Buffet and Lurz Say It's Time to Buy
Bill follows Warren Buffet’s words – and hopes the public does, too, he notes in his blog, Ear to the Ground.
Fortune magazine says it's time to jump back into the stock market and quotes no less an
Bill wants to know what's going on in your market. (Go on, email him!)
authority than investing guru Warren Buffet. If the stock market prospers, can housing be far behind?
Fortune also ran a story in 2001 that said Buffet watches the total market value of U.S. stocks as a percentage of Gross National Product (GNP). When the value of stocks falls to the range of 70 percent to 80 percent of GNP, it's time to jump back into the market. "If the percentage relationship falls to the 70 percent to 80 percent area, buying stocks is likely to work very well for you," Fortune quoted Buffet as saying.
Well, that's where stocks were by late January this year (75 percent of GNP), Fortune says. Meanwhile, Buffet actually went on record in an Oct. 17, 2008, New York Times op-ed piece saying he began then to personally buy stocks again, after a long period of owning nothing but U.S. government bonds. He said that if prices kept falling (and they did), he would soon have 100 percent of his net worth in U.S. equities.
It seems to me that the same logic that Buffet applies to stocks ought to work for investments in homes as well. I'm not sure what the current total value of all American homes is in relation to GNP, but it has to be lower than in a long, long while. It's time to buy!
Tell your prospects Bill Lurz and Warren Buffet say so.
Don Magruder, general manager of Ro-Mac Lumber & Supply in Leesburg, Fla., just issued his latest lumber and commodity report, showing a price jump of 12.3 percent in the wood commodity index as mills continue to shut down operations due to low volume and low prices. In the last 30 days, Magruder notes, softwood producers Tolko Industries, Canfor and Tembec announced shutdowns, which resulted in the price spike despite low demand. Many panel product producers have also curtailed production, Magruder cautions.
The lumber portion of the wood commodity index jumped 8.3 percent to $198 per thousand, led by the spruce markets, with 2 by 4 random spruce up double digits on certain lengths and 2 by 6 spruce up 15 to 20 percent. Magruder says 2 by 4 pine is also up a few percentage points. Meanwhile, sheathing prices spurted 15.4 percent to $210 per thousand, the first increase in some time, according to Magruder, and an indication that CDX plywood and OSB products are moving together.
"The increases over the last 30 days were very strong," Magruder says, "but keep in perspective that pricing was at generational lows." His feeling is that the only direction most prices can go is up as mills curtail supply. Magruder warns builders against price quotes beyond 30 days. He says higher prices and lower supply will be the story for the next three to six months.
Read more of what Bill Lurz has to say in his blog, Ear to the Ground.