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URL:  https://boards.fool.com/i-have-also-quotlearnedquot-the-same-things-33577160.aspx

Subject:  Re: What's simple isn't always easy. Date:  12/6/2006  7:56 PM
Author:  QualityPicks Number:  384 of 457

I have also "learned" the same things you mention but I just want to add few points:

 

Homebuilders trailing PEs might be in the mid single digits, but forward PEs are double digits. While forward PEs are really what matter, one just has to understand that they can be unreliable. A company without growth is not worth more than a PE of 15 I have always believed. That is pretty much where homebuilders are right now (so they may not be that cheap anymore).

 

Also, I personally like to stay away from stocks without growth in the relatively near future (<1 year).

 

House prices are another variable, I still have reservations about house prices. If they do come down further, forward PEs might be adjusted and all of a sudden the stocks could be considered "expensive".

 

Lastly, I have also noticed, that very often, after I tout a "big call" I made, it starts to go the other way :) Or, if I put money into it, it also does not work :) (probably because there was no real fear). Often the fact that you are willing or not to put money in a stock, is an indicator of the level of fear.

 

No worries though, there is still likely more room for homebuilders to rise though, because I'm not bullish on them :)


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