Stocks and Home Values

There is a short term negative correlation of stocks to house prices which normally never exists. But why is it so now? Well, home values can't go up unless the unsold house inventories come down and inventories can't go down enough because of one major reason - Growing Unemployment.

As for stock prices, they are on the so called 'bear market rally' but what surprised many was its month-long strength. That should tell something, and in my view its signaling the bottom which many are waiting for. This housing-stock market disconnect seems to be a new phenomenon yet to be named and I want to call it the "Jason Effect" named after its discoverer "me"! How about that.

I would be a buyer at any pullbacks, but I am lucky that a bucket of my stocks I bought between Dec 2008 and Feb 2009 are up a handsome 38% and some even above 50%. I expect the trend would continue albeit gradually. I hope for a high percentage return going forward 6-12 months.

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