March 29, 2007
Waiting for XHB to Come to Papa
Weak market, bad day for all the stocks I already think are cheap. But as we know, cheap often gets cheaper. I have a limit order in to buy some of the Homebuilders SPDR (XHB). Don’t know if it will ever come to Papa, but I’m patient.
Cat: | Time: 9:14 am (utc+8)
March 29th, 2007 at 11:07 am
Why use a limit buy? Why not sell the 29 put? Then if it never reaches 29 you make some money, if it does it’ll be put to you at 29 which is what you wanted, but you’ll get a discount (the option premium you received)
March 29th, 2007 at 11:18 am
libertas: I don’t know what price to sell the put at, plus I don’t want to fool around with options in general — they take too much mental/emotional energy. But I appreciate the suggestion…
March 29th, 2007 at 11:25 am
Well up to you of course, but it seems to me that you’re passing up “free” money. From the CBOE site, the Sep 29 put XXJUC is bid at $1.30. That means that either you keep $1.30 per share if 29 isn’t reached by September expiration, or you buy $29 shares for $27.70, a 4.5% discount.
March 29th, 2007 at 11:29 am
libertas: Whenever I hear about “free” money, I automatically take firm hold of my wallet. ;-)
March 29th, 2007 at 11:44 am
Fair enough. But what it really means is that your buy order at 29 is worth money to someone. Right now you are passing up that money away in return for the right to cancel the order for free. How valuable is that right to you?
March 29th, 2007 at 12:13 pm
libertas: The value of not being forced to think is priceless.
March 29th, 2007 at 12:34 pm
lol… priceless dialog.
since ur obviously so anxious to be schooled about investing i will give u another idea. short it here and buy back at $29 and go long then…
seriously though. This whole sector is a mess right now. It is one thing to try to figure out market and economy risk. But having to worry about potential fraud at BZH and others adds risk that is disproportionate to the reward… IMO…
i think if XHB does indeed bottom soon and starts trending up we shall have plenty of time to catch the next leg up.
March 29th, 2007 at 1:27 pm
i don’t think xhb will bottom anytime soon
lots of inventory for the builders to get rid off in a slowing market amid tightening credit standards
home prices are likely going to be depressed for some time and that is going to adversely impact the builders’ net book value
March 29th, 2007 at 2:46 pm
Born2 & brian: Yeah, who knows. I’ll buy it in the IRA and look at it again in about 30 years.
March 30th, 2007 at 2:50 am
I don’t think the housing market is going to bottom soon. (not @ 29) The new home inventory is still growing. And the housing-construction slowdown is not an industie that takes a few months to recover, it will takes years and then only the builders will recover…so I would also suggest you to short xhb
March 30th, 2007 at 8:29 am
dennis: Well if it comes down to me I’ll buy it and we can all see how wrong I am… it’ll be an experiment and I’ll put up the money.
March 30th, 2007 at 5:59 pm
Ok it’s your money…and after all maybe not such a bad idea to buy @ 29 because it will indeed probably rebound for a few months and for some $ like it already did before.
March 30th, 2007 at 6:02 pm
dennis: It will join my Tony Soprano portfolio: Buy it and fuggitaboutit.
March 31st, 2007 at 6:20 am
I have a 20 May ‘07 puts at 33 - I will be buying the stock at 29 - if the market makes a downward adjustment, this will make a bigger % downward adjustment. I shorted this from 37 to 34 last month. The puts were cheap,the short tied up too much $. It will be interesting (april)
1. the window dressing is over today - what will they get out of monday
2. The securities industry has an interest in getting all the 401K, IRA, Roth, plan money at good high prices. Most of that money (that is not invested monthly) will be in by April 15
3. Earnings season - will there be surprises - I think good surprises will increase the market by fractions and bad surprises will decrease the market by multiples.
I really didn’t want to go into more than XHB - but we ramble sometimes.
paul
April 13th, 2007 at 9:04 am
[…] A little hesitation in the morning but then buying kicked in after 10 AM and continued all day. Hundreds of diverse stocks on the new highs list. Homebuilders (XHB) jumped — feel like a bit of an ass with my $29 limit order. ;-) QID more actively traded than the Q’s — I don’t remember that ever happening, do you? Here’s a look at MedImmune (stock du jour) and the QID, intraday. […]
April 27th, 2007 at 12:39 pm
[…] Homebuilders jumped nicely… meanwhile some jerk’s lowball limit order is sitting in there. […]
May 11th, 2007 at 6:13 pm
[…] digg_url = ‘http://www.neuralmarkettrends.com/2007/05/11/xhb-trend-madness/’; digg_title = ‘XHB - Trend Madness’; digg_bodytext = ‘A look at XHB, the homebuilders ETF, and the affects of self reinforcing andself correcting trends. Funny how sentiment and fundamentals affect trends. The trends in turn affect sentiment and fundamentals.’; ( function() { var ds=typeof digg_skin==’string’?digg_skin:'’; var h=80; var w=52; if(ds==’compact’) { h=18; w=120; } var u=typeof digg_url==’string’?digg_url:(typeof DIGG_URL==’string’?DIGG_URL:window.location.href); document.write(”"); } )() People do dumb things at the heights of trends, like issuing the homebuilders ETF XHB. Shortly after its debut, XHB began to sell off as the negative sentiment snapped the RE buying trend. As I mentioned yesterday, sentiment and fundamentals affect trend and in turn the trend affects sentiment and fundamentals. I believe the pain for XHB and real estate isn’t over but I wouldn’t be a buyer here. Some people with their limit orders at $29 might just get XHB at the price they want, if they wait a bit longer. […]
June 2nd, 2007 at 11:27 pm
[…] The Regional Banks have gone nowhere, relatively speaking, since the bottom of the bear market back in 2002, and in 2007 their performance has been terrible. But I’m tired of Waiting for the XHB to Come to Papa, and plan to buy a nice cheap regional bank instead. I’ve written about it several times before, but have just put my order in now. You gotta buy ‘em when they ain’t. […]
July 4th, 2007 at 5:16 pm
[…] Someone we know has been waiting for XHB to trigger their limit order at $29, and as I posted before, they might just get it. […]