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alstry (< 20)

Wall Street Analysts Frogs?



February 26, 2008 – Comments (0)

We all know the story of the frog on boiling water.

As I keep reading the idiotic quotes coming from Wall Street, it amazes me that these guys continue to get press.

The Main Stream Press is reporting that today's run up in HB shareprices is due to declining prices leading to better affordibility.

I found this quote from an AP piece:

"We think better affordability should help demand to stabilize in the second half of 2008," Banc of America analyst Daniel Oppenheim wrote in a note to investors Monday.


Well, as an earlier article noted, in some new communities, prices are dropping below builders cost.  Further, as additional inventory keeps coming to market, downward pricing pressure is only going increase.

Can you imagine if homebuilders simply sold homes for $1 dollar, how demand would increase?  Right now, HBs are selling homes for a loss.  As prices keep decreasing, the losses will only increase.  You sell enough homes at a big enough loss, you guarantee your bankruptcy.  If you don't believe me, just ask anyone of the majore airlin executives about the consequences or continually decreasing to stimulate demand and remain competitive.

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