Housecleaning, Part 1

Housing resumed its now-familiar place at the forefront of the market's consciousness today. It strikes me that everybody is now involved in this debate on whether housing is a bubble and the implications for related shares. That's good news if it causes both sides to challenge their thinking on the issue, bad news if it causes the sector to become a battleground, as

noted previously.

Homebuilding shares were mixed at midday following a report that new-home sales fell by 3.1% in March to 878,000 units on an annual basis vs. estimates of 890,000. Still, February's results were revised upward to 906,000 from 875,000, and January's sales were raised to 853,000 from 831,000.

The S&P Homebuilding index was recently down 0.7% while major averages were struggling to hold on to modest early gains.

On the earnings front,

Ryland Group


posted first-quarter earnings of $1.83 a share, far ahead of estimates of $1.16 and up from $1.12 in the year-ago period. Ryland forecast its full-year results will top $10.25 a share, up from its previously guidance of $9.50 and beyond the current consensus estimate of $9.83 a share.

Ryland shares -- up 47% year to date heading into today's session, after hitting a 52-week high of $108.59 yesterday -- were recently up 0.1%.

Standard Pacific


also raised its guidance after reporting first-quarter earnings of 59 cents a share, down from 88 cents in the year-ago period but above the consensus estimate of 53 cents.

The firm raised its guidance for the second quarter to 70 to 75 cents vs. the current consensus of 70 cents. For the full year, the company forecast earnings of $3.30 to $3.40 a share vs. previous guidance of $3 and the current consensus of $3.07.

Standard Pacific said it expects the recently closed Westbrooke acquisition to add 10 to 15 cents a share to earnings for the year and 20 to 25 cents a share in 2003.

Standard Pacific shares were recently down 1.4% to $34.57 after hitting a 52-week high of $35.14 yesterday.

Which brings me to the following:

Last night I wrote that "

Toll Brothers

(TOL) - Get Report

is the only major homebuilder to have fully recouped the losses suffered after the group's recent peak in early March."

Obviously, that was incorrect. What I meant to write was: "Toll Brothers is the only major homebuilder

among those mentioned in the story

to have fully recouped the losses suffered after the group's recent peak in early March."

As noted above, Ryland and Standard Pacific hit new 52-week highs yesterday, as did

Hovnanian Enterprises

(HOV) - Get Report


K.B. Home

(KBH) - Get Report


M.D.C. Holdings

(MDC) - Get Report


M/I Schottenstein

(MHO) - Get Report



(NVR) - Get Report


William Lyon Homes



Those names were posting mixed results at midday, but, obviously, that kind of group performance attracts the attention of traders -- including our own

Jim Cramer. I appreciate the many readers who pointed out the error of my ways. (Seriously, I'm grateful, as your feedback is often incredibly insightful and helps keep us on our toes.)

On a lighter, more historical, note, I also received feedback regarding the phrase "Sell at the sound of trumpets and buy at the sound of cannons."

The original saying is "buy on the cannons, sell on the trumpets," and it is attributed to Baron Nathan Mayer Rothschild during the Napoleonic wars (

achetez aux canons, vendez aux clarions

in French). According to

legend, Rothschild greatly expanded his fortune by buying shares on the London Stock Exchange amid panic selling caused by fears that the allied forces had been defeated at Waterloo. Of course, some say Rothschild helped generate those fears.

On the surface, this historical anecdote seems to have little (or nothing) to do with today's market, but in reality it has everything to do with the current environment.

The markets, the particulars and the players all change, but human nature stays the same.

Housecleaning, Part 2


piece yesterday also generated some heated feedback, but only from its subject.

Robert Robbins, the recently deposed chief strategist at SunTrust Robinson Humphrey, took umbrage with two aspects of the story.

First, he thought I didn't give enough credit to his long-term track record, noting "it was not easy to be a 'super bull' in 1982" and to forecast -- as he did -- a period of diminishing inflation and a lessening of economic cyclicality.

"I don't know anyone who's matched the returns I had in 16 years," he said. "People who took my advice over the long haul have seen tremendous investment gains," and the "setback" suffered in the past 18 months hasn't destroyed them. (That's a salient point in an era in which many purportedly long-term investors have the attitude of

"What have you done for me lately?"


Robbins also defended his sector work, claiming to have been overweight tech in the two years prior to the


peak in March 2000 and underweight since shortly thereafter.

Second, he took exception to my characterizing his hedge fund -- Eagle Investment Associates (not "Association") -- as having been "crushed," although he didn't deny making the comment. His point was that it had been "crushed from lofty heights," i.e., down significantly from its peak but not wiped out by recent losses.

Robbins was unable or unwilling to provide returns for his picks as strategist -- because they weren't audited -- or for his hedge fund -- citing regulations prohibiting fund managers from soliciting investors by discussing their returns.

Make of that what you will, but in the interest of fairness I thought it appropriate to give Robbins his say.

Aaron L. Task writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.