[FoRK] Oil at $66.86

Matt Jensen mattj
Fri Aug 12 17:37:31 PDT 2005


Quoting Adam L Beberg <beberg at mithral.com>:

> http://images.forbes.com/media/2005/08/housingbubble.jpg

This is from an "Advisor Soapbox" piece by James Stack, in Forbes.  That
"Housing Bubble Bellwether Index" is just a list Mr. Stack made up of stocks
related to the housing industry.  It is *not* an index of housing prices.  If
those stocks tumble, it will not affect demand for houses.

Stack offers "advice" at his website, investech.com.  The website and its
content do not inspire confidence.  Maybe if I subscribe to his newsletter he
might tell me which twelve stocks actually make up his index. Right now it
appears to be a secret.

Some quotes from Stack's piece on Forbes.com...

"Our Housing Bubble Bellwether Index-- [is] a composite of 12 of the most
sensitive stocks in the housing industry"

Does that mean he retrospectively picked the stocks *because* they were
volatile?  This "Index" can only be meaningful if he picked the stocks in it
years ago, and *then* they went up.

"And if our Bellwether Index for the housing bubble comes down hard, then so
will the housing sector itself."

Why?  The strength of these companies has little or nothing to do with the
available demand (or supply) for housing.  The only argument I can think of is
that consumers are speculating on real estate, and looking at housing-related
stocks to judge future demand, rather than looking at trends in current home
prices, or factors known to correlate with consumer confidence.

It's said that the housing boom has been fueling the economy for a while, but
not through a few housing-related. Rather, through money on both the national
and local levels, from mortgage banks to agents and lawyers, to drywall
contractors.

-Matt Jensen
 http://mattjensen.com
 Seattle

---
[1]
see
http://www.forbes.com/newsletter/2005/08/04/centex-meritage-housing-bubble-toll-cz_js_0804soapbox_inl.html



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