Homebuilders – The NEW Value Trap

Five years from now when the homebuilding stocks are 20-30 percent lower and marking time, small investors will all own shares in what the institutions have distributed to them since mid 2006.

The companies are not crap and they won’t be in 5 years, but the stocks will be value traps. Victims of a badly ended trend where the stocks were overowned and overhyped.

It is no one person’s fault, it is just the way Wall Street works. They are just not real growth stocks. Nothing was different this time and no particular CEO or management team will be totally immune.

The industry will continue to go out of favor with Mutual Funds. That does not mean you should sell your home or get bearish on the world. hundreds of new trends have been emerging since the homebuilders peaked last spring.

Do not overthink it and get sucked into buying value. That’s for Warren Buffett and a select few, great value managers.

There is all kinds of juicy goodness going on. Real juicy. I have been writing about the trends for months.

Most interesting to me lately is the bid in the Semiconductor Index (SMH). I am not a biter except for those semiconductors hitting all-time highs. Not many, but there are some. I have been long SIGM for a long time. Even amongst the semiconductor rubble you can find and buy strength .

At JFK waiting for my flight home to Phoenix and my awesome wife and kids. Another week of busting our asses at Wallstrip . Next week we have a few new classics headed your way.

Stay Tuned :) .


  1. Pingback: Howard Lindzon » Homebuilders - Welcome to Value Trap HELL!

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