Bookkeeping: Restarting Lennar (LEN)

My 13 2009 Outlier Predictions is coming out later this afternoon; as I've been working on it the past three weeks and knowing how the stock market is all about thesis over reality, I've come to the conclusion that not having housing exposure based on what I expect is about to hit us in the face in terms of government intervention come January 2009 forward is silly. Even if every government plan I dream of washing over us in the year ahead only addresses existing housing stock and not new homes, it won't matter to Wall Street - seeing how they can quadruple a dry bulk shipping stock in a few days, they can run up housing stocks on hope and dreams. Hence, I am reversing my foolish call to sell Lennar (LEN) near $7 three weeks ago [Bookkeeping: Closing Lennar] and restarting the stake.

I think the first 100 days of Obama is going to be an all out assault of carrots (and sticks) to get Americans to buy homes (and refinance them). Now my belief is people, who are worried about jobs (or losing them) and seeing an asset go down in price won't be too interested in buying, but thesis is all that matters on Wall Street. Further they have a small issue of not being able to sell the home they are currently in... but those are facts, and we only deal in thesis and hopes. With things such as no appraisal refinancings also appearing to be on the horizon, the foreclosure rate should (all things being equal) lessen to some degree - but once more, the reality on Main Street is not what matters. Only perception. Perception should be that Obama will save the housing market with his brand of socialism. The "free marketeers" on Wall Street will clap in glee.

Further, the chart is holding up quite well - after a huge run - the profit taking is almost nil. I am using Lennar (LEN) as a proxy - there is nothing specific to this name that I deem special; any of 6-7 housing names or an ETF will do. I believe we will sit here with our jaws dropped in awe by March 2009 with what the government will be doing in the housing market. No used fighting it anymore - full blown socialism is our path in 2009.

I am restarting Lennar with a 2.6% stake just over $9.00. The stock, after a huge run, has not given back much of any of its gains. It has held the 50 day moving average even when the market weakens. Today, the stock gets downgraded - and is up. That's the type of relative strength one must respect.

You can't stop Obama's future housing plans; you can only hope to contain them.

(p.s. I am still awaiting the Obama hype to drive up these darn solar names - every group he touched turns into gold except solar - bah)

Long Lennar in fund and personal account