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Invest with Best, Insiders, Buffett, Bernanke
by Henry Lu
November 30, 2006
Big Rally Last 2 Weeks on Housing Stocks
Housing related
stock had big jump today. Just couple of
months ago, the stock market was
full of gloom and doom on US housing market, and to a less degree on
the US economy overall. Why the sudden change on mood?
Housing Leading Indicators Up
The
direct reason for recent big rally on housing related
stocks is due to today's Bank of America upgrade on housing sector. In
a research report released today by Bank of America, the
brokerage said its monthly survey of real estate agents showed
improved buyer traffic in 33 out of 39 markets in November relative to
October, and added that it viewed traffic as the leading indicator of
sales and pricing. Stock market usually chase the short term trend and
news. When the market suddenly heard the news, they chased every
housing related stocks up madly today.
Oh well, Bank of America brokerage has so much power on short term move
of stock market. They had the inside information before the stock
market general public could possibly know.
Well, what if I tell you that, there is even a way to know this housing
story earlier than Bank of America?
Learn from the Best - Bernanke,
Buffett,
Insiders
Well,
we
knew this housing slump was temporary, we strongly believed in this and
described this in BlastInvest Private Club and in newsletter issues in
the past. In
that sense, we knew this housing recovering story earlier than Bank of
America. How could we have such strong belief in the short term
nature of housing market slump?
Well, our answer is pretty simple: follow the best in the market.
Bank of America or other Wall Street research analysts are certainly
not dumb, but they are not.the best, their track records are not
impressive. We don't need this sometimes truth, sometimes
misleading research from Wall Street. We learn from the best
directly.
The list of the best in my book is Warren Buffett, Fed Chairman
Bernanke, and CEO and Chairmen of various corporations in America.
Buffett - Long US Housing
Market,
Long US economy, Long Oil, Short US Dollar
Warren Buffett is best investor in the world with best long term track
record. We take notice from him and watch him closely. Not only
we study his investment philosophies, we watch his current actions as
well.
Buffett today owns oil stock PTR and COP. Buffett has been aggressively
buying building material stock USG. Buffett is owning lots of stocks
that is linked to US and world economy such as Coke, Nike, Washington
Post, etc. Buffett has been shorting US dollar.
Fed Chairman Bernanke - No
Housing
Bubble, Economy Growth about Right
There are lots of economists and experts that are predicting housing
market crash in USA. But Bernanke said no
US housing bubble late last year.
Just days ago, Bernanke said US Economy's growth is about right, no
fear of economic crash or recession, and he is still worried because
the biggest potential risk is still inflation.
Which economist is smarter or better than Fed Chairman Bernanke?
Insiders of Housing Related Stocks Turned Bullish Recently
To understand the long term prospect of industry and a company, who is
better than the insiders?
In recent months during our regular publication of insider weekly report,
and in our internal data mining research efforts,we noticed that
insiders of homebuilders, building materials, are quite bullish. Some
of biggest dollar amount of insider buying in recent months were from
housing related stocks, such as Eagle Materials (ticker: EXP), Owens
Corning (Ticker OC), WCI Communities (ticker WCI), etc.
As an individual, many insiders' opinion could be wrong. But as a
group, insiders are much smarter than public, and their insider
indicators are much more correct than half true, or sometimes even
misleading Wall Street research.
Long on Building Material and Infrastructure Stocks
We see housing related stocks quite bullish, not just
because of cheapness of valuation, but also because of pretty decent
prospect of housing market in USA, and overall decent growing US
economy. When the best and smartest economist Bernanke said US economy
is about right, when Buffett and insiders are bullish on housing
stocks, we took notice and sticked with our belief regardless how
bearish of the market sentiment in those months. Today's big jump is
the start of sign that our belief is right.
At end of the day, the odds are, that only the opinion of
the best matters to long term oriented value investors, the rest are
just noises that we do not need to pay attention to. When the mood of
stock market is at odds with the best in the market, most likely,
market is wrong and the best are correct.
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