Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (19763)	10/5/2004 9:39:33 PM
From: E_K_S	Read Replies (1) \| Respond to of 78627

Hi Paul - The home builder cycle may be long in the tooth but it is a sector, if timed right in the cycle, where you could make tons of money. I think that ths shipping/tanker sector follows a similar cycle to the home building sector but rather than a function of interest rates it is following the price of oil. FRO and SFL continue to hit new highs as oil closes above $50.00. I hear that the daily tanker rates are at all time highs and during the next six months is peak season too. Do you think this time it is a long term trend higher (like what the housing stocks are seeing?) or is it just a short term bubble? Based on pure value analysis both the home builders and the shipping/tanker companies have very low PE's and resonable book value based on the underlining assets. I am tempted to buy more SFL or even diversify into other tanker/shipping companies but like the home builders we may have already seen the run. Any opinion? EKS P.S. I have my eye on MRK but am looking for a lower low on lower volume (some price below $31). This may occur in the next six months on continued negative news (ie more litigation, bad pipe line, negative WSJ articles etc.). It's setting up for a perfect value play. You just have to wait for the OBV to reach it's low and then back up the truck.

To: Paul Senior who wrote (19763)	10/5/2004 11:06:48 PM
From: Spekulatius	Read Replies (2) \| Respond to of 78627

re home builders - it is time to be extremely careful with these stocks, IMO. The housing cycle looks like it is going to end. Las Vegas was the hottest market and it seems that the bubble is bursting. South CA is slowing down as well as it seems. There is a lot of speculation induced demand in the market that will quickly disappear, when home prices won't rise any more. Looking at PHM balance sheet YoY I see that cash is down and debt is up to finance the house inventory (6.6B$ !) which are roughly 2/3 of the balance sheet). Despite the housing boom, the company does not seem to generate FCF. The question is how much of the earnings is just appreciation if the house inventory, which in my opion should be accounted for as market to market gains rather than operating earnings. If I assume a rather lowly 10% appreciation gain for the inventory 680M$ of the 950M$ in operating earnings is due to market to market gains rather than the operating business itself. In other words, if the housing market were flat, about 70% of PHM earning would disappear, if my above assumptions are correct.

To: Paul Senior who wrote (19763)	10/6/2004 9:32:35 AM
From: Grommit	Read Replies (3) \| Respond to of 78627

home builders and oil. home builders. paul, i don't know if home builders are living in a bubble of not. but i noticed that my home building stocks are among my longest holdings -- we talked of these in 2001. With PE's of 9, they are hard to shed. I still have SPF, KBH, RYL. biz.yahoo.com just thinking... oil. almost a year ago I said that the sky was falling concerning peak oil production and I found some stocks to hedge my portfolio against oil production declines. I thought those stock were overpriced, but i wanted a hedge witha 10 year horizon. with oil now over $50 per barrel, their profitability will be higher and the stocks have attracted a following. things sure are grand. :o) finance.yahoo.com I still think oil production is limited and will drop over then next 10 years. i've seen wall street journal and new youk times articles where experts say that any supply disruption could cause $100 oil in a jiffy. but they fail to point out that normal demand increases will have the same effect if it is true that production is limited (let alone declining). peakoil.net plug: I friend of mine recently published this book. U.S. Dept of Energy ordered copies, and talks to the author. The author gets a little more into jihad issues for my taste, but he has estensively studied the issue of middle east oil reserve overstatement. fyi: futurereality.org grommit