MIB: Making the Contrarian Call on Housing, Pre-GFC

What do you do when the head of product management tells you to flip bullish or your job is at risk? Or when a major homebuilding company, Toll Brothers, names the recent lows after you (“The Zelman Bottom”)? Or if most of the sales staff does not appreciate your negative contrarianism?

If you were Ivy Zelman, housing analyst at Crédit Suisse First Boston – and you just happen to be right about your forecast of an impending housing and mortgage collapse that will be part of the Great Financial Crisis – you double-down.

Zelman, who warned of writedowns in homebuilders before the stocks fell 40%, responded by writing a new research piece in December 2006, titled: 10 Reasons to sell housing stocks.

Housing began to collapse on cue. So much for the  so-called Zelman bottom.

The sales staff might not have appreciated her negativity, but her clients —  including subprime bears John Paulson, Steve Eisman (depicted in the Big Short) and Danny Moses of FrontPoint Partners — appreciated her actionable perspectives.

Today, Ivy Zelman is co-founder and Chief Executive Officer  of Zelman & Associates. She is a “Hall of Fame Institutional Investor” and Equity Research Analyst covering real estate and housing-related industries. Zelman is best known for warning about the housing crash and great financial crisis in advance.

Her contrarian calls on housing have been astute and well-timed, in large part due to her cultivating a network of private industry professionals from homebuilders, brokers, mortgage under-writers and suppliers.

Her favorite books are here; a transcript of our conversation is available here.

You can stream/download the full conversation, including the podcast extras on Apple iTunesBloombergOvercast, and Stitcher. Our earlier podcasts can all be found at iTunesStitcherOvercast, and Bloomberg.

Next week we speak to Don Felder, lead guitarist for the Eagles.

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