Originally Posted by bkelly

Oh, good heavens, why?



Perhaps that strength is nothing more than short traders cashing out.



Well, how about...

1) We won't be seeing the bottom of real estate prices until the banks sell the properties on which they foreclosed and the banks are about to get a glut.

2) With property values dropping, homebuilder's can't make as much money. Wall Street punishes companies with no growth.

3) Homebuilders overbuilt in the boom years and now have more houses than they can sell. What happens to the value of the company if their inventory and land drops in value?

4) Homebuilders build suburbs and it's the suburbs that are suffering. If we passed peak oil in Jan 2008, it's only going to get worse.

bkelly

Ok. All I know is that I've been watching these stocks every day for 9 months. Earlier this year, I started loading up on PHM and TOL and I'm up 10% and 12% since February on them. I'm watching HOV, KBH, CTX every day, and am interested in a few of them. With my financials, I've been more hit and miss, but the dividends are yielding around 10% on average, so if the stocks continue to sit still, and I continue to load up on them, I'll still be making 10% and camping out on a pile when they start ticking up strongly. If the data changes I'll change my opinion. I'm not married to them, I'm just participating in the homebuilder rally and carefully accumulating financials.

Personally I think your thinking is about a year slow. Look at SRS. Up 30% over the last year, but down 9.93% over the last 6 months, and down 11.07% the last 30 days. Meanwhile TOL is up 11.5% over 30 days and 14.2% over 60 days. PHM is up 14.5% the last 30 days and 5.2% over 60, and pays a little dividend to boot. Yes I do keep an eye on the short interest on these stocks, and I see that it's up about 2 million each since last month, but still only 3 and 4 days to cover, which doesn't bug me much.

Maybe I'm wrong, but I can afford to be wrong for a little while. You, however, had better hope the market changes its mind fast. Down $2233 so far? If you're not up after a day like yesterday, something is seriously wrong with your strategy.

I'll be keeping an eye on your trades in case I turn out to be wrong. You try not to ride your position into the dirt before admitting to yourself that you're wrong. I strongly suggest selling off a large portion of both your positions and diversifying. Also consider using cost averaging to manage your risk. I mean, if you're right, you'll win big, but remember the market can stay irrational longer than you can stay liquid.