jepittman

The Sad Semi Stocks: J.P. Morgan Sees a Bottom

You pose a very good question which is essentially when will investors 'look over the valley' and begin buying the semiconductor stocks. I will take a stab at this and say some already have. However they are not yet in numbers large enough to sustain a trend. I have found in the past that most institutional investors need to see convincing evidence that the recession has stopped getting worse before they begin to committ the large sums necessary to sustain an uptrend. In other words the worst case for the industry has to be quantified to a preset probability (which can vary from firm to firm). It usually is not a 'gut call' but something that can be explained using statistical models.

I believe the investors who have moved the prices off the lows have been primarily the 'value' investors who buy based on their perception of intrinsic worth. These people usually are fairly long term oriented and have amazing amounts of patience and ability to endure financial pain because they are often early ( I have had some experience with this particular style, much to my chagrin).

The above is hardly gospel but I offer it FWIW.