"USA houses cannot be built in China and this stock must recover and thrive in time." But do houses have to be built by the current public homebuilder S&P 500 components? What stops future homes from being built by smaller public or private builders? Further, how many of the current XHB components can survive the current downturn given their debt?
I agree that eventually demand for homes will pick back up and eventually we will work off the current backlog of built, but empty homes. But does that necessarily help HOV, DHI, BZH, and PHM? Some, like TOL, probably will survive without a problem. But some won't.
I think you need to wait until a few more homebuilders exit the S&P 500 completely before you buy XHB.
These rallys are a joke. Anyone calling a bottom in the housing market has to be smoking crack. The problems are increasing, not diminishing, and it is going to take quite a while to work it out. Lenders are scared to death. Even with a 20% down loan, there is no assurance it won't go sour. This is a classic case of an over supply of product completely dependent upon credit access which is drying up. Even if people wanted to buy, it is tough to get a loan. This problem is much to big for the FED to fix with a couple of interest rate drops. Mortgages are toxic at this time and soon to be followed by HELOCs and credit cards.
There is a big difference between short and hold. To short, we want the stocks to go down to make money.
To hold and buy on the dips, I am very happy to see stock up or down. If this goes down, I will be happy to buy more at a much better prices. Remember, I have been waited 4 years for this price low. Although I bought at some at $32 and some at $25, I am happier to see I can buy this at $20. I waited 8 years for China index to be at 1000 bottom.