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Strategies & Market Trends : Value Investing
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To: pcyhuang who wrote (24599)8/16/2006 7:11:48 AM
From: Madharry  Read Replies (4) of 78753
 
There is nothing wrong with the concept of blood in the streets, but there is nothing to indicate that builders and such shares have bottomed. Not only that but such builders are usually highly leveraged in terms of deposits being cancelled, building on spec, and then having to compete to sell their properties with investors who want out at any cost, foreclosure sales and the like.

As far as blood in the streets goes - I have Dell and SIL and others, which are relatively unleveraged and are not caught up in asset bubbles. At least I see a catalyst for upturns. Not sure what the catalyst is for an upturn in some of the builders. Where are the buyers going to mysteriously appear from? Now that adjustable rates have soared , and credit standards if anything are bing tightened, I just see a lot of pain going forward. Even wealthier people who have adjustable home equity loans are complaining to me about how much more its costing them now. The time to buy homebuilders and the like will be when some of them announce restructuring of debt, bankruptcy and the like. I dont know if you were investing during the asian collapse in the late 90s but at the time private investors were snapping up condos in major cities in asia for about 15-20% of original pricing from financially strapped builders. That is blood in the streets.
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