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

To: Math Junkie who wrote (26958)	12/6/1998 10:32:00 PM
From: Skeeter Bug	Read Replies (2) \| Respond to of 70976

richard, i agree wholeheartedly. however, i think the payback of actual analysis has been as detrimental as it has been helpful to many people. so, they've stopped doing it. at least for now. not everyone, but many. the amount of notes i get saying "the stock went up so you were wrong" is immense. however, they can't show eps growth, they can't show pricing power, they can't show supply isn't increasing at least as fast as demand, etc. i would not be the least bit surprised if both amat and xlnx were in nearly the same state they currently find themselves after another 12 months. also, when EVERYTHING is going up it probably isn't indicative of some super individual company effort. it is probably due to pure supply and demand of paper shares. this demand may or may not be due to improved business conditions. it could just be rank speculation. why is nvls up 175% from recent lows and amat is up less than 100%? why ask why, drink bud dry ;-) that is why i now own puts on nvls. jun 40 puts, to be exact. a lot can happen in 6 months. good luck...

To: Math Junkie who wrote (26958)	12/6/1998 10:33:00 PM
From: Gottfried	Read Replies (1) \| Respond to of 70976

Richard, food for thought? Definitely. I have neglected >>forecasting the behavior of other investors<< to some extent in the past. Another lesson learned. Now I'm trying to apply the AMAT lesson to the oil and gas drillers sector. I hope it's transferable. Gottfried Your gloating was very dignified.<G>

To: Math Junkie who wrote (26958)	12/7/1998 12:21:00 AM
From: Big Bucks	Respond to of 70976

Richard, Excellent, profound point. It is all about investor psychology/opinion that determines a stocks value/price. The object of the game is hoping we can be invested before it is popular with everyone else. Sometimes you eat the bear and sometimes the bear eats you. Hors d'oeuvres anyone?? BB

To: Math Junkie who wrote (26958)	12/7/1998 12:43:00 AM
From: 16yearcycle	Read Replies (1) \| Respond to of 70976

I think this idea that the business and stock price are 2 different things is best summed up by Ben Graham, Buffett's mentor: "In the short run, the stock market is a voting machine, but in the long run, it is a measuring device. The short run reflects a popularity contest, but in the long run the stock price will properly reflect real value." Of course, like Keynes said, in the long run we are all dead. It is very clear that Graham is right, but it is helpful to realize that he went at this exercise as a cold blooded mathematician. He would never be drawn into discussions about anything other than what the companies underlying value was based on past numbers. Here is another good quote from Keynes: "We have reached the third degree where we devote our intelligences to anticipating what average opinion expects what average opinion to be." I love that one. I have many old business and investment books, and they reflect these same discoveries time and again. I did not buy these manuscripts until I was investing for many years, and was shocked that things have always been the same: this time is no different. The market is acting in a strange fashion because it always does and always has. Yet, in the end, an individual stock will accurately reflect what the business is worth. I like to think of this as regression to the mean. Life works this way. Take oil prices: the historical mean is ~14.50, right Gottfried? So here we are at ~11, and there is all out panic that prices won't recover for years. Maybe they won't, maybe the crowd will be right for once....but I doubt it.