Investment idea: US Construction and Housing to capture some alpha...

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leeks
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Re: Investment idea: US Construction and Housing to capture some alpha...

Post by leeks »

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Last edited by leeks on Mon May 10, 2021 6:10 am, edited 1 time in total.
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xerxes101
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Re: Investment idea: US Construction and Housing to capture some alpha...

Post by xerxes101 »

CardinalRule wrote: Sun May 09, 2021 10:19 am
xerxes101 wrote: Fri Dec 04, 2020 4:28 am ITB (yesterday's close): $55.37 USD +1.66 (3.09%)...just trying to cheer it on...(probably just some short-term noise) :sharebeer
Obviously the market in general has been strong, but I had almost forgotten about that I had allocated a little of my equity holdings to ITB on April 3, 2020, as the pandemic began, in a small IRA that I have. I paid $26.25, and on Friday it was $77.03! Looks like D.R. Horton and Lennar are still the biggest holdings.

Had there been a proper airline ETF, I might have dabbled in that instead, as a contrarian play. But I was certainly happy to see how well ITB has done.
That's great, but I believe this party is just getting started :beer:
1. shortage and high demand for houses
2. stimulus and infrastructure spending making its way to the economy
3. still a very low rate environment
Valuethinker
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Joined: Fri May 11, 2007 11:07 am

Re: Investment idea: US Construction and Housing to capture some alpha...

Post by Valuethinker »

vineviz wrote: Thu Dec 03, 2020 8:10 am
I can say, however, that my experience in having worked with and for some of the world's best investors tells me that if you're not entering the trade thinking "I'm probably wrong about this, and here are ten ways this might go badly" then you haven't done enough research.
And the rest - totally agree.

With one caveat. You may know you are in a bubble (I was pretty sure I was in 2000 & again in the case of US housing) but that doesn't mean you can easily bet against the herd.

You may be right, but Dr Michael Bury (in The Big Short) is instructive - had his investors succeeding in pulling their money out, he would have been wiped out before the crash came.

Perhaps a related one, you can "know" that Japan was undervalued (or that stocks were cheap in the 1970s) and therefore you can go long on that bet.

But again your waiting time for the recovery might be far longer than you have - either due to personal financial needs or if, as a fund manager, your investors pull their money out.

Tony Dye at Philips & Drew (UBS Fund Managers) was instructive. PDFM had a huge bet against the dot com bubble - 0 weight in BT (about 6% of the UK index), Vodafone (15% of the UK index) etc. Also big weightings in Index Linked Gilts (at 3.0% real yields! they are now -2.5%).

But he was fired the week that the dot com bubble peaked. PDFM started buying the Tech-Media-Telecoms stocks all the way down the curve of the bear market. They lost a lot of clients in the next 3 years.

John Ralfe at Boots moved the pension plan into gilts (UK govt bonds) when it was in surplus, thus protecting the company from falls in long term interest rates. Having done so (in 1999-2000 ish) he was then no longer employed by Boots ...
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