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Meritage Homes Corporation Message Board

  • hebert_art hebert_art Jan 9, 2008 9:39 PM Flag

    Same cycle as 1990 and 2000...

    time to load up. KBH is going to rebound, the bad news is out there, the analysts are saying the financial rebound will happen in the 2nd quarter (remember the stocks always rebound before the housing market does).

    I don't think it will be $50 soon but it could be in 3-4 years and folks that is a heck of a return on a $10 stock. All of these stocks are going to rebound. Its the same old cycle. It did it in 1990, 2000 and now 2008. Get on board. I have started buying etrade, countrywide, the home builders namely meritage and lennar. Look at their charts after the 1990 housing bust.

    You will make 300% if you start buying now

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    • Since I've been shorting and you have been a strong buy the last couple of days, I guess I have been bending you over a bit. Guilty as charged, you naughty little sissy. Wear a hospital gown for me Monday.

      I thought I knew your real identity based on your investment strategy and command of english, but I don't think Mike Tyson has internet access.

    • thanks for the tip

    • The intelligence of both of you combined would still not equal an imbecile. I am nailing this stock month after month, but you two are the ones giving advice.

      Much like politics, the ones who know the least are always first to give advice.

    • You're right, of course, regarding the cyclical nature of the homebuilding industry. Here are the problems:

      1. Some major homebuilders will probably go bankrupt, as has happened in every other housing cycle trough. Will MTH be one of them? The cash situation is not great, although the option strategy should work in their favor. Obviously, if MTH is one of the ones that goes bankrupt, then what the stock price could have been 6 years from now is irrelevant.

      2. Let's assume that MTH doesn't go bankrupt. At this point, at the 9 dollar level, who is going to step up to buy these shares. As I had been posting on the board, there was a floor around 14 where some large fund was buying in a manner that suggested they were short covering. (This included that garbage at the end of the day where prices were being driven up.) Once it broke 14, one could argue that this fund had bought back all of its shares (or at least all of the shares it wanted to buy back) and the price continued its free fall. So, here's the question, why buy at this point? The free fall is most likely to continue until another buyer steps in and has a reason to buy shares (taking profits on a short position or something). Buying before we hit that level seems foolish. Once we get some floor, we can buy back in, set a stop below that floor, and get on the train again.

      3. A 300% return would be an understatement if we get a repeat of what happened in the last 2 upturns. In the past, from the highs to the lows, was about a 90% drop (we're around there now). If you think that it could return to its 2005 levels sometime 5 years out from now, a move from 9 to 90, then you're looking at 900% return. Again, this is all the more reason just to wait until the stock finds a floor.

      Again, I reiterate my position that it's foolish for anyone who is short to not take profits. However, without an established base, it makes no sense to hold this stock since the free fall could easily continue.

      My two cents.

40.14+0.24(+0.60%)Jul 22 4:02 PMEDT