The Depressed Homebuilder Stocks:
Is it Time to Buy Them?

Some analysts have been saying that the big U.S. new-homebuilder stocks have bottomed out and that these stocks might be a buy today. Are they right? Michael gives you his take on the situation.It’s quite unbelievable…

U.S. mortgage rates have fallen to their lowest level on record—since Freddie Mac started keeping records of mortgage rates back in 1971.

A 30-year fixed U.S. mortgage can be had today for 4.12%. But instead of consumers taking advantage of the low rates, mortgage applications actually fell five percent last week, according to the Mortgage Bankers Association.

Consumers are still not interested in purchasing homes. And who can blame them?


About 12.9% of all U.S. home mortgages are 30 days or longer past due on their payments. That’s 6.3 million mortgages that are late. And many banks have pulled back on their foreclosure process, as they deal with claims from various States that lenders improperly foreclosed on homes.

American consumers are not stupid. With the glut of foreclosures overhanging the market, with banks soon or later needing to restart their rapid pace of new foreclosures, with the underemployment rate in this country at 16.2%, consumers are rightfully looking for better deals ahead. (The under-employment rate includes part-time works who want full-time jobs and people who have given up looking for work.)

Yes, some analysts have been saying that the big U.S. new-homebuilder stocks have bottomed out and that these stocks might be a buy today. But I think it’s still too early.

Somewhere down the road, the stocks of new homebuilders will undoubtedly present investors with a tremendous and classic “buy low” opportunity; it’s just not time yet. Why buy an investment and hold it, waiting for it to go up? I like to buy when prices hit bottom and start to rise…and we’re not just there yet with the homebuilder stocks.

Michael’s Personal Notes:

It was a very emotional weekend in the Lombardi household. As a general rule, I don’t watch TV unless it’s a documentary of interest or current event. But we were glued to the TV Sunday morning for the 9/11 10th anniversary ceremony…tears in our eyes as we watched.

The designers and architects that decided on the memorial at Ground Zero did a spectacular job. The cascading water, the names of those who passed during the terrorist attacks engraved on the sides of the water structures, the trees…truly beautiful.

Yes, the horrifying memory lives on. For my generation, there will always be two “where were you when” moments: when President Kennedy was shot and when the planes hit the Twin Towers.

The human being is an exceptional animal…especially in how we are able to rebound from adversity and disaster. New York, a city my family truly loves, is more gracious, stronger, safer, and more welcoming today than ever.

Surprisingly, the best speech of the day, I believe, was Vice President Joe Biden’s speech at the Pentagon ceremony. In case you didn’t see it, you can see it on YouTube here:

Where the Market Stands; Where it’s Headed:

The Dow Jones Industrial Average opens this second week of September down 5.1% for 2011. While there is pressure on the markets this morning related to the renewed fear of a Greek default, I believe that the market discounted the Greek crisis long ago.

My opinion is that we are still in a bear market rally that started in March of 2009. From March 9, 2009, to this past Friday, this bear market rally has brought stocks 71% higher.

What He Said:

“I see the coming recession being deep and difficult because U.S. consumers do not have the savings to spend their way out of the recession. The same thing happened in Japan. The Japan example proved that when consumer confidence is shattered, even zero percent interest won’t spur consumer spending. The same thing could happen here.” Michael Lombardi in PROFIT CONFIDENTIAL, August 23, 2006. Michael started talking about and predicting the financial catastrophe we began experiencing in 2008 long before anyone else.