Sifting thru some material for Bailout Nation, I came across this video interview — recorded exactly 3 years ago today!
This was a pretty contrarian stuff back in 2005 — although now its become a lot more common place — but I recall it generated surprisingly little email. I always find the nasty emailers comforting from a cognitive perspective — it means you are challenging a deeply held emotional viewpoint.
I suspect that, at the time, this broad discussion about Housing and Financials was perceived as merely that of a crank. Three years later, it turned out to be rather prescient:
• Housing Tops out in in 05/06 after a 6 year bull move; Condo Sales, rising interest rates, are all weighing.
• Percentage of asking price, length of time on the market, inventory for sale, and Home affordability are all negative;
• Look for real estate prices to fall to 15-25% (even 30%) from the peak;
• Avoid Home Builders, Money Center Banks, Financials and REITs, avoid Home Depot and Lowes; In these sectors, get defensive in 2006.
• If the Yield Curve gets Inverted, it is broad negative for the economy
• Look for a possible recession in 2006/07
click for video
A pretty contrarian call, with a lot more right than wrong at the time. The institutional clients that followed this advice — especially about the Home Builders and Banks — made a lot of money . . .
The recession call was a bit early, but overall, I’d give this a A-.
Awaiting Housing’s Big Chill
Maxim Group’s Chief Market Strategist Barry Ritholtz predicts doom after the boom.