Harshu Vyas, I'm one who can't get the housing cycle correct.
In the previous cycle, I did very well for a while. Burry was here then, and he began shorting the housing stocks. I believed him to be wrong, but he was right. I couldn't see it, didn't understand why he was doing it. I wound up giving back a lot of my profits. This last time I got in when the stocks were at multiyear lows, but - remembering how the cycle turned on me - I gave up as the stocks came down last year, before they again turned up now to new highs this year.
I believe some of these stocks could be held through the housing cycle. Lennar, with its diversity of operations, e.g. a mortgage arm, and NVR, for example. NVR has had a different strategy from the others: It keeps its landbank small (or uses options to control land) so as to keep its debt relatively small. (I still own a few shares.)
Anyway, I've not had much success with metrics p/e, d/eq, sales growth. If I remember correctly, a rule was you don't want to own housing stocks with p/bk near 2. Doesn't seem to be right: we are seeing highs in housing stocks with their stocks closer to 1x book now. Can the stocks keep going up in this cycle? Who knows. |
