I have also been poking around at the housing sector. Seems like there MIGHT be some bargains here.
When you are buying something at a 3-4 P/E, the company does not have to keep going very long at that rate of earnings to make a serious amount of capital (in relation to market cap).
Where I am at, housing is still strong, but slowing down a bit. I suspect it will take a while to fully "cool off", a year or so maybe?
If a homebuilder is well managed, got a good balance sheet, in decent markets, they should STILL be able to make money even if the market cools off. They just won't be making 1/4 of their market cap. Maybe their earnings get cut by 2/3? Still not too bad if you buy right?
great post. homebuilder puts were the most obvious trade back in the day for betting on against the housing bubble. wish I had known this back then. really love reading perspective from anyone who has been watching the markets for a long while. thanks
The most important thing I forgot to say!
I would strongly encourage you to look at the sector in more depth and share your findings!
I certainly would appreciate it.
I have also been poking around at the housing sector. Seems like there MIGHT be some bargains here.
When you are buying something at a 3-4 P/E, the company does not have to keep going very long at that rate of earnings to make a serious amount of capital (in relation to market cap).
Where I am at, housing is still strong, but slowing down a bit. I suspect it will take a while to fully "cool off", a year or so maybe?
If a homebuilder is well managed, got a good balance sheet, in decent markets, they should STILL be able to make money even if the market cools off. They just won't be making 1/4 of their market cap. Maybe their earnings get cut by 2/3? Still not too bad if you buy right?
Thank you for your thoughts!
I agree
Similar to some other followers, I would be very interested in a deeper dive from someone who has seen what you've seen.
Your posts are always very thought-provoking. I was an analyst with Gerald Oney in the 2010s.
great post. homebuilder puts were the most obvious trade back in the day for betting on against the housing bubble. wish I had known this back then. really love reading perspective from anyone who has been watching the markets for a long while. thanks
You are welcome!! And thank you for your comments.