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[] Psychic Homebuilders? [] How to Leverage Housing Stocks to Predict the Future...

If you've ever wondered how to know exactly what the stock market is about to do 100% of the time -- then you are just like everybody else. No need to call Captain Obvious though, because he lives in my basement on the futon and he isn't going anywhere soon. Also, if you are looking for a magical formula aka algo, then I have a spoiler alert. You aren't going to find the secret answer on this website because we prefer to live in reality.


The good news, depending on your perspective, is that there are plenty of "qualified" crystal ball analysts around every street corner. The bad news of course, is that as an investor, it might be more advantageous to wait for the moon in retrograde while analyzing moon cycles in order to finally nail down that perfect indicator to your desired yellow brick road. But hey, there are no taboos when it comes to making money in the markets.


That said, we only ever live in the present and for the sake of not taking the most circuitous approach to adding value in a single blog post (read I'm running out of jokes), I'm going to reveal the proverbial "silver lining" now. When you begin to educate yourself on the principles of mastery level investing/trading/speculating you get unusually comfortable in the unknown, and yes, the inability to predict the future. Furthermore, it actually becomes enjoyable to not know or try to forecast the future because you have developed a solid understanding of the principles of successful investing.


Let's add some proof to the pudding I just whipped up. Note how Toll Brothers, one of the largest homebuilders begins to sell off in dramatic fashion during the middle of 2005. Over the course of the next three and a half years it drops a staggering 76%. Need I remind you of what happened from October 2007 to March 2009? Thought so...

In the interest of thoroughness, I've also included D.R. Horton given they are the largest homebuilder in terms of market capitalization. As you can see, similar chart but DHI drops close to 91%...wonder how many sleepless nights that CEO had?

If you happened to be living in a cave at the time, below is a chart of the S&P 500 futures contract on a weekly basis. If you haven't guessed by now, the homebuilders were a good two years ahead of the broad market bear cycle. Wouldn't that have been useful information before you watched the S&P drop ~ 58%? It was for me at the time.

Fast forward to present day and we can see a similar development on Toll Brothers below.

And the D.R. Horton monthly chart as well -- see below. Although the corrections aren't as dramatic as 2005 does that mean we should ignore what they are saying given their track record and how the markets have been acting for the last 18 months?

Now, the BIG question is will it be the crystal ball this time? Maybe or maybe not. One of the most fascinating aspects of the financial markets in my opinion (most people feel this is a negative) is that the context is always just a little different. It's like one of those curve ball events in life when you least expect it and usually when you least want it.

Thoughts? Challenges? Want to learn more? See more? Or, just let me know what you think...


As always, there is so much more to learn about these charts. Greater clarity in anything, ultimately means more opportunities to choose from. Wouldn't it be more enjoyable to approach investing with a real edge as opposed to getting filtered information by someone you believe knows better than you?


Similar to golf, we all have our own unique swing. Don't take my word for it or judge me based upon a single qualification on a dead resume or something I accomplished in college. If a professional can't show you in real-time where a particular stock is headed, then they are guessing. We don't guess at Principles.


Here comes the hard sell -- If you're ready to stop guessing and take your knowledge to the next level then sign up today risk-free (or keep making the same mistakes so the pros can eat your lunch). It is your CHOICE ----> https://www.principles1.com/plans-pricing

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