With inflation bearing its fangs and the financial system looking about as stable as a lush on a balance beam, it shouldn't be too surprising that many investors are turning to good old gold.
Gold has always been considered an inflation hedge, but some investors today are also turning to it as a store of value to hedge against a collapse of the entire financial system. Say what you will about their reasons, but the bottom line is that people are buying. And as the price of the yellow metal has headed up, up, and away, it's taken the stocks of gold producers such as Yamana Gold (NYSE: AUY ) with it.
On CAPS, more than 2,800 investors are following the ups and downs of Yamana and weighing in on its future. Of them all, none has been right on the money the way CAPS member carstenjansing has. He gave a thumbs-up on Yamana back in October 2006 and collected 42 points as it ran up over the next two months. He then rated the stock an outperform again last August, just as the financial troubles were starting to roil the markets, and he has held onto that call ever since. In all, he has scored nearly 100 points of market outperformance on that single pick.
He's one of CAPS' All-Stars -- players with a rating of 80 or greater -- and he has managed a stock-picking accuracy of 56% on his calls while racking up just shy of 3,000 points. Yamana Gold hasn't been his only great call, either. Here's a look at a few of his other prescient picks:
|
Company
|
Date Picked
|
Call
|
Score
|
CAPS Rating (5 Max)
|
|
Mosaic (NYSE: MOS )
|
4/17/07
|
Outperform
|
341
|
****
|
|
First Solar (Nasdaq: FSLR )
|
9/26/07
|
Outperform
|
130
|
**
|
|
Transocean (NYSE: RIG )
|
1/16/07
|
Outperform
|
110
|
*****
|
Data from CAPS. Score is by how many points the call is beating (lagging) the S&P 500.
So what is this investor looking at these days? Here are a few of his most recent calls on CAPS:
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Company
|
Date Picked
|
Call
|
CAPS Rating
|
|
Applied Materials (Nasdaq: AMAT )
|
6/25/08
|
Outperform
|
*****
|
|
KB Home (NYSE: KBH )
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6/25/08
|
Outperform
|
*
|
|
Ryland (NYSE: RYL )
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6/25/08
|
Outperform
|
*
|
Data from CAPS.
Even if all of these picks don't pan out, they might still provide a good place to start some further research. I decided to take a closer look at the two homebuilders on the list.
It has to bottom out eventually ... doesn't it?
If the housing market's downturn lasts much longer, I predict that calling a bottom could replace baseball as the national pastime. The whole country hasn't been hit equally -- for instance, Charlotte, N.C., hasn't taken nearly the hit that Las Vegas has -- but nonetheless, "real estate" is a four-letter word pretty much anywhere you go. And those smug house flippers who were everywhere during the boom? They're not quite so prevalent today.
You know the homebuilders have been hammered. The exchange-traded fund for the S&P homebuilders was above $45 in early 2006 and has since plummeted by more than 60% to right around $17. And remember, that's just the tracking ETF for the sector -- many individual homebuilders have fared even worse.
The dual threat facing homebuilders consists of falling demand for new homes along with the rapid decline of property values that's making investors nervous about the large inventories still sitting on most public homebuilders' books. The twin torpedoes have driven both KB Home and Ryland -- along with most everyone else -- into the red.
But like Gloria Gaynor, these builders will survive ... at least for the time being. They're even starting to gather a few CAPS bulls who think we've seen the worst. MarkusV, a CAPS All-Star, rated KB Home an outperformer back in June and noted, "Despite what many knowledgeable Fools are saying, I believe we are at or near the bottom for housing, and the survivors with some cash will thrive in the new competition-lacking environment. "
That's not to say that most Fools are getting bullish on homebuilding. Though some CAPS members are selectively getting more positive, most still have a pretty bleak view of the industry. As CAPS All-Star JeffersonAdams recently put it: "Wouldn't be caught dead holding home builders. Recovery will be long and slow in this sector."
So what's your take on the homebuilders? Get in the action by clicking over to CAPS. The service is absolutely free and already has more than 110,000 stock pickers chipping in to help you find the best stocks out there.
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