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RVB's Market Musings

What began here as an avenue to interact and learn has far exceeded those goals.

If you are a prospective employer, please consider this site a place where you can see my passion for investing...

Monday, August 08, 2005

Overall Market Under Pressure!

Overall, the market as a whole is under some serious pressure.

Some of the top stocks in the past months / year have toppled in the past few sessions. D.R. Horton (DHI), St. Joe's Company (JOE), Toll Brothers (TOL), Pulte Homes (PHM), Lennar (LEN), Builders Material Corp (BMHC), and Meritage (MTH) are all related to home builders (With exception to JOE which is more of a real-estate holding company) and each have fallen more than 5% in the past three sessions - most closer to 10%

Foreign stocks are holding up well, however. One should expect some profit taking on the mentioned stocks -> They've had HUGE runs in the past year. The catalyst has seemed to be the downgrade of TOL by Wachovia securities in reaction to their perceived lackluster earnings report last week.

I view this as a good opportunity to add the homebuilder related stocks to my watchlist. For my risk tolerance, my favorite here is probably the most boring - D.R. Horton. It is the country's largest homebuilder, and I believe they are the best run. Lennar is also interesting, and it would be my second favorite, because they are also a weak real estate play. St. Joe's has a high P/E, but is my third favorite. They own about 800,000 acres of land (some developed into condos, etc, and other undeveloped) in Florida. Baby Boomers! (Need I say more?) In the 30-34 range, DHI looks like a great play. But we just have to wait. This is a large holding in my Aggressive Growth Fund (Linked on right)

However, I would not recommend going out and buying these stocks right now. There is WAY too much risk. The markets are under pressure, not just in the short term, but we might be peaking for the year. Keep your eyes peeled.


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