Time for an update. As you may know the stock market has started a long overdue correction. As I have stated before, the market always gives you a good opportunity 2 or 3 times a year to add to positions. This is the 2nd opportunity after the Feb/March sell off. This is the BEGINNING of the correction. It will probably continue for another 4-6 weeks or another 5% -6% on the downside. I would suggest making up a list of blue chip high dividend paying stocks to buy. Companies such as Bank of America, Citicorp, Coca cola, Johnson and Johnson, Proctor and Gamble, Chevron, Pepsi, Altria , Chubb Insurance, General Mills, Microsoft. Or if you are uncomfortable buying individual stoack, a good low cost S&P 500 index fund is also fine. The talking heads are saying that interest rate are going higher ( they have ticked up ) and that Bill Gross has turned bearish on the bond market ( he has been wrong for 2 years ) and that emerging markets are way ahead of themselves ( true ) and that there are too many speculative private equity deals going on ( also true ) BUT..these are the excuses for a very natural, healthy AND normal correction. The market will work higher over the long term given present economic conditions. All bets are off if there is an exogenous event like a nuclear device being set off somewhere in the world by terrorists.
As far as housing stocks, I am queasy about pulling the trigger because we may be going into another housing swoon. Having said that, I will buy a 25% position in KBH at 38 a 25% position in JOE at 40 a 25% position in Centex and a 25% position in Lennar at 40.....all my limits are below the market. The reasoning being that the recession/depression in housing has to end someday and I think it will take another 3 years of bumping along before supply /demand normalizes so I am willing to leg in very slowly. I DO like MASCO at these prices and Home Depot at 36 and Lowes at 31. I would suggest nibbling on the way down. No one rings a bell at tops or bottoms whether in stocks, commodities or real estate. But all markets always over-react whether going up or down. Take advantage of the oppurtunities that are developing in the stock market.
) i bought hd in july of 06 at 33.50. i am waiting for long term to kick in so i get the 15% preferential tax treatment but may sell the aug 40 calls because i don't think there is much upside in hd from here.