July 13, 2006
True Believers of the Homebuilder Stocks Getting Murdered
When I first wrote about the Homebuilders SPDR ETF, I mentioned that this new instrument might be a handy way to take advantage of the Head & Shoulders top that had formed in the Housing Index. As you can see from the chart below, the Housing Index has further to fall before meeting the “measured move” target.
The Homebuilders SPDR hit a new low yesterday… there’s no reason to bottom fish. Toll Brothers, Lennar, Ryland, Beazer, Meritage Homes, Standard Pacific, Fleetwood, etc. all figured prominently on the new lows list. I wonder if those investors who were fortunate enough to buy the homebuilders back in 2000 (like John Buckingham), were equally savvy about exiting them when the trend changed last summer.
You’ll recall that last summer at the very peak of the market Buckingham said he “welcomed ‘Bubble Talk.’” Let’s hope for his shareholders’ sake that he was saying one thing publicly while doing another thing privately (which is the modus operandi of all smart money managers).
Related: Chat Transcript: Have the Homebuilder Stocks Peaked? (August 23, 2005)
Very Zen-like as if to embody the full spirit of a Daoist blogger…
July 13th, 2006 at 1:08 pm
Based on his market returns and relative returns, it doesn’t appear Buckingham was too affected by the swoon…..relative chart of XHB is inverse.
July 14th, 2006 at 9:14 am
soap: I see that over the last year the Al Frank Fund is even with the S&P, though VALUX’s long-term outperformance is great.
July 16th, 2006 at 11:24 am
but Toll brothers is just extremely cheap
July 16th, 2006 at 12:30 pm
AK47: Cheap and getting cheaper every day.