Homebuilders/oil stocks.
"...the economics of the publicly traded Home Building companies are not driven by rising home prices or their continuation (or lackthereof)."
Perhaps it's about perception vs. reality. Or maybe Graham's weighing machine vs. voting machine. Difficult to discern what or where truth is. If we just look at the business results and did not look at what the business is, and we compare the stock prices now against the financial numbers and ratios for these companies, the stocks are terrific bargains compared to other stocks in other sectors. That's how I have made and continue to make my bet here.
Imo, a somewhat similar conventional wisdom situation exists for oil stocks. That is, I presume that the conventional wisdom is that if oil prices come down, the oil company stocks will drop too. What the oil companies get for their oil must be less, so earnings might drop, and even if earnings don't drop, prospects for the companies are less, and so the oil stocks are less attractive and will be lower. And for now, as with homebuilders, that is true. Oil prices have dropped and oil stock prices have dropped. Dropped though from their highs.
I offer this long-term chart on Exxon, the most conservative of companies (I am believing), and ask that for a conservative investor with a balanced-type of portfolio looking for long term holdings (and not someone who's looking for quick, large gains), has there really ever been a time when XOM was not a decent buy? It looks to me like XOM has about made the price of oil irrelevant: The long timeframe of good performance encompasses oil prices spikes - drops, and rises.
finance.yahoo.com
I'd like to believe that profits could be made - in oil stocks/home building stocks, etc. etc. if one can understand the conventional wisdom, and IF one is right in the timing and challenging of that consensus.
Jmo, I'm no expert on conventional wisdom or challenging it, and I could be very wrong in my opinions and bets. And I have been wrong - many, many times. |
