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The Greatest Contrarian Play Of 2012

 January 13, 2012 12:18 PM

by Dr. Mark Skousen, Investment U Contributing Editor

"Real estate prices may be bottoming out."
– Robert Shiller

Over the weekend, I attended the annual American Economic Association (AEA) meetings in Chicago, and ran into Yale economist and long-time friend Robert Shiller at a luncheon.

Bob is famous for his book Irrational Exuberance, wherein he predicted the tops of both the stock market in 2001 and the real estate market in 2006. He is also co-inventor of the Case-Shiller Real Estate Index.

I asked him if the index suggested a bottoming pattern. He didn't know for sure, but he noted that the futures market for real estate looked promising.

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Clearly the Case-Shiller Home Price Index, covering major cities across the country, looks promising.

Moreover, a new report issued on Monday states that "the number of improving housing markets nearly doubled," including Dallas, Denver and Philadelphia.

Housing starts are also up. Metrostudy, which researches all 84 metropolitan statistical areas (MSAs) around the country, predicts that housing starts will increase nationwide 12% in 2012. It forecasts:

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Total starts: 660,000 (up 12.0%)

Single-family starts: 469,000 (up 9.8%)

Multi-family starts: 191,000 (up 17.9%)

No wonder homebuilding stocks such as PulteGroup (NYSE: PHM), D. R. Horton (NYSE: DHI) and Toll Brothers (NYSE: TOL) have risen sharply in the past three months. That trend could continue. I'm recommending them in my trading services.

I also interviewed New York Times columnist Paul Krugman at the AEA meetings and he told me an interesting story:

Nouriel Roubini, the notoriously bearish economist from New York University, recently bought a house in the New York area. "That's a clear sign of a bottom," Krugman said with some glee.

Bob Shiller was kind enough to ask me about my new book. I told him that The Maxims of Wall Street is selling well. I shared with him some of the classic Wall Street lines. One of the best has to deal with real estate:

"Want to make a million dollars?"

Answer: "Borrow a million dollars and pay it off" – by buying real estate.

Good Investing,


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