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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Think4Yourself who wrote (219027)	9/5/2009 11:37:09 AM
From: Perspective	Respond to of 306849

The sad part is, most of those that have worked are chart-driven picks. I just had it in the back of my mind that the builders would start running out of "shareholder equity" in the middle of 2009. When you pull up the industry browser and nothing shows up for the price-to-book, that's a pretty good hint that they're underwater. Lots of companies run for years with negative book value, but they tend to be ones that have executed huge levered takeovers and buy a revenue stream to pay the debt service. I don't think the builders can be considered to be in that situation. I don't expect the market to give them a whole lot of latitude to operate and borrow additional funds in this position, but lenders have been doing plenty of asinine things in order to avoid actually booking existing losses. That's like rule numero zero in my Book of Investing: Never add to a losing position. It's right up there with having a defined stop loss on every single position. Anybody figure out how long HOV can run with losses on their existing balance sheet? Haven't figured that out yet. `BC