Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19
The Exponential Stocks Bull Market Explained - Video - 13th Mar 19
TSP Recession Indicator - Criss-Cross, Flip-Flop and Remembering 1966 - 13th Mar 19
Stock Investors Beware The Signs Of Recession / Deflation - 13th Mar 19
Is the Stock Market Still in a Bear Market? - 13th Mar 19
Stock Market Trend Analysis 2019 - 13th Mar 19
Gold Up-to-Date' COT Report: A Maddening Déjà Vu - 12th Mar 19
Save Fintech? Ban Short Selling. It's Not That Simple - 12th Mar 19
Palladium Blowup Could Expose Scam of Gold & Silver Futures - 12th Mar 19
Next Recession: Concentrating Future Losses & Bringing Them Forward In Time As Profits - 12th Mar 19
The Shift of the Philippine Peso Regime - 12th Mar 19
Theresa May BrExit Back Stab Deal Counting Down to Resignation, Tory Leadership Election - 12th Mar 19

Market Oracle FREE Newsletter

Stock and Finanacial Markets Trading Analysis Worth

U.S. Housing Market Winds Shifting, Investor Flexibility Breeds Opportunity

Housing-Market / US Housing Aug 01, 2009 - 01:41 AM GMT

By: Money_and_Markets

Housing-Market

Best Financial Markets Analysis ArticleIf there’s one thing you learn fast in this business, its flexibility. If you stay rigid, unwavering, and unyielding in the face of a mounting pile of contrary technical and fundamental evidence, you’re not being disciplined. You’re being inflexible. And you’re going to go broke pretty darn quick!


Why do I bring this up? Because I get the sense that many investors have a hard time embracing change. They suffer tunnel vision and fall in love with investment themes and stocks that fit them. So they end up sticking with losing investments too long … and they miss the profit opportunities that they could have capitalized on by shifting gears.

Let me give you a prime case study …

When the Housing Winds Shift, You Have to React

Starting several months ago, many of my on-the-ground, local, and national indicators suggested that the housing market was starting to stabilize. New home inventories were peaking. Sales rates in many of the “canary in the coal mine” markets were starting to increase as prices plunged. The “tone” of the activity out there was improving.

I didn't buy the Greenspan, Bernanke and Paulson fairytale that the mortgage collapse would only impact the subprime market.
I didn’t buy the Greenspan, Bernanke and Paulson fairytale that the mortgage collapse would only impact the subprime market.

Now, here’s the thing: I’ve been wildly bearish on housing for YEARS. I didn’t buy the whole Alan Greenspan verdict on housing, namely that it wasn’t a bubble, just some localized “froth.” I didn’t agree with Ben Bernanke or Henry Paulson that the mortgage collapse would stay “contained” in the subprime market.

Instead, I warned anyone who would listen that the market was going to collapse and that the mortgage industry as we knew it was going to implode. I named the stocks that wouldn’t just “correct” I said they were going to be crushed! You can judge for yourself whether the analysis you got from Washington was more accurate than what you heard from Weiss Research.

But as the evidence began to mount that the freefalling Armageddon-phase in housing was coming to a close, I shifted gears. I didn’t just bury my head in the sand and ignore it …

I told you on May 8, almost three months ago, that A) Conditions were changing, and B) Your investment approach in the sector had to change, too. My very specific comments here in Money and Markets:

“I still believe home prices have further downside. That’s because we remain oversupplied, with approximately 1 million “excess” housing units for sale in this country. More foreclosure inventory will likely hit the markets in the coming months, too. Reason: Many of the filing moratoriums put in place at the state and industry levels have expired.

“But the sharpest declines in residential real estate are, for now, mostly behind us. I expect to see sales volumes gradually stabilize on a nationwide basis over the coming year, with total inventory for sale (new plus used) gradually coming down. By mid-to-late 2010, we should see pricing stabilize and gradually turn higher, with the improvement coming in stages depending on location.

“So for those playing the downside in the housing market by shorting residential real estate-related stocks, I’d suggest moving to the sidelines.”

Lo and behold, The New York Times is now reporting on the same trend! The headline that confronted me Wednesday morning was “Recovery Signs in Housing Market Stir Some Hope.” The story chronicled how the S&P/Case-Shiller index showed a smaller year-over-year drop in house prices and the first monthly gain since July 2006. That report followed others showing the biggest monthly gain in new home sales since 2000, and the lowest for-sale inventory in 11 years.

Is the news great? Of course not! We still have a ton of foreclosure inventory coming into the market. We still have more mortgage defaults ahead of us. Unemployment is still a problem, and rising mortgage rates could slow any recovery.

Recent numbers show the lowest for-sale inventory in 11 years. But we still have a ton of foreclosure inventory coming into the market.
Recent numbers show the lowest for-sale inventory in 11 years. But we still have a ton of foreclosure inventory coming into the market.

But like I said earlier, the sum total and tone of the market data has shifted. So I shifted my suggested investment approach to the sector, too.

A Message to Take to Heart …

Keeping with the flexibility theme, it’s important to acknowledge that there are now some upside profit opportunities, rather than just downside ones, out there in the sectors I follow. By using exchange traded funds (ETFs) and options, you can profit from moves higher in strong stocks, as well as moves lower in weak ones.

For the past couple of years, my approach has been to focus mainly on downside plays. So this is a change worth noting.

Now I’ll be the first to admit I’m not going to get things right all the time. But remaining flexible is the key to improving our investing results in these changing markets.

Until next time,

Mike

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules