I really need to stop being so pessimistic. I’m getting richer by the day. My home value is rising at a rate of 1% per month according to the National Association of Realtors. At that rate, my house will be worth $1 million in less than 10 years. Every mainstream media newspaper, magazine, and news channel is telling me the “strong” housing recovery is propelling the economy and creating millions of new jobs. Keynesian economists, Wall Street bankers, government apparatchiks and housing trade organizations are all in agreement that the wealth effect from rising home prices will be the jumpstart our economy needs to get back to the glory days of 2005. Who am I to argue with such honorable men with degrees from Ivy League schools and a track record of unquestioned accuracy as we can see in the chart below? These are the facts. But why trust facts when you can believe Baghdad Ben and the NAR? It’s always the best time to buy.
Eleven states made Forbes' list of danger spots for investors including California, New York, Illinois, and Ohio. They warned (and with the cliff it is even more critical), if you have muni bonds in these states - clean up your portfolio; if your career takes you there - rent, don't buy! Two factors determine their list of 'fiscal hellholes'. The first is whether there are more takers (someone who draws money from the government) than makers (the gainfully employed). The second is a state credit-worthiness score (via Conning) based on large debts, uncompetitive business climates, weak home prices, and bad trends in employment. Conning rates North Dakota the safest state to lend money to, Connecticut the most hazardous. A state qualifies for the Forbes' death spiral list if its taker/maker ratio exceeds 1.0 and it resides in the bottom half of Conning’s ranking. See below for the 11 states to avoid...no matter what Bob Toll, Larry Yun, Bob Pisani, or Alexandra Lebenthal tells you..
It seems like yesterday that Bob Toll was propounding the benefits of stimulus packages for housing and the ever improving status of new home sales (solidly grounded in the same sands as Dubai is now sinking into). Yet while we at Zero Hedge have enjoyed taking repeated stabs at Mr. Toll's seemingly endless selling of his own stock, we have not learned our lesson. Which is why we present his insider transaction in a new and original way, courtesy of Bloomberg. As the image indicates, Mr. Toll's money is roughly 180 degrees from where his mouth is.
"Yesterday’s subprime is today’s FHA. It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money." - Bob Toll
Yesterday Bob Toll sells 1.6 million shares of TOL. Today JP Morgan upgrades the stock, raising its recommendation from Neutral to Overweight, and stock price from $17 to $29.
What are the possible conclusions:
- Bob Toll is a hopeless fool who knows nothing about his company's business prospects (unlikely)
- Bob Toll does not have access to the JPM research reports huddle (likely)
- A Rorschach test of JP Morgan analyst Michael Rehaut using the picture below reveals an answer of "a diamond in the rough" (near certainty)
At least the Bloomberg auto headline generator demonstrates humor:
( DJ ) 09/17 12:39PM *WSJ: Toll Brothers Chmn Robert Toll Continuing To Sell Stk In Co
( DJ ) 09/17 12:40PM *WSJ: Toll Brothers Chmn Sold 1.58M Shrs In Co Sept. 16
In other news, insider selling ($182 million) outpaces insider buying ($2 million) by 80-to-1 in the last week (data courtesy of FinViz). Once again, this provides all the data you need to determine just where all that $2 trillion in household net worth increase has gone.