By Justin McKenna ([email protected])
April 5, 2000

If you didn't completely follow Rick's line of reasoning, you must still be trying to recover from the switch to daylight savings time (i.e., I'm not sure Rick's argument holds up very well to scrutiny). Objective Fool that I am, however, I think my line of reasoning remains pretty solid.

To wit, wafers, semiconductors, and chips are not going to go the way of the asbestos hairdryer. If anything, the market for them is just beginning to take off. Now, I am not going to deny that the semiconductor sector is cyclical. However, my overall point here is to convince you that Applied Materials is an excellent, LONG-TERM investment, even for a company in a cyclical industry. Rick's argument actually seems to bolster my case, so let's look at the numbers he mentioned a little more closely.

When I dropped by Tom Gardner's desk recently to ask about the original purchase of Applied Materials back in 1995, he smiled and said, "We shouldn't have sold it." I couldn't agree with you more, Tom. Rick, on the other hand, would seemingly have you second-guessing a purchase of Applied Materials. The numbers he presents in his argument, however, would only have you questioning WHEN to purchase Applied Materials, not whether to buy it in the first place.

Pardon me if I don't sneeze at a 556% gain in four-and-a-half years -- if the Fool Portfolio had stuck with Applied Materials instead of taking a 31% loss. Rick, for reasons unknown, points out that if the purchase had been made just 11 months later, a Fool would now be looking at a 1,618% gain. Let's get real: How many times can we go through this exercise with how many stocks? "If ONLY I'd purchased Qualcomm a year ago," if only� if only� AAARRGHHH!

As investors, we have to deal with the fact that we may not always purchase a company at the optimal time. But is there much use in going over what might have been, particularly if you purchase an excellent company that is growing over time? Take a look at what the returns on Applied Materials would be if you purchased this company exactly 10 years ago, and I think my point is made.

Rick's exercise in looking at the various returns of Applied Materials if purchased at different times doesn't refute the fact that it is a top-rate company in a burgeoning technology sector, with an excellent management team, great numbers, and excellent future prospects. Let's not rehash the numbers regarding WHEN one should have bought Applied Materials; let's realize that many investors WILL buy Applied Materials and likely benefit from it in the long run.

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