Another HUGELY successful $$$MR. MARKET$$$ pick

Quote from dbphoenix:



If he's holding it for only 4-6 weeks, it's not an investment.
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He's holding it until it goes up 15%. 4-6 weeks or 4-6 years. He'd rather hold it down to 0 than break his streak and damage his ego.
 
Quote from slammajamma:

1) Housing is cyclical, no matter how rosy it is currently
2) There is no proprietary product, little to no branding.
3) The house is the at the low end of the profit spectrum in the real estate industry. Land is where the biggest money is.
4) You build a home, you sell it. It's a closed circuit. And you must have the land to make the product, plus zoning, provided there is demand. It's not a wealth generator in the sense that commercial real estate can be, or a consumer product with a good brand that can be easily manufactured and distributed. There will always be a new drink, a new snack, a new electronic product, a new service, but homes are determined by demographics and availability of land where demand exists. You can't distribute homes. Plus, most homes are built by independents.

That is why homebuilders traditionally sell for 5-10 PE because they are not worth much more than book.

Not that homebuilders can't be a good investment, its just that they are the best investment when the real estate cycle is in the earlier stage and the PEs are lower.

No, I did not mean a rum and tonic, although tonic is along my lines of thinking.
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I certainly agree with this post. Large home builders are really LAND DEVELOPERS. They buy tracts of land and sub-divide and are able to sell these finished lots at a profit by building a home on them. They historically really don't make much of anything on the home, although in recent years they discovered they can make some margin selling granite, stonework, landscaping, insurance, and what ever else they can whore as upgrades to the basic "box". The point is, building the home is just the way to sell the lot.

With the real estate market having gone well of late, builders are very low on having finished lots ready to build with. The process of buying large tracts of land, getting the necessary permits, grading, etc takes years. A very long pipeline. Many large builders have taken the plunge and are buying ALREADY finished lots at retail from other developers AT RETAIL to keep there stock price propped up.

MR Market is entering this game late in the 9th inning. Home builders would have been a good trade a few years ago. But as usual, Mr Expert is touting this as the second coming. Real estate cycles come and go. They always take two steps forward and one back. When real estate undergoes cyclical retreats, as it always does, many builders go under or are aquired by other companies.

Many investors do not realize how few surviving home builders there were after the collapse of the real estate market in 1990. Many of the "names" live on as though nothing happened.
Two examples:

Kaufman & Broad filed a Chapter 11 bankruptcy wiping out their shareholders.

William Lyon, CEO of William Lyon Homes, the largest owner of developable land in Southern California, was worth $6 billion in 1989. He was last on the Forbes 500 list in 1991 with $500 million. His company, failed in the down-turn and Sheriff's Marshalls seized his cars, artwork, and jewelry. The bankruptcy court took all of his real estate holdings, but allowed him to keep his home.

In 1997 he was hired as the CEO of Presley Companies when his tiny, newly created private company, William Lyon Homes, was "merged" with the Presley Companies. The slim percentage of the company owned by William Lyon was slightly augmented by by stock options.

The company changed their name to William Lyon Homes and trades on the NYSE under the ticker of WLS - as if William Lyon Homes had not vanished in the downturn.

These stocks are good for a trade like any other POS stock, but beware of "investors" who buy on "fundementals" with no stop loss like Mr Market.
 
Quote from richtrader:


He's holding it until it goes up 15%. 4-6 weeks or 4-6 years. He'd rather hold it down to 0 than break his streak and damage his ego.
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You guys continue to bash my strategy, please give me your assessment of my last 53 trades, 47 of which have been WINNERS!!
 
Quote from onewaypockets:



I certainly agree with this post. Large home builders are really LAND DEVELOPERS. They buy tracts of land and sub-divide and are able to sell these finished lots at a profit by building a home on them. They historically really don't make much of anything on the home, although in recent years they discovered they can make some margin selling granite, stonework, landscaping, insurance, and what ever else they can whore as upgrades to the basic "box". The point is, building the home is just the way to sell the lot.

With the real estate market having gone well of late, builders are very low on having finished lots ready to build with. The process of buying large tracts of land, getting the necessary permits, grading, etc takes years. A very long pipeline. Many large builders have taken the plunge and are buying ALREADY finished lots at retail from other developers AT RETAIL to keep there stock price propped up.

MR Market is entering this game late in the 9th inning. Home builders would have been a good trade a few years ago. But as usual, Mr Expert is touting this as the second coming. Real estate cycles come and go. They always take two steps forward and one back. When real estate undergoes cyclical retreats, as it always does, many builders go under or are aquired by other companies.

Many investors do not realize how few surviving home builders there were after the collapse of the real estate market in 1990. Many of the "names" live on as though nothing happened.
Two examples:

Kaufman & Broad filed a Chapter 11 bankruptcy wiping out their shareholders.

William Lyon, CEO of William Lyon Homes, the largest owner of developable land in Southern California, was worth $6 billion in 1989. He was last on the Forbes 500 list in 1991 with $500 million. His company, failed in the down-turn and Sheriff's Marshalls seized his cars, artwork, and jewelry. The bankruptcy court took all of his real estate holdings, but allowed him to keep his home.

In 1997 he was hired as the CEO of Presley Companies when his tiny, newly created private company, William Lyon Homes, was "merged" with the Presley Companies. The slim percentage of the company owned by William Lyon was slightly augmented by by stock options.

The company changed their name to William Lyon Homes and trades on the NYSE under the ticker of WLS - as if William Lyon Homes had not vanished in the downturn.

These stocks are good for a trade like any other POS stock, but beware of "investors" who buy on "fundementals" with no stop loss like Mr Market.
More...


If i make 15% in 4 to 6 weeks on DHI, will you say this is a good trade?
 
Quote from richtrader:


He's holding it until it goes up 15%. 4-6 weeks or 4-6 years. He'd rather hold it down to 0 than break his streak and damage his ego.
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"I will sell it in 4 to 6 weeks at 46.42."

It's getting more and more difficult to distinguish between the moderators and the moderated these days.
 
Quote from AAAintheBeltway:



You're right in your comment that land is where the money is, but you're missing a key fact. It's not really the land, it's the building approval process that generates the value. And that's where the big boys shine. They have the political muscle , the legal firepower and the patience to wear down the no-growth forces and get approvals for huge tracts. The pickup truck independents are at an increasing disadvantage, due to this factor and also the big boys ability to get much sweeter deals on materials and utilize labor more efficiently. They also typically have mortgage subsidiaries that both guarantee access to financing and also generate extra profits. These factors are not exactly unrecognized by Wall Street, but as $$$MrMarket$$$ notes, the stocks are still cheap. The big question is are they still crappy cyclicals or have they graduated to a permamently higher valuation range. Time will tell, but they weathered this recession without missing a beat.

MrMarket, Why DHI? Is there something there that makes it better than any of the others in the group like RYL, LEN, TOL, etc?
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I suggested HOV to big boy when it was 40 having risen from 10 in half a year. It bought summit in Ohio a little while ago.

Funny thing is, housing construction is a two level cyclic. The long cycle is sort of economic and the short cycle is seasonal. great idea to buy a stock to hold for 4 to 6 weeks going into the fall and winter months. LOL.

138% increase is peanuts compared to over 800%. LOL. He couldn't figure out the value at 40 bucks now its 85. LOL
 
Quote from Grob109:



I suggested HOV to big boy when it was 40 having risen from 10 in half a year. It bought summit in Ohio a little while ago.

Funny thing is, housing construction is a two level cyclic. The long cycle is sort of economic and the short cycle is seasonal. great idea to buy a stock to hold for 4 to 6 weeks going into the fall and winter months. LOL.

138% increase is peanuts compared to over 800%. LOL. He couldn't figure out the value at 40 bucks now its 85. LOL
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You did not go to Wharton. Your suggestions have no value to me.
 
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