Sell Rayonier (RYN)

I’ve already sold Rayonier (RYN) out of the Jubak Dividend Income Portfolio today, May 28. And now I’m selling it out of Jubak Picks as well. Nothing wrong with the stock—when the real estate market does finally turn, this timber and real estate REIT will do quite well. But I think that turn is still a long way away and that investors will see better places to put their money to work—most likely in the world’s emerging stock markets—before then.

I’m looking at a 2% drop in the price of a Rayonier share since I added it to the portfolio on November 9, 2007. On a total return basis—that’s capital gain (or in this case loss) plus dividend payments—I’ve got an 8.4% profit. Read more

Is the slowing in the rate of home price increases, a forecast that the economic recovery will slow at the end of 2010?

This is exactly what I’m afraid of for the 12 months ahead.

Yesterday’s numbers on home prices suggest that as the economic stimulus money gradually dries up over the next 12 months, the economic recovery will lose some steam. Not enough to send us back into recession mind you. But enough to slow economic growth below the rate that higher stock prices now reflect.

The Standard & Poor’s Case Shiller Home Price Index, according to data released yesterday, April 27, shows that home prices rose 0.6% from February 2009. This marks the first time since December 2006 that the index has shown a year-to-year increase in home prices.

That’s the good news. The recovery in the housing market continues.

But there was bad news in the February numbers too. Read more

Could it be? Housing stocks actually leading the market?

Bounce or trend? That’s the question.

The dollar took a break yesterday as it met some resistance after moving up so strongly in January.

Commodities hit support that then rallied.

At least that’s one way to look at it. From a purely technical point of view all we’ve seen this week is a bounce in commodity prices on a dip in the dollar. The United States Oil Fund (USO), for example, bounced off the bottom o its four-month trading range and its 200-day moving average.

But looking at the sectors and stocks that are moving together, you could also argue that the upwards move of the last two days is a reaction to news indicating that U.S. economic activity is picking up—fourth quarter U.S. GDP (announced last week) showed 5.7% growth—and that we might finally be seeing the bottom for home builders. Read more

Behind the bad news in housing sales is there even worse news?

Bad numbers on existing home sales this morning. But is the reason behind the numbers even scarier than the numbers themselves?

The numbers, mind you, were bad enough. Existing home sales fell 2.7% in August. The drop comes after four consecutive months of increasing sales. And after a jump in sales of 7.2% in July economists had expected August numbers to continue the upward trend.

So why the drop? Read more

The Fed decided to go slow on removing housing stimulus–and that’s a good thing

I heard what I was hoping to hear in yesterday’s statement from the Federal Reserve’ s Open Market Committee: the U.S. central bank isn’t going to cut back its support for the U.S. mortgage market ahead of schedule or abruptly.

And that will keep mortgage interest rates from jumping so much that they kill off any chance of a recovery in the housing sector.

The Federal Reserve has been buying mortgage-backed securities hand over fist during the financial crisis. It has had to since private buyers have pretty much disappeared from the market.

 And without someone buying this paper banks would have quickly run out of mortgage money to lend. (Banks make mortgages and then Wall Street lumps those mortgages into mortgage-backed securities. When those are sold to another buyer, the bank that made the original mortgage gets its money back and can make more mortgages. It’s a way to multiply capital and that keeps mortgage money available and relatively cheap.)

The Fed launched a program to buy mortgage-backed securities late last year. Right now the Fed is about 2/3 of the way to the $1.25 trillion target that it set for the effort. The fear was that the bank would stop soon buying soon by redefining that target as “up to” $1.25 trillion rather than buying the full amount. Read more