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Short This Homebuilder Now

Michael Shulman, September 30, 2009 Free Trading Guides

5 Surprising Rules for Rebuilding Your Wealth

Last week, we saw some disappointing housing data -- existing home sales were down, and new home sales were up less than 1%. I think this will be the beginning of a re-adjustment in Wall Street's attitude toward the homebuilders, and a few of these companies could even go bankrupt. Check out these fun facts:

Home prices have never fallen this far, this fast, and I think they will continue to fall another 15% or so.
The number of foreclosures has never been so high, and is climbing. Foreclosures are not likely to peak until mid-2011.
Due to foreclosures, inventories will remain near all-time highs and prices will continue to fall.

Combine all of this with the tightest mortgage standards in living memory and you have the next chapter of homebuilder Armageddon. So, which stock is the best one to short in this sector?

Next: The Best Homebuilder to Short ...

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