Embrace Cycles, Sell High, Buy Low

The cyclical nature of technology demand, particularly in industries like PCs and hard drives, reveals that market perceptions often misalign with actual performance. Demand for components such as DRAM and hard drives frequently swings between overestimation and underestimation, creating boom and bust scenarios. Investors should buy hard drive companies when their price-to-earnings ratios are high, which typically coincides with pessimistic earnings forecasts, and sell when P/Es are low, as that usually corresponds to peak net income. This pattern highlights the slow response of production capacity to changes in demand, underscoring the importance of strategic timing in investment decisions.