i think the main difference is that the tech backlog in 2000 was based on the demand that was created during the Y2K buildup, and the idiotic notion that such demand would continue, whereas in fact the demand dropped by 50 to 75% in many cases, and by 100% in terms of the fiber optic buildout, as those systems were overbuilt...the sector-wide crash was exacerbated by all of the excessive hiring done by those tech companies, to meet the phantom demand
it's true that removing the speculators from the RE market will reduce demand, but it isn't going to drop by 50%...i wouldn't be surprised to see some pain in the condo market, but the housing market can afford a prolonged period of price stagnation or even short term small drops (such as occurred in las vegas in late 2004 with no lasting effect), without any kind of upheaval...the strongest areas in terms of housing price increases have/had that strength due to the fact that people keep moving there, so the demand isn't going to just fall of a cliff like it did for tech products after Y2K was done
housing companies don't have a problem with overhiring, because almost all of their work is done by contractors
one thing to note further is that in 2000, stocks like CSCO were trading at 200 times earnings, and many tech stocks didn't even have earnings
compare this to KBH or other builders which are highly profitable, have substantial real assets in terms of land and housing inventory, and are trading at P/E's of 5 to 8
finally, note that i am not wildly bullish on the housing stocks, i just don't think the housing market or the housing stocks are headed for an implosion, especially as long as the economy and job market are strong
my only positions in the sector are some short TOL 20 puts for jan of 2007 (if someone wants to sell me TOL shares at 20 bucks i will gladly take them), and a long position in NEW |
