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Desperate Realtors… Desperate Retailers… Desperate Housewives…

Can you believe that the Real Estate industry is so desperate that it is spending $40 million on an advertising campaign to convince the public that “It is a Great Time to Buy or Sell a Home?”  Desperate times cause desperate measures to be taken.  However, that is just ridiculous!  Have we gotten to the point where marketeers think that we will believe anything?  All you have to do is ask your neighbor, whose house has been sitting on the market for 6 months, if it is a great time to sell a house.  Give me a break.

Nouriel Roubini, one of the few guests on CNBC that is not afraid to tell it like it is, says “In spite of the spin, the housing recession is getting worse.  Building permits – the most important leading indicator of future housing – fell another 5% last month and are already down 30%, and likely to fall even more in the coming months. In the housing sector the cycle starts with permits that lead to housing starts, to construction spending, employment in housing and sales. The continued fall in permits is the strongest signal that a 15% fall in housing starts (from trailing peak) is only the beginning of a much sharper adjustment in the housing sector. The sharp fall in new home prices – down 10% already – is the beginning of a much bigger downward adjustment in prices ahead, at least 30%.  The only thing that is going up in the housing market now is delinquencies, defaults and foreclosures.”

Desperate Realtors …

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Confessions of the Home Builders

The following are headlines from yesterday.

  • Homebuilders Try to Avoid Cancellations 
  • Toll CEO says Speculators Walking Away from Contracts
  • Beazer Tried to Close Homes to Avoid Future Cancellations
  • Pulte CEO says Scaling Back in Response to Tougher Market
  • Home-Improvement 3Q Earnings Seen Down

Two days ago it was:

  • S&P cuts Target Price on Hovanian
  • Bad News From Some U.S. Homebuilders
  • US Homebuilders Say Housing Slowdown Continues

The homebuilders are singing a much different tune over the last few days.  Why?  Many have released earnings this week and the costs of misleading investors are too high.  So, CEOs are confessing their sins and are setting more realistic expectations.

I know what you are thinking.  The news is so bad that we must be near a bottom.   It is going to take some time, maybe years, to work-off the excessive inventory in the market.  Bargains will only get better.  Real Estate investors be patient.

 

Source: Reuters
by James Kelleher

U.S. Homebuilders Say Housing Slowdown Continues

CHICAGO (Reuters) – Three leading U.S. home builders warned on Tuesday that the slowdown in the country’s once-soaring real estate market continued in the latest quarter as deteriorating consumer confidence and falling prices cast a growing pall over the sector.

Luxury homebuilder Toll Brothers Inc. said it expects to report a 10 percent drop in quarterly home-building revenue, and warned of continuing softness in formerly booming markets such as Northern California and parts of Florida.

The company also said it expects to take fourth-quarter write-downs of $50 million to $100 million on both the land it owns and has options to buy, up from a prior forecast of $4 million. The charges will reduce net earnings by 18 cents to 36 cents per share.  

More ….

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The Time & Money Group Welcomes our New Readers

If this is your first time visiting – WELCOME.  Make sure to read the “about page” to get feel for who I am. This past week, I was very excited when I was quoted in an article “Gold on a Tear” by David Vaughn.  It was posted on many well-known financial web sites including Kitco, Financial Sense Online and Gold Seek. Being quoted by an industry professional, helps validate the message that I am trying to convey here. 

This blog was started for the sole intent to share my views on Financial Freedom with anyone who is interested. This marks my second time down the Financial Freedom path and I believe that I have much to share. Although my forte is stock trading, I have tried the other paths and continue to dabble in those areas.  I strongly believe that everyone should actively participate in the stock market.  It doesn’t have to be your primary source of income, but it should be one.  Having multiple streams of income makes Financial Freedom more sustainable.  With just a little non-mainstream knowledge, the stock market can become one of those streams. 

What do I mean by non-mainstream knowledge? Jumping on CNBC’s bandwagon and buying Consumer Staple stocks over the past few months is acting on mainstream news. The DOW breaking its all-time high is main-stream.  If you bought at the peak in 2000 and held for the last 6 years you were rewarded with a 0% return. Whoopee. Yes, you would have received dividends on that investment, but Whoopee.  I would have rather been invested in the HUI gold-index that is up nearly 1,000% since 2000. 

A great place to start accumulating your non-mainstream knowledge is by reading my article “The No-Brainer Investment Strategy to Double Digit Returns.”  Follow that by reading all of the articles in the Absolute Must Reads category.  Then pick and choose different categories of interest.

I am VERY THANKFUL that you are spending some of your valuable time here.  The road to Financial Freedom is treacherous.  Hopefully, I can help to navigate the roadways as you seek your dream.

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Week in Review 11/5 – Dow Down 6 Days in a Row

The DOW closed down -0.6% on 10/27.  On the surface it didn’t seem like much to worry about; however the internals across the market were terrible.   Decliners led advancers by more than 3 to 1 on many of the indices.  That proved to be too much to overcome.  The S&P 500 and NASDAQ had a couple winning days, but were down for the week and the DOW closed down every day.  With the mid-term elections effectively behind us, I wouldn’t be surprised if the highs are in for the year in the general markets.   

The general markets aren’t that interesting anyway.  The action is in the commodities.  Oil appears to be putting in a bottom and spot Gold was up 4.7% for the week.  The star of the week was Platinum up 12%.

Below are this week’s results of our regularly discussed stocks: Continue reading “Week in Review 11/5 – Dow Down 6 Days in a Row”

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The Commodities Bull Market is Back

This article was updated on 11/6.  So, if you read it once it is worth a second read. 

It was just a few short months ago many were saying the bubble had burst in commodities.  First of all, I never bought into the bubble talk.  How can there be a bubble in commodities – when not one of your friends can name 5 gold stocks?   Back in the internet bubble days, taxi cab drivers could rattle off the names of internet companies without skipping a beat.  Before there can be a bubble the masses must participate.

The commodity bull market is being driven by simple supply and demand dynamics.   Just think about the amount of copper that will be consumed as China industrializes.  Mass industrialization takes many years.  Everyone knows that Rome wasn’t built in a day and China will be no different.

What the bubble promoters forget is that no bull market goes straight up.  The days of buy and hold – I call it buy and forget are over.  There is no certainty that a stock will be higher in 6 or 12 months although that is what Wall Street teaches.  I believe to profit in today’s stock market you have two choices:

  1. Either dollar cost average (DCA) into a clear cut long term trend like the industrialization of emerging countries.  Refer to the many articles on this site pertaining to DCA.
  2. Learn how to use simple trend lines. 

Looking at BHP’s chart below, the ideal purchase price over the last month would have been around $35. if all the stars lined up you could have purchased it at $35, but more than likely you would have been petrified that $30 was right around the corner.  Using charts, there is a strong likelihood that you could have picked it up at $38. Not quite $35, but in retrospect not a bad price. I think that you would be pleased with a 12% return in 4 weeks.  Continue reading “The Commodities Bull Market is Back”