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SPDR Series Trust - SPDR S&P Homebuilders ETF Message Board

  • itsthehorn itsthehorn Apr 9, 2010 3:04 AM Flag

    Recent news

    Did you guys see the new article in Forbes which concludes that homebuilder business will not pick up for years?

    http://www.forbes.com/2010/04/07/home-builders-employment-markets-equities-mortgages.html?partner=yahootix

    And did you se the wave of analyst downgrades of homebuilders this week?

    http://finance.yahoo.com/news/Sector-Snap-Homebuilders-apf-1817657443.html?x=0&.v=1

    One of the more accurate Wall Street analysts:

    "Stifel concludes that homebuilders are in for years of slow to no growth: As we work our way through an immense backlog of unsold homes, earnings in the homebuilding sector will grow at only 3% for the next three years. "Normalized earnings" won't return until 2014 at the earliest. Meanwhile, Stifel finds Pulte overvalued by a good 28%, with room for 22% in downside."

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    • While still catatonically slow...today's existing homes sales data did confirm that the rate of sales exceeded expectations this month.

      Did any of you care to notice the news below the headline?

      "The inventory of unsold homes on the market was up 1.5 percent at 3.6 million"

      Inventory of unsold homes is still rising fast even in a month that featured a flurry of government stimulated buying with the tax credit expiring.

      When the tax credit expires, and existing home sales drop to the floor, what will happen to the inventory of unsold homes? Foreclosures are rising fast, still...

      Of course, new home sales data tomorrow will be a lot worse than the existing (foreclosed) home sales data from today.

      But the real move down in homebuilders will start as people stop and think about the rug that is being pulled out from under this industry when the tax credit expires...

      That massive wealth transfer to home buyers from current and future generation taxpayers is about to disappear.

      Inventory of unsold homes will spike up, and continue to rise, causing a massive drop in sales prices.

      How can that not happen?

    • So...

      I guess the strategy is:

      Since we don't have enough money for homes, let's take what money we do have and use it all to buy homebuilder stocks.

      Yup.

      Got it.

 
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