7.26.2007

The housing market is getting slaughtered today on news that new home sales have decreased substantially. It is said to be the worst downturn in 16 years and the largest one month drop in 5 months. Is this a buying opportunity or a sign of things to come? Housing and mortgage stocks look cheep right now, but is that because they don’t have the financial legs to sustain a turn in the market or has Wall Street accurately valued these stocks? Wall Street loves to find a weakness (subprime) and talk about like it is the end of the world until a report comes out that says the trend has turned. It is very difficult to find the bottom of that curve. The best way to invest in a downward trending industry is to look for quality stocks and invest over a period of time. When you invest in quality stocks you lower your risk of a complete collapse. When you invest over a period of time you are able to lower your cost basis by purchasing on dips. Or option #2 is to buy Apple stock!! up 10 points taday!