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TheStreet Open House

The Five Dumbest Things on Wall Street: Feb. 29

1. Toll's Take on Depressing Talk

Take a sounding of the housing market at any depth and you'll agree that it can be officially declared a "Worst Since Market," as in "worst sales since the early '80s," or "worst drop in home prices since the Louisiana Purchase."

On top of that, we're in a credit crunch, and with indisputably slower economic growth, a recessionary environment is at hand.

Wait. Did I say there was a possible recession at hand?

There I go again. Flapping my gums without thinking, and in the opinion of Toll Brothers' (TOL) CEO Robert Toll, destroying home prices with my keyboard and a song.

You, dear reader, thought past overbuilding and current credit restrictions were at fault? I did too until I heard Mr. Toll -- while reporting his company's biggest loss in 22 years and one that was way worse than analysts expected -- tell me the following:

"Ceaseless talk of a recession continues to dampen the mood of consumers. This drumbeat, coupled with concerns over mortgages, the direction of home prices, and foreclosures has kept pent-up demand on the sidelines."

Do you unenlightened out there get it now?

It is not the possible actual fact of an economy slowing into a recession or the apparent notion that Toll's houses are simply not affordable anymore based on carrying costs. It's talk -- yes, idle chatter -- about a recession that has the housing market in the worst shape in memory.

Thank you, Mr. Toll, for sitting on your perch as head of an overextended company and setting me straight as an arrow. I promise not to mention anything about a slowing economy, and maybe soon, the housing market can improve markedly, climbing in stature until it can be labeled the "Worst Since the Franco-Prussian War," a marked improvement from the Louisiana Purchase-era pricing.



Dumb-o-meter score: 95. Toll also mentioned in the release that the year-over-year decline in the average selling price of the company's homes was caused by a shift in product mix and the addition of incentives. Why are you letting chatter off scot-free here, Mr. Toll? They would have bought your more expensive homes -- and without incentives -- if it weren't for the chatter. No need to be magnanimous about who is at fault with this crowd, sir; you are among believers.

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