Buying Opportunities in China

I have been a big proponent of China and I am not alone. Recently, however, some short players have slammed China, pointing at possible bank problems and an overheated economy.

Some of that may be true. But as with all booming economies, there is always a cooling-off period and China will no doubt hem and haw as it powers its economy ahead. This is a buy-in opportunity.

Domestically, despite the fact that I like housing for the long run, recent data for new home sales are a concern. New home inventories have continued to shrink to the lowest level in almost 40 years. Builders who shut down high-end projects have gone back and rezoned them to fit the lower market (under $300,000) and tax breaks for first-time buyers have helped.

The American homebuilder is one of the most resilient creatures and they will survive. But it's hard to compete with the glut of existing homes on the market and Wall Street is a short term thinker.

As a result, I felt it was time for another update on our existing portfolio and talk about two new additions:

Pulte Homes(PHM). I first picked it last February at $10.20. Guess what? It crept back over $10. But new home sales are flat for December and the stock is taking a beating. While I think it will eventually be back, take your money off the table for a slight loss (down to $10) and sell. We will be able to buy it back cheaper soon.