Tuesday, October 30, 2007

A Comparisson Of Bubbles

I remember the days at the peak listening to the conference calls and almost every analyst reiterated their buy rating based on the low pe, after the earnings were gone they pointed to the book value & the strong balance sheets, ...... Now we now why they call them "Wall Street Finest"....

Ich kann mich noch sehr gut an die Telefonkonferenzen zu Zeiten des Peak erinnern wo fast jeder Analyst sein "Kaufen" Urteil bestätigt hat. Begründung war seinerzeit die niedrigen KGV´s, nachdem die Gewinne sich in Luft aufgelöst haben wurde dann das Argument der niedrigen Buchbewertung und der starken Bilanzen herausgeholt..... Den Namen "Wall Street Finest" haben die sich wirklich redlich verdient

Number Of The Day ....Earnings Estimates for Homebuilders

Now the bust is taking a brutal toll. In January, industry analysts predicted that the 10 biggest builders would have average earnings per share of $3.69 for 2007; the latest forecast ( August 2007) is for a loss of $1.18.

But they were not alone. Even Bill Miller from the Legg Mason Value Trust and until last year one of the most successfull fund manager was way of the mark. He jumped on to buy the builder in mid 2006 and still has some of them in his portfolio. If you look at the Portfolio Holdings as of June 30, 2007 (unaudited) i think it is safe to say that he will underperform again. So far he is lagging over 6 percent. In 2006 he underperformed the broad market by a margin of 10 percent.......

Selbst der bis zum letzten Jahr erfolgreichte Fondsmanager Legg Mason Value Trust ist bereits Mitte 2006 massiv in die Builder eingestiegen. Dieser Wahnsinn hat ihn seine einmalige Rekordserie den S&P 500 über 15 Jahre zu schlagen gekostet. Wenn man sich die Portfolio Holdings as of June 30, 2007 (unaudited) ansieht dürfte er kaum in der Lage sein seine Underperformance von 10% in 2006 in diesem Jahr zum positiven zu wenden. Zur Zeit hinkt er dem Markt mit 6% hinterher.....

Bill Miller August 2006
"Here we clearly made a mistake by initiating positions too early," Miller said. "We were waiting for a significant sell-off to establish positions," he added. "When that sell-off occurred late last year, we jumped in,"

Revisiting the Homebuilders / Bespoke
Below we revisit our comparison between the Nasdaq bubble of the late 90s and the Homebuilder bubble of the 2000s. The chart below highlights the performance of the two from the start of their enormous gains to their eventual peaks, and back down to their lows again. As shown, the S&P 1500 Homebuilder index actually registered more gains than the Nasdaq at its peak, but the comparable time frame (both around 2,000 days) of the two rises is eerily similar.
The bursting of the Nasdaq bubble lasted 943 days with declines of 78.29%. The current bursting of the Homebuilder bubble has lasted 831 days with declines of 67%. While the declines have already been severe, for the Homebuilder index to decline to the low levels that the Nasdaq reached, it would have to go down another 34% from here.
> Keep the comments from analysts and experts in mind when they tell you that the worst is over for the banks, brokers etc.... I assume we will see the sequel of incompetence and dishonesty what we have witnessed from the homebuilding sector. Here is one funny example Citigroup Dividend, Share Drop Make Banks Unbeatable ......
> Die Lehre aus dieser Erfahrung kann nur sein dem gesunden Menschenverstand zu folgen und die Meinungen von sog. Experten mit größtmöglicher Skepsis zu begegnen...... Ich erwarte das wir eine Fortsetzung der Inkompetenz und Vernebelung die wir im Homebuildersegment zu sehen bekommen haben auch im Banken & Broker Segment bewundern dürfen. Die ersten Versuche sind in der Tat vielversprechend.... Citigroup Dividend, Share Drop Make Banks Unbeatable .......
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2 Comments:

Blogger jmf said...


Neopost shares tumble 20% after U.S. sales warning


the world's second-largest maker of mailroom products, dropped 20% in early Paris trading after cutting earnings guidance for the year, citing U.S. market conditions. "Sales achieved in the course of the past few weeks led to confirm a slowdown in the U.S. business which is far more pronounced than anticipated when the group published its 2007 interim results at the end of September," the firm said

1:48 AM  
Blogger jmf said...


O'Neal Writedown Erased 20% of Equity, Earnings From Debt Boom


The real damage to shareholders came with Merrill's $8.4 billion writedown. It is the biggest in the history of Wall Street and wiped out four quarters of growth in shareholders' equity, according to Merrill's published figures. The charge, mostly for collateralized debt obligations and subprime mortgages, left the New York-based company with $38.8 billion of assets minus liabilities.

Losing ``20 percent of shareholders' equity in one fell swoop is a serious blow,'' said Robert Willens, the accounting analyst at Lehman Brothers Holdings Inc. in New York. ``It might take them two to three years to earn that capital back.''

2:25 AM  

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