Selling

into today's 100+ DOW rally. Homebuilders were up 5-10% across the board. That, together with fixed rate mortgages up year-over-year makes it a no-brainer. The only question was which one to short. I decided to find the most capitally impaired company I could short. On the list were DHI, PHM, HOV, and BZH. I calculated a debt to cash plus last year's operating cash flow ratio. Here's what I got: DHI, 2.2x; PHM, 3.7x; HOV, 33x; and BZH, 3.6x. HOV and BZH are overshorted, so that left PHM, which I sold at $15.61.

This gives me a rough portfolio allocation of:

Short financials: 33%
Short homebuilders: 24%
Long commodities: 12%
Short emerging markets/China: 12%
Long Yen/short dollar: 6%
Long safety: 5%
Short retail: 5%
Long gold: 3%