On the flight home from the Financial Health Coach training in Naples, Fl last week I was catching up on my reading (which is what I usually do when I am flying). As I was going through the November 13, 2006 edition of Fortune magazine,an article on page 189 caught my eye … the title was “Can the Economy Survive the Housing Bust?”.
With a title like that, you can bet it caught my eye. As a foreclosure investor and foreclosure trend forecaster, I am always interested in getting some edge on which way the market is going. Obviously, a “down” market means huge opportunity for those of us who are lucky enought to call ourselves “Foreclosure Investors”. The article starts off by teaching the reader that the “mood of builders is a terrific stock market bellwether: The correlation between current builder confidence and future stock market returns over the past ten years is downright unnerving.” Okay, I am always interested in some “insider” trick … and this seemed to be just that. The spooky part followed:
Not only did the NAHB index presage the start of the post-1994 bull market in stocks, but its decline starting in 1999 foreshadowed the equity market collapse that came the following year. Builder confidence rebounded in November 2001 - a year ahead of the stock market upswing that began in October 2002.
Why is Sonders worried now? Just look at the chart. Over the past year, the NAHB housing index plummeted 54 percent. Were stocks to follow suit, the S&P - 1400 in late October - would be trading below 700 this time next year.
It isn’t like this is some earth shattering revelation, especially for those of us who have been foreclosure investors for any length of time. We have all been hearing (since 2001) that there is a big wave of foreclosures coming … and once again it looks like that wave is just starting to be seen in the distance.Hold on, EasyHUD readers. And hold on tight.
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