The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Doughboy who wrote (14788)	11/3/2003 7:01:23 AM
From: Wyätt Gwyön	Read Replies (1) of 306849

i think the low PE on the builders reflects market skepticism over historically cyclical businesses. keep in mind that the current housing bubble is a national phenomenon, so strong earnings could disappear quickly in the event of a nationwide crash. still, the builders (and the overpriced housing market) have defied negative expectations for quite some time now--just as the Nasdaq bubble defied expectations until the last bear had gone home. i don't own any public builders, but i would take comfort from the fact that they are stealing market share from local builders and apparently can keep doing that for a while yet. but i still think they are cyclicals, with maybe an incremental windfall here due to "rationalization" of their processes as well as bubble-oriented financing for their customers. the low PE also reflects that the market doesn't care about fundamentals. the worse the stock, the better it has done, on average, this year. just look at how energy has underperformed the market, despite providing most of the earnings growth in the SPX. same could be said for dividends.

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