This guy explains why the decline in foreclosures and distressed sales is a big negative for the housing market. While counter-intuitive, his explanation is clear – crystal clear:
In summary, the halting of foreclosures and short sales due to can-kicking — and to a larger extent exotic mortgage mods — has caused serious structural damage to the demand equation of the macro housing market, which amazingly hasn’t not dawned on many yet.
Here’s the full article link: Headwind For Housing
My first homebuilder short-sell is performing well so far – it has at least $10 of easy downside in it from here, with patience. This stock traded below $5 in the 1990’s and I expect it go below $5 eventually once again: Homebuilder Stock Short-Sell Idea
As the overall stock market begins to price in reality and sell-off quickly, it will exert particularly heavy downside force on the homebuilder stocks.
“Government Employment Report Friday” and “fraud” are synonymous. It would be redundant to say, “the employment is a fraud.” If you just say, “employment report,” the word “fraud” is implied. As an English major in college, I find that tautologies can be intellectually oppressive in certain contexts. This is certainly one of them…
Of course, it now looks like Banco Espirito Santo is headed to the graveyard. Most of the creditors and the stockholders, including the “mighty” Seth Klarman of the famed Baupost hedge fund, will see their money and their investors’ money incinerated.
This one was as easy to spot as was Enron. But what about the derivatives?
Also easy to spot is the fraud known as homebuilder stocks. I saw a presentation yesterday by Jeffrey Gundlach here in Denver who gave a scathing assessment of the housing industry and referenced the homebuilder stocks as “insanely overvalued.”
Of course, I’ve been beating this drum since January 2013…You can see my first short-sell research report on a homebuilder with 360% more debt than book equity: Homebuilder Short-Sell Report. It’s overvalued by a factor of at least 4x and I uncovered a stunning fact about its accounting.