Yesterday's Case-Shiller housing index showed that year over year home prices were higher than they've been since May of 2006. As I've said for quite sometime, I believe the rebound in housing started last year and should continue for the remainder of this year and into 2014. The source of the positive increase year over year appears to be the result of demand for housing/property is greater than the supply on the market (simple economics of supply vs demand - like to thank Dr. McArthur at Wofford College for that!). The way our firm has been playing the housing recovery has been by owning Chimer Investment Corp (CIM), which is a real estate investment trust (REIT) which pays a hefty 11% dividend yield. We also own a Real Estate focused mutual fund. Another way I'm looking to play the housing recovery is to own retailers such as Lowes, Home Depot, Bed Bath and Beyond, and other retailers (I currently don't own any of these companies but am looking to do so if they come down in price).
Other than that, 1st quarter corporate earnings have been pretty good, which reflects an expanding economy (altho a slow one). Consumer confidence is also rising as we usher in the Spring season as consumers appear to be spending slightly more money than we saw last spring; part of this could be the related to the decrease in prices at gas pumps.
Going forward, I still believe we will see a modest 3-5% pullback in stocks at some point in the coming weeks, but then again I've also been saying that for about a month....nonetheless I still believe the selloff will soon come to pass and as soon as we see that on the horizon I will become extremely defensive in our approach to the markets and wait for prices to come down before I buy back in.
Some new stock positions we recently purchased are Facebook (at $27.76) and Veolia Environment Corp at $12.15)...both are up nicely and we plan on holding them for quite some time. I am looking for FB to move towards the low $30's and we own Veolia for its healthy 8% dividend yield.
That's all for now...
