I said (June 20): "Hold on here; we're getting into the Accumulation Zone!"

The good thing about a blog is that there is a record. Here is one of the articles I did, which made this statement:

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"But there is nothing in this data that so far indicates that the best quality homebuilders " like Toll Brothers (NYSE: TOL) and Hovnanian Enterprises (NYSE: HOV) ought not be acquisition candidates when the share prices drop to the Accumulation Zone. In fact last Wednesday was the best time to acquire them. And any further weakness in markets will seal the deal for those of you who missed that opportunity."

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I can assure you that probably 95 pct of my readers thought I was nuts. How many took advantage of what I called an "opportunity"? But look at the charts today.

Today UBS Research has a report on the Home-Builders. Download UBS Oct 4 report on Home Builders.

Things like valuations, margins, perceptions, etc, are discussed. But the point I'd like you to consider " if you were selling the Home-Builders down in the Accumulation Zone during the Summer or buying them here after a top in late September " is why?

Back in June, what is it that compelled you to sell into what you perceived as weakness? Did somebody teach you to go for every head fake in the market? Is that their fault, or are you finally going to take the credit you deserve?

All I can do is point out how markets operate, why Mom & Pop is getting screwed, and so forth. I can't do any more. The rest is up to you.

You need to do the research, and follow a handful of companies. I have the Cara 100 " but these are just ones I like. There are tens of thousands of publicly-traded companies out there, many of them better suited to you.

When reading Wall Street research, I think there is a difference between the big firm and the small independent firm research.

Particularly with respect to big firm research " like the material I make available from UBS, Credit Suisse, Citigroup, BMO, TD, etc, readers need to read between the lines on these analyst ratings, and how they relate to their firm's BIG PICTURE view of the world.

A big firm portfolio manager reminded me of this today.

For example on the UBS report on Home Builders, their analyst will refer to the UBS 'soft landing' thesis - whatever the analyst thinks, his ratings and price targets reflect the BIG PICTURE view of UBS 'soft landing'.

In other words the analyst is unlikely to go against the BIG PICTURE even if he felt it was wrong (CYA at work).

But how many economists have made good portfolio managers or pro traders?

So waiting for a BIG PICTURE consensus view of recession may be more than a smidgen late and probably is partly to blame for the poor timing of many analyst rating changes.

Note the buy ratings on the Home Builders all the way down... just like tech in 2000-2002.

Also on commodity stocks (like chemicals) the analyst is using UBS estimates on these cost inputs. A soft landing is also built into those commodity price assumptions. If, in fact, those commodity prices continue their downtrend and/or a recession is in the cards, the BIG PICTURE folks will then belatedly revise down their commodity price assumptions AND THEN ALL THE ANALYSTS BEGIN REVISING THEIR estimates and price targets AFTER MUCH OF THE MOVE IS ALREADY IN the stocks in their coverage.

As my friend says, "Maybe this is all too obvious to everyone, but my impression is that most investors don't really understand the process."

Well, I have been trying to say that in this blog, but the words from this skilled portfolio manager have also now helped, I think.

If you do happen to have an ongoing interest in the Home-Builders, here is a link to the independent research on several of them. Like I say, it's up to you " and your advisor. Trust me, nobody else matters.

Beazer Homes (Ticker: BZH)

Centex Corp (Ticker: CTX)

D.R. Horton Inc. (Ticker: DHI)

Hovnanian Ent. (Ticker: HOV)

Kaufman & Broad Home (Ticker: KBH)

Lennar (Ticker: LEN)

Monterey Homes Corp. (Ticker: MTH)

NVR, Inc. (Ticker: NVR)

Pulte Corp (Ticker: PHM)

Ryland Group (Ticker: RYL)

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ADDENDUM

The operative words above -- just in case you missed it --

But the point I'd like you to consider " if you were selling the Home-Builders down in the Accumulation Zone during the Summer or buying them here after a top in late September " is why?

You study the companies in order to determine which company shares you want to buy or sell, and then you study the market prices to determine when you want to buy or sell.

When you trade: you trade prices, not companies. And because a price isn't say Black 14, you need to understand what the price is related to and the drivers affecting that price.