Homebuilders and other real estate stocks have been rallying with the financials over the past week, but dismal earnings from Pulte Homes ( PHM), Ryland ( RYL) and Starwood Hotels ( HOT) are working to punish the sector today.

The three stocks are included in my Bricks and Mortar mock portfolio, which has been trading sideways of late along with the broader market.

At a time when only falling oil prices seem to spark a rally in stocks, it's not easy for investors to make money in the stock market. An even year -- one in which your portfolio loses no money -- may prove the best you can ask for in 2008.

The long-short Bricks and Mortar mock portfolio is down 3.9% this year, based on Wednesday's closing prices, better than the 12.7% decline in the S&P 500 but worse than the 0.7% gain in the U.S. MSCI REIT Index.

The obvious conclusion here is that my real-estate heavy portfolio should have carried more real estate investment trusts, or REITs. Then again, that sector is looking pricey today, and I believe better long-term value exists in the casino and lodging stocks. That's why my mock portfolio is long several stocks in these sectors, while staying short homebuilders and construction companies.

Today's results boost my underweight thesis on the builders as both Ryland and Pulte Homes reported massive losses in their latest quarters. Both stocks carry "flag" ratings, meaning I believe they are overvalued and can be shorted. Shares of the two are falling in recent trading Thursday.

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