Bottomfishing in Homebuilders

I’m not much of a fan of bottomfishing for investments. There are two reasons. First is that stocks can go much lower than you assume. It’s very hard to know where it will end. The second is that when the selling does end, it usually takes a knowledge of the company or industry that only very few people have. A lower stock price doesn’t mean that a stock is cheaper. Strangely, much of the evidence suggests just the opposite.
Having said that, here’s a look at the battered Homebuilders ETF (XHB). For those brave souls who bought a few days ago, they’re already seeing some nice gain.

Posted by Eddy Elfenbein on February 1st, 2008 at 2:35 pm

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