5. Housing Bottom - Floridabuilder2 - Ultralong - DragonLZ > America Decides!
When people think of America's greatness (Obama not included) most people think dropping the bomb on Japan, hunting buffalo to extinction, or Reefer Madness the anti Marijuana film of the 1930s.... Not me my brother, I think of the Royal Rumble. Having legends like the Honkey Tonk man, Cactus Jack or Vader racing in every 90 seconds in a 30 man no holds bar brawl. Pass me the popcorn and beer, put on my favorite black Iron Maiden t-shirt, and strap on a depend.........cause I'm not leaving this seat until we reach our bloody conclusion.
I've recently been glancing at the chimpcontest picks because a winner will be declared tomorrow...
tomorrow tomorrow I love ya tommorow your always a day away!!!!!!!!!!!!!!!!!!
Oh, add that song to America's greatness
I've also noticed that there have been a few blogs regarding my homebuilder bottom call. After all I have been a bear since 2006. The most recent blog was UltraLong's, but since DragonLZ has been throwing banana's and kitchen appliances at me for the last six months I thought I would invite him to the ROYAL RUMBLE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ARE YOU READY!!!!!!!!!!!!!!!!!!!!!!!!!!!!
DRAGONLZ Agitator or Analyst
Before I take DragonLZ to the mat with a sleeper hold, let me be clear that I don't dislike him or have a bone to pick with him. However, he has been trying to call me out since spring and I'm putting on the spandex and getting in the ring. A little Ali rhyme there for you
Calling Other CAPS players out
In the link above DragonLZ is calling out other CAP players. I didn't go through all his blogs this is the first one that popped out at me. However, in seeing his titles over the past year, I get what he is all about. First of all I have no love for GMX myself because he created a blog about "why should anyone listen to Floridabuilder". He said MTH was going bankrupt and I said this was the best builder stock at that point in time. By the way MTH was up over 200 CAPs points this Spring, which means they aren't bankrupt.
As many people pointed out in the comments of this DragonLZ blog post.... Where was DragonLZ prior to the collapse to the SPY? Was he a bull? a bear? Undocumented.
So joining CAPS after one of the biggest crashes we have seen since the 1930s, greenthumbing 200 high beta stocks during a huge bull run and declaring yourself a great investor.... and all bears are idiots. Well, I think I need a little more convincing. I would suggest passing around a bong, a fifth of Jack and Jim, and a stack of one dollar bills in a strip club if you want to hear applause!!!
Just as I have not really cared for perma bears, a perma bull is just as ridiculous. If investing were this simple you would never be in cash, you would just be all in short high beta or all in long high beta. It wouldn't matter.
DragonLZ and My Housing Call of Spring
Since my Homebuilder implosion call during this spring (Floridabulder builder blog that I had taken down) you have been circling around me like a pedo at a Chuck E Cheese. The fact that you haven't tried to lure me into the men's bathroom is a miracle.
So let's examine some of your brilliant attacks on me.... Not because I am suddenly bullish on builders, but because how dare I be bearish and ruin the party this past spring.
On March 9th of this year under Floridabuilder2 I blogged that the homebuilders would get crushed and that the tax credit was propping up the housing market. Additionally, I complained how my red thumbs on the worst builders were under water and why. I will recap that at the end. This had nothing to do with my opinion on homebuilders, but on a massive amount of data that I can access for free plus my builder contacts.
I specifically red thumbed ITB that day at $13.75. ITB is a homebuilder ETF. I closed the position in August after a 19.5% plunge. One should note that I didn't even call the top of builders that spring and the ITB through more CNBC and Bull pumping climbed to $15.77 on April 30th which is a 26% drop in 3 1/2 months. Remember THIS IS AN ETF weighted with more than one stock (low beta) and the highest grade builder stocks.
My call had nothing to do with "I'm so smart and your not" mentality. Because I have always said I don't give my opinion. I have better information and more information that is either not publicly disclosed or it is publicly disclosed but would take an enormous amount of effort to obtain and analyze. Remember, I do this for a living... NOTHING but land, homebuilders, valuations, private equity, etc.... over and over every day.
DragonLZ loved to comment on my ITB pick in the comments section whether it be that I am insider (of all the public builders?) or that I am dead wrong for being a bear. I know as many VP's of Sales as I do VP's of Finance. I'm never wrong, maybe early... but never wrong.
If you are to believe Motley Fools caveman like charts DragonLZ's score has dropped from 5,000 to 2,500 since May of this year...... hmmmmmm.... perma bull? This is no different than Alstry's magificent climb on being a brilliant bear who "got it" to his continuous rant and loss of probably 5,000 points being a permabear.
You will find DragonLZ that being kind to dumb animals like Chimpanzees is considered a VIRTUE. This is why we throw sticks for dogs to run and catch and not put them on sticks to skewer over a fire....
Be careful with your permabull blogging rants because the bears will bury you when the tables turn and you may be the one disappearing in humilation and a trading account worth very little.
Ultralong's Blog and More Chatter from DragonLZ
Before we get to Ultralong, I have another clothesline and flying armbar for DragonLZ.
DragonLZ in the comments section stated that I am wrong about the bottom and that the REAL BOTTOM for builders was on March 2009... He then went on to explain how I am wrong for stating a bottom this Summer since the real bottom was March 2009..... Are you kidding me?
Gee, you know if the Packers didn't draft Tony Mandarich they could have gotten Barry Sanders. Gee, if we didn't allow zero down mortgages we probably wouldn't have had such a bad housing crisis. Gee, if I would have stopped drinking on my 9th beer I probably wouldn't have puked up those gummi bears. Gee, if the US would have done a pre-emptive strike on Germany in the 30s we wouldn't have had WW2.
WTF? Do you always critcize people in the rearview mirror. Again, you went from 5,000 points to 2,500... When are we going to see your blog post about how brilliant you were for being long in that time frame?
First, Getting back to your picks when you joined CAPS after the greatest drop since the 1930s... On March 2009, you could have bought Ford, Bank of America, let alone any great company and made between 200-2000% return. You didn't have to buy a homebuilder.
Second, How many people were going all in on homebuilders let alone any stock in March 2009? Do you remember March 2009? Have you ever heard of the concept of risk? Not the game, but risk as investment risk? return of capital vs. return on capital. Did you understand the risk involved in homebuilder stocks at that point in time? Whether they could raise debt or equity, their cashflows, etc?
Third, Have you ever heard of massive government intervention? hmmmmm... hmmmmm.. Danny.... Mr Scholarship!!!!
March 2009 - Obama Homeowner Affordability and Stability Plan
March 2009 - Federal Reserve Quantitative Easing
March 2009 - California $10,000 New Home Buyer Tax Credit
Q2 2009 - Home Affordable Modification Program (HAMP)
Nov 2009 - Worker, Homeownership, and Business Assistance Act
April 2010 - Home Affordable Foreclosure Alternative
2Q and 3Q 2010 - HAMP - Principal write downs & FHA support.
This doesn't even include the BILLIONS... yes BILLIONS of dollars in cash that public builders received early this year when Congress in all its glory decided to allow carryback losses to go back 5 years instead of the LEGAL 3 years.
So I apologize for not having the God Like ability to predict things that didn't exist on March 2009. I would be more concerned with telling people to buy homebuilders like Beazer in March 2009 at 50 cents a share and they lost everything because I am a perma bull or on a hunch. At that point in time many of the homebuilders still had bankruptcy risk on the table.
If you are going to cherry pick don't make it so obvious.
When I give out advice it also takes into account of whether or not I am wrong. There is little to no downside from my last green thumb pick on Floridabuilder August 24, 2010. Additionally, I have not green thumbed HOV because of the risk of bankruptcy in 2013.
I agree with all the macro points Ultralong has brought up. I for one believe we will be in a bottoming phase for a while. However, I do not see another leg down in housing to the point where land valuations drop, homebuilder stocks drop, etc...
My call is purely on a valuation analysis in residential construction. If you look at all the government intervention that occurred above, do you really think the gov't is going to let another leg down happen? The answer is no.... they will screw up other areas of our economy in order to make sure housing doesn't implode below where we were at in Aug 2010.
Does that mean homebuilder stocks will explode north? No, but over time they will have crazy runs north and will outperform the SPY x-fold over 5 years or more.
I also think (based on chatter) that builders will be forced to merge which will put upward pressure on their stocks. The benefits to CTX-PHM merger were huge and their competitors see that.
DragonLZ says Ultralong and I are wrong when in fact he is wrong. Ultralong and I are forward looking and understand risk. DragonLZ can continue sitting in his chair with the rewind button calling out coaches, politicians and others.... looking in the rearview mirror you will always be right in your own mind.
Ultralong put together a thoughtful argument about why he disagrees with me. I respect it and he is right. However, anyone who went short builders in August 2010 will regret it eventually