Monday, November 21, 2005

Home Builder Index

My index for the up coming housing boom.


Pulte Homes PHM $41.81
DR Horten DHI $36.14
Beazer Homes BZH $68.67
Lennar LEN $57.37
Plum Creek Timber PCL $38.74
Toll Brother TOL $35.24

Total $277.97

This index, like all healthy industries, pays a good dividends which need to be consider when tracking the return.

I included PCL because of two reasons :
It’s primary commodity (timber) will hold and increase in value.
It’s secondary commodity. Is the very land that today is worthless because it is impossible to live and earn wages on it, yet the whole principle of the upcoming housing boom is the migration from inflated regions to more reasonable priced markets. An example of this would be PCL buying 650,000 acres in the Upper Peninsula Michigan for $345,000,000 - or $530 PER ACRE. On properties in the Washington DC market I have been able to sell the timber rights to the land for $700 per acre on plots of land with 50 or more acres of Oaks and Poplars. Those of you who desires to live in the sun of California or where ever you're from may not see the land of Upper Michigan is being worth anything. But I lived in Chicago and Michigan. I know of plenty of people that if they had the time, would love to own a hunting lodge in upper Michigan. Time will soon be made available to millions and millions of people. Tommorrow, or the next day that land will be worth more than nothing.

I did not include nursing homes in my investment picks. Look at the PEs of those that are publicly traded.. The obvious answer of things to come have taken a huge bite out of future stock growth ability. The second issue, is the alarming number of nursing homes traded on the pink sheets. You can show me all the money making benefit’s a casino pulls in, but I know one thing about these casino. You may win, but probably lose when you bet against a man that loves money. But one thing is for certain you will lose everything if you invest with a man that loves money. People that specifically target senior citizens as their customers LOVE money, and they employ the right accountants to insure they walk away with all the money.

The safest and best way to invest in this up coming changing hosing market, of course is to sell your house in your LA suburb and buy one out in the mountains. Some of us are simply too young to do this just yet.

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