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Strategies & Market Trends : Value Investing

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To: Kapusta Kid who wrote (11938)	1/30/2001 9:36:10 PM
From: Archie Meeties	Read Replies (2) of 78495

Only casually and related to this... futures.tradingcharts.com Which I follow as a leading indicator of housing starts and a piece of the puzzle when determining bank/builder/consumer confidence. In order for the lumber companies to become attractive to me, I need to see a discrepancy between the price of lumber and the valuation of the companies. Right now the companies are overvalued vs. the lumber and have moved in response to the expectation that recent rate cuts will trigger a reacceleration in housing starts. That's yet to appear, and the price of lumber, dispite production cuts, reflects that. You'd have to go back to 1991 to find lumber prices this cheap, and that's not inflation adjusted. Yes, a contrarian play worth following. Remember also, that higher electricity costs will affect all forms of industry in the West. Several mills have curtailed production for this very reason. BTW, what does this mean to you? "Most mills in the South are shut down until the market recovers. In some cases the logs cost more than the lumber is worth after it is manufactured." I don't know the industry well enough to know if this means that the price of harvesting logs exceeds the cost of selling the lumber made from them or if it merely means that logs are mispriced! One site of many. randomlengths.com

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