I believe you are correct about bargain stocks. Their very unpopularity is what makes them bargains.
Secondly, it looks like the housing sector disintegration is picking up speed. Yesterday FMT reported sharply lower earnings and the stock made a new low. Today CFC got hit. The homebuilders have been hit very hard and, I think, justifiably. What interests me, is that it is now spreading into the lenders. It has been my contention for a long time that that is where the trouble is. These were the guys who provided 100% financing to almost any warm body with a job to buy a house at any price, that was appraised at what ever amount the lender would lend.
I will be interested to see how bad it gets. At this point I think the new trend is probably irreversible.
Yeahp. Equally impressive is the leverage used by the homebuilders and lenders themselves.
In related craziness, did you catch the WSJ article last week about "balance sheet" lending? Real estate developers are increasingly willing to pay higher interest (often a lot higher, 2 points or more) in order to keep their loans from being securitized. One developer came right out and said that he wants flexibility if he has trouble repaying the loan.
Somebody says that to me, I'm going to ask for a lot more than 2 points. But there he was saying it to a reporter, seemingly unconcerned that his blabbing might embarrass his poor lender.
It's all pretty scary. When real estate came unglued 15 years ago, ITIC didn't lose anything, but they didn't make any money for a year or so either. Could happen again.