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

To: Skeeter Bug who wrote (27309)	12/20/1998 7:19:00 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 70976

Skeet, How about we agree to disagree:-)) In terms of bubbles, I would point you toward the thread of EBAY, YHOO, AMZN and a host of others. We are in the early stages of the next cycle for semis. Because they bottom with such poor earnings, it's not unlikely we'll see tremendous PE's on these companies. The question ultimately is whether you believe it is fair to value a company based on trough earnings coming out of a prolonged downturn. I do not. Especially a gorilla like AMAT which is in the same category as INTC, MSFT, and CSCO. BK

To: Skeeter Bug who wrote (27309)	12/20/1998 9:34:00 PM
From: Clarksterh	Read Replies (1) \| Respond to of 70976

Skeeter - What you are missing is twofold: First historically cyclical stocks (and the semi equips are cyclical growths) often start getting close to new highs before they have really exited the recession. This is not just true of semi equips, but of other cyclicals as well. Hence a famous investor's (Peter Lynch?) quote 'buy when the PE is sky high, and sell when it is absurdly low'. Of course the quote is taken out of context, but it is just to show that this phenomenon is not new. Second, you seem to blithely ignore the slope of the orders. Do you think the ramp in orders does not portend another big jump the next month. If so why, since there is definitely a correlation between the growth in month m and the growth in month m+1. Clark PS Having said all of that I agree that the leading semi equips have priced in a pretty optimistic assumption about growth over the next 6 months, and are thus pretty vulnerable if it doesn't happen. PPS Another difference between you and I is that your time horizon is substantially shorter than mine. I care about a minimum of 6 months out. That is probably your max, but I am almost completely incapable of predicting short term movements.