D.R. Horton ( DHI) reported decent numbers Wednesday, and most importantly, its unit orders were up 28%. However, the bears are not writing about these orders the same way they commented on Toll's ( TOL). Horton delivered 50,000 homes, compared with 9,000 for Toll. Now, you tell me what's happening in the housing market.

I don't think that many investors, not even the sell-side analysts, are aware that what really happened at Toll was a management mistake. They simply filled out existing communities too quickly last year. That maneuver gave them monster numbers then, but is a big problem today. Don't base your opinion of a $200 billion industry on Bob Toll's comments. Look at the entire group.

Hmmm. Horton orders up 28%, Beazer ( BZH) up 15%, Hovnanian ( HOV) up 38% and Pulte ( PHM) up 20%. What am I missing? Seems as if most of the large public builders are managing the current slowdown just fine.

I know that the real estate bull market is over. I have been incorrectly forecasting this for five quarters now. It's about time. Housing demand and prices have flattened. But if you keep reporting that as news, you need to buy a clue.

But, just as with the steel sector, high-quality housing stocks can trade up big in a soft landing. Don't get bummed by the incessant bearishness of the sound-bite shorts. The sector is too cheap not to own.

Once again, if the sector implodes, the builders have index-type downside. If it undergoes a soft landing, another big trade into spring.

Marcin vs. Cramer

Obviously, Jim Cramer and I disagree on the homebuilders. I had sold them into the "land bank" run, but repurchased them recently after their big decline.

However, our disagreement is more fundamental than that. He says to follow the stock-price action, and I say follow valuations and fundamentals. I have made an entire career out of buying stocks that are dropping big to cheap valuations, with good fundamentals.

He wants you to sell builders because they are dropping. I want you to buy them for the same reason. Well, let's apply the same question to another stock. Should you sell Sears Holdings ( SHLD) because the stock is plunging? Or is it a buy because the market does not get it? Sometimes, despite its "infinite wisdom," the market is wrong.

I do not know how my homebuilder trade will work out. Finding the absolute bottom is a problem, not a benefit. I call it the "curse of the downtick." It tends to inhibit large positions, especially when they rally quickly.

So I will continue to take the opposite side of the popular sound bite: "Avoid value stocks because they often get cheaper." Sometimes they do, sometimes they don't.

I have now tired of laying out my risk/reward case for the builders and will leave them alone if the bears reciprocate.
At the time of publication, Marcin was long Pulte Homes, although positions may change at any time.

Robert Marcin is the founder of Defiance Asset Management, a private investment management firm. Client accounts managed by Defiance Asset Management often buy and sell securities that are the subject of writings by Marcin, both before and after the writings are posted. Under no circumstances does this column represent a recommendation to buy or sell stocks. This column is intended to provide insight into the financial services industry and is not a solicitation of any kind. Neither Marcin nor Defiance Asset Management can provide investment advice or respond to individual requests for recommendations. However, Marcin appreciates your feedback; click here to send him an email. Marcin is not required to update or held responsible for updating any portion of this column in response to events that may transpire subsequent to its original publication date.