See the cool thing about not having any earnings is you can never be expensive on P/E ratio ;) This is a "great" story in this market - as evidenced by the chart.


So we are told to run into these stocks, and abandon stocks in foreign countries who will now slow, as discussed above... let's use the Brazilian homebuilder Gafisa (GFA), which is set (again using analysts estimates) from just over $1 Billion to nearly $1.5 Billion (mid 40% growth), and grow earnings from $2.58 to $4.11. But we are told that is all fairy tales and as commodities fall, the economy (Brazil) that is reliant on commodities will devolve into anarchy - so instead of 45% growth, maybe (gasp) they do 30% growth... or (gasp) 25%. So we don't want junk like Gafisa trading at just over 10x this years earnings and instead need to buy US homebuilders. Here is the chart to prove to you that you should be avoiding Gafisa aka not a great US homebuilder.


Folks, that is the current "logic" in this market and why buying anything based on fundamentals is completely useless right now. But it's about timeline. Because for those of us with 5-10 year time lines (certainly not hedge funds whose time line is 90 days or less) we will be looking for opportunities like Gafisa - guess who is in there with us? Sam Zell. I don't see him buying DR Horton (DHI) or a US homebuilder - companies in a mature market. But Sam Zell is not trying to spit, flip, and kick his way to gains every 90 days so he can make his performance fees for his hedge fund. Now as for myself, I'm sort of in the middle - I have to ignore fundamentals to some degree because I can't sit in Gafisa with a large stake and lose 30% in a few months - because investors are a bottom line type and frankly most look at performance first and foremost (and last) and won't care that your buying stocks for cheap if you are not outperforming in every time slot. When I was trouncing the market by 20%+ I was getting pledges by the bucket. Now when I lag for a few months, it begins to lag. So this is the harsh reality and it is what it is. So for now I need to own Lennar (LEN) and cackle about how cool it is I'm making money on a money losing operation in a country whose housing market is not coming back anytime soon. Because.. Perception is Reality.

But I wanted to point out Gafisa because one of our young readers - his blog here - pointed me to some information which I want to reference. Because we'll be in Gafisa for years - even though now we cannot own much of it because I need to actually show performance instead of losing money hand over fist fighting hedge funds.