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

To: Ramsey Su who wrote (28090)	2/8/1999 7:44:00 PM
From: Proud_Infidel	Respond to of 70976

Ramsey, Glad to see you back. We need a healthy dose of skepticism in this market. Although I disagree with you on valuation and believe AMAT will earn about $3.00 for FY00, there has never been a greater need for skepticism IMO. This sector IMHO again, has set itself up for a multi-year run because of extremely depressed levels of capex and a period of overcapacity. I am very bullish looking out.....but then again are you surprised:-) BK

To: Ramsey Su who wrote (28090)	2/8/1999 11:13:00 PM
From: roly	Read Replies (3) \| Respond to of 70976

Ramsey, Hi, I've been lurking for quite sometime and just could not resist to respond regarding the P/E argument. I hope by now you have realized this is like the "Phillip's Curve" which most economist claims now is an obsolete tool. I think P/E is not a useful tool for the market we have been the last few years The technology age gives tremendous power to investors and fund managers. Stocks moves based on news, momentum, and perception. For now, the semi equipment is coming off it's low and is favored by the analysts and news media. Funds are moving out of the internet stocks to the semi equipment. We all know this will not last long. It is the new wave of investors job to work hard and read when this will happen. I agree with you that the earnings are not as good as years before. Of course. By now you should also have figured out that all what the street looks for were beating the consensus or the whisper number. Most of estimates were a lot lower than 2 years ago. I would hate to say that these days, P/E doesn't mean anything. These leaders like CSCO, LU, MSFT,YHOO etc moves because investors perceived their monopoly and leadership as AMAT.They don't care about their P/E. I also would say that it is suicidal to go against AMAT the next few days. We all know that AMAT will report a better than expected earning. These are just my observations. Congatulations to the AMAT diehard bulls like Paul, Brian, Lester,GM and Tito. They hanged in there and now reaping their rewards. Just a word of advice, we know that this sector will be out of favored again sometime. Know when to get out and buy again when the stock is low. Good luck to all. Roly

To: Ramsey Su who wrote (28090)	2/8/1999 11:30:00 PM
From: MrGreenJeans	Respond to of 70976

Amat Valuation Ramsey, we finally agree on an issue. Amat is a great company, no doubt, but all the large semiconductor equipment makers are fully to overvalued here; I am including Klac, Nvls, and Ter. There are very few fabs coming on line this year and these companies are being priced like we are in the middle of a booming cycle. Since October 8th, the low point for the market, these stocks have doubled, tripled, and gone up in some cases four times plus. A great run but these stocks are going up at an unsustainable pace. It is strange how all the investment banking analysts are issuing strong buys on these issues. Where were they in September when these stocks were in the teens or the low twenties? I will tell you where they were: they were sitting on their hands doing mental gymnastics! They were obviously strong buys then but dare I say not strong buys now. At some point in here the market will sell off significantly. Probably a normal correction in a continuing bull run. The companies that will be sold will be the companies that have run up greatly. Guess which ones? Amat, Klac, Ter, and Nvls. My point is there will be many entry points into these companies in the weeks ahead. Don't chase the sector. For the record I bought Amat, Brks, Klac, Nvls and Ter in September, sold them a week ago and I am now trading Amat day to day. Good Investing.

To: Ramsey Su who wrote (28090)	2/9/1999 9:07:00 AM
From: klaus pluszynski	Read Replies (2) \| Respond to of 70976

Ramsey, back in '95/'96, the S&P500 traded at an average PE of around 15. The historically low level of interest rates has pushed today's average PE into the 25 range. (See yardeni.com for charts ) AMAT valuations should peak at higher than historical numbers during this cycle, provided that interest rates remain low. Klaus

To: Ramsey Su who wrote (28090)	2/9/1999 4:19:00 PM
From: Math Junkie	Respond to of 70976

Ramsey, thanks for a good, thought-provoking post. One of the things that was good about it was the interesting discussion that it started. This thread had gotten kind of dead lately. Now to the subject matter at hand: in my view, it is not necessary to abandon PE as a valuation tool in order to explain semiconductor equipment stock prices. Investors are clearly factoring in some very high expectations for the industry in setting such prices, and as Klaus has already pointed out, one of the drivers is the valuation of the overall market, against which any sector must be measured. The important questions are: are these expectations reasonable, and what are the risks? Looking at industry history long term, we have just gone through a very unusual period, in which we had two industry slumps in a three year period, and the second one was unusually deep. Borrowing the oriental concept of yin and yang, unless the fundamental drivers of technology advancement have disappeared forever (and I see no reason to make such an assumption) such a prolonged period of weakness implies a period of unprecedented growth to follow. Now, whether investors' current expectations are for blowout good news on February 16th, or whether they are based on anticipated performance over the next two years, I haven't a clue, and that is one factor which makes buying this sector a crap shoot at the present time. Unless AMAT's report has a lot better news than people are expecting, I suspect that we will see some selling after the report. AMAT already stated a week or so ago that business was getting better, so if enough investors were paying attention, then the good news should already be in the stock, and it is very common in this sector to have a runup before earnings and a selloff after, even when the news is good. However I am unequivocally sitting on the fence about sector stock prices near term. I do think that the sector is a good one to hold for the long term. For those already holding stocks in the sector, I think this is one of those times when it would pay to take into account whether one's holding period has been long enough to qualify for long term capital gains, as well as to assess what percentage of one's portfolio one is comfortable keeping in the sector. The other driving factor, the overall market valuation, is justified by some commentators based on the low interest, low inflation environment we now enjoy. The obvious question there is, will it continue? A big risk factor is that the economy grew awfully fast last quarter, and if the expected slowdown does not materialize this year, it is reasonable to expect the Fed to raise interest rates, letting at least some of the air out of the market.