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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: Sharp_End_Of_Drill who wrote (15257)	7/19/2002 11:29:11 AM
From: kodiak_bull	Read Replies (1) \| Respond to of 23153

Sharp: I don't want to start weaving stories on the homeboys, which is where I get into trouble. I'm much happier looking at the charts and seeing a downward channel intact than I am trying to stay two steps ahead of the Fed. If I were forced at gunpoint to answer your question (the old joke is: what's the difference between a Radcliffe student (in the old days) and a bowling ball? well, if someone had a gun to your head, you could make love to a bowling ball), then it would follow these lines: 1) the Fed is stuck, at 1.75 and deficits ballooning and the currency falling below parity with the Euro, it has to maintain and slowly raise rates (hoping for an economic recovery); 2) the consumer is now, officially tapped out. Obscene levels of personal debt and jumbo mortgage payments, 401K destruction, job losses, porfolio damage, forward buying of too much house and new vehicles (Zero financing!) now has the consumer on the ropes; 3) the homeboys, to boost their stock prices, used company cash for stock buybacks at absurd levels (2X, 3X book) and will be showing less financial strength just as sales droop because (drum roll) they sold 5 years' worth of houses in just a couple of years (just like GM). As in the biblical story of Joseph, the fat years will be swallowed up subsequently by the lean years, a punishment for the imprudent; 4) market darlings come, market darlings go. The whole idea that homebuilders could be the juggernaut of Wall Street is, on its face, absolutely ridiculous. The fact that Wall Street analysts actually had the brass ones to proclaim "this time it's different" for guys who basically buy land, go to planning divisions and put up stick built houses is a clear indicator of where this group of market darlings need to go. The investor no longer believes that homebuilders and recreational vehicles will produce a new paradigm. But I don't need the story, I just need to look at BZH's price action on the chart below the 10, 50 and 200 dma and still above its book value. It's got a ways to fall yet. The weekly chart tells me so. JMHO, Kb