This stock has strong technical support at the 2003 lows of $15.50. It bounced off that support line twice and even did it once near there in 2002.
But if it breaks through that, I am out of here, because the next support is not until $2.50 (!)
Sure hope you didn't hold through this brutal downturn, assuming that you are better at assessing "true value" than the insiders and those that evaluate companies for a living.
People like Buffet can and do go the CFO and demand that he open the books before investing. They have access and knowledge that retail investors can only dream of.
To succeed in the market in the long run, you have to either:
1) Buy and hold - this works fine over a long enough term, but you might have to be very patient in this market
2) Understand and identify psychological factors that influence market movements - this is all the "chartists" do, is describe how, over and over again, markets have moved in similar fashions, due to the unchanging psychological herd nature of most traders.
Still waiting for the high $2's to make my buy.
He will have to cut rates. If won't help everything though. It won't change consumer psychology and make them want to buy houses since no one wants to buy a depreciating asset especially when it is such a leveraged investment.
It is not about bail outs. It is about trying to support an economy that is headed into recession. The market has been cutting off credit which is death to a leveraged economy.
The reason why they are not dropping rates in a hurry is that they are trying to do different things instead. The FF rate is not their only tool.
Regarding a fed cut, I don't think it's a done deal. I'm hearing that Ben really isn't a "bale out" kind of guy. As long as the overall economy is healthy he may just pass. If the market discounts a cut and it doesn't happen LOOK OUT.
Sure in hindsight you can always say that certain option positions would have worked but I don't think they are very useful going forward. Options reduce you upside or downside risks but overall, they just reduce your expectation value of return.
A typical thing is that you buy a stock and buy puts below it. The stock drops but not to the strike price. It expires worthless. Then you have lost money on the stock and the option. The day after expiration, it drops further below your strike. This doesn't happen everytime but I think overall, options are a suckers bet. It is hard enough to buy stocks that will go up long term. Trying to figure out WHEN they will go up just adds more complication and it distracts you from thinking long term. Most of the great investors (Buffett, Lynch etc) advise to avoid options unless you know something that everyone else does not.
I think immigration may cut both ways. If you think about many of the markets that Meritage is in, I think it would be beneficial to have a looser immigration policy. I assume this is what you meant by your comment. If not, with the large inventory of houses, an influx of immigrants into an area might help to send that inventory down in those particular markets.
What do people think about a Fed rate cut? At this point, I'm willing to bet that we don't get a rate cut in September, and I think that gives us a chance for another downturn in these stocks. Let's say the Fed does cut, does that actually move anything? Doesn't everyone seem to think that the Fed will cut, it's just a matter of how much? What do you guys think about the cut. Do you think it will actually move the market at this point?
Do not expect technical support to hold on this or any other home builder stock. The bear is just starting. I expect MTH to break below $10. I am an MTH fan but I love to make money. This stock will make a lot of money for you in the next bull if you wait and buy it below $10.
kant you make some sense. I don't think you can catch a falling knife. Having said that, I live outside the US and I don't think the US will go into a recession as the drivers of the world economy have shifted to Asia (including India) and the US companies are making profits there galore. The housing market is more dependent on your future immigration policy and cheaper money than anything else. I don't own MTH, but I am looking to enter at some point. An easing by the fed or a plan to have reasonable immigration (remember people inflation is a cause of housing going up) would do it for me.
I am not making recommendations. I cut my position because I felt too exposed to the market. I think MTH is one of the best builders. I will probably add to my long position once the discount becomes big enough. I would like to see MTH at $12/share where the margin of safety would probably be big enough for anything.
I may also buy bankrupted builders. As long as book value is over twice the price, they should be able to come out of BR with plenty of equity and very little debt.
A quick note about the options. I look at buying protective puts as insurance on my shares. Just like one would buy insurance on one's home, car, or something or similar value. Dave, you sold 1/2 of your position at 32, and now that position has been cut in half. When the stock was at 32, you could have gone out to March 08 and bought some 25 or 30 dollar puts for pennies on the dollar. I may believe in a company's long-term story, but I've been smacked around by the market enough to know that I'm not good enough to call tops and bottoms.
Dave, Accvording to your comments you're on the wrong side dave. Did you say you are long the stock?? I'm not sure how I should take your advice. If I followed your first move I'd be seeing lots of red now.