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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (21502)	6/19/2005 11:15:05 PM
From: E_K_S	Read Replies (2) of 78666

Hi Paul - I liked JLG under 10 but have not paid attention to the company for the past year. Wow! Over $20 now. That list of remodel companies continue to do quite well. I want to thank you for the heads up on WHR (Whirlpool) where I made an excellent return w/ my straddle position. I suspect this housing boom will continue especially w/ the way I am buying power tools. I noticed that both WallMart and Home Depot carry all the Black & Decker (BDK) tools each with a different "package" set taylored for the customers in each store. You will also notice that the boxed sets have both Spanish and English all over the packaging. I do not think BDK can be considered a "value" stock anymore but it still carries only a 13 forward PE eventhough it is trading at an all time high. The Economist Magazine recently had several articles explaining that this real estate boom is a "Global" bubble rather than specific to any one country (like Japan in the early 90's). The U.S. market could be 18 months behind many of the other countries that have already seen double digit annual price increases. I like both Citi Corp and JPM and believe they will continue to participate in this "Global" real estate boom too. They provide the necessary financing to both their retail and corporate customers that invest in this sector. What in your opinion are the risks these companies have if this real estate bubble begins to deflate? Both companies already took huge one time write off's for their Enron & WorldCom deals in the late 90's (over $2 Billion!). Potential losses from Global Real Estate deals that go sour could impact future earnings. What's the best way to quantify this risk and as a value investor what should I look at to alert me to any potential problems? EKS

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