovers. That's also true of the SOX. The SOX and the stock price of the largest cap semiconductor equipment maker are affected by the same news, i.e., anything that gives a clue to the health of the semiconductor industry. So I don't really see any mystery here.