Don't Fight the Trend!

Nationwide, housing-related employment accounts for about 10 percent of the economy. "The 10 percent is a problem, but it's not something that's going to undermine the economy," Zandi said.

These pearls of wisdom (quoted in Reuters) come on a day when the market shows that it clearly does not understand that the housing depression is not a trend to fight. Mark Zandi is the chief economist of Moody's Economy.com. Right now ITB is -5%. CFC -4%, GS -4%, DJIA -235, 10yr Treasuries, +2% (flight to quality), TOL -5%, etc.

This is not the time to look for value in the homebuilders. The thing to consider is the trend. It is still a toddler. It has room to grow much bigger and spread. On top of that, the market clearly has a well-documented history of underestimating the problems.

DHI reported an $824 M loss for the second quarter. It had charges of $1.28 B. That's $4.07 per share. Their book value per share is $20.82. They just lost 20% of book. In one quarter. Does anyone still believe that book value means anything?