Value Microcaps Motherboard

[lentinman]

WADE: SMTX:

If you are going to make your evaluation on issues such as inventory levels then you have to try to evaluate how inventory in semis or semi manufacturing companies compares to other electronic manufacturers IF the cycle is ending.

However, that seems like a lot of wasted work to me.

Unless you agree that the cycle is ending, then why waste ANY time on it. If you DO think the cycle is ending, then inventory issues are secondary to this IMO.

That being that there is NO WAY that (on average) semis or semi equipment companies are going to go down, BUT yet at the same time electronic manufacturers or component manufacturers are (on average) going to go up. No chance.

They produce electronics that are equally essential for the same types of products - generally tied to the consumer's electronic demands.

Here are two links to overlays of one Electronic Manufacturer, two Component Manufacturers and the SOXX index (Semis and Semi Equipment manufacturers).

http://finance.yahoo.com/q/bc?t=2y&s=%5ESOXX&l=off&z=m&q=l&c=jbl%2Cavx%2Carw

http://finance.yahoo.com/q/bc?s=%5ESOXX&t=5y&l=off&z=m&q=l&c=jbl,avx,arw

They're very similar over a two year period and a five year period. The similarity being that when one turns, so do the others. I don't have an "index" for EMS companies or Component companies or I would overlay the indexes. But, suffice it to say that if I DID have them, I believe they would be very similar - so I chose a few examples.

Conclusion, if you don't think the cycle is ending, then it is irrelevant. If you do, then you can't divorce an EMS company for any of these other sectors that are directly related.

One of the best financial quotes I have ever heard: Peter Lynch: "Buying a cyclical after several years of record earnings and when the p/e ratio has hit a low point is a proven method for losing half your money in a short period of time."

Len