Tags: Kass | Buy | Housing | Stocks

Doug Kass: Buy Housing Stocks After Pullback

Thursday, 01 Mar 2012 07:58 AM


Seabreeze Partners head Doug Kass recommends buying housing related stocks such as Lowe’s and Home Depot following a market pullback of at least 4 percent to 7 percent.

“It rarely pays to buy stock when 85 percent of the S&P trades above its 50-day moving average as is the case today,” Kass told CNBC, adding that the market also tends to decline when only a small number of S&P stocks are oversold, which he says is the case now.


Moreover, Kass says it also rarely pays to buy stocks when the 10-week moving average of gasoline prices rises. “At the rate they’re moving now – historically it has not paid to own stocks,” says Kass.

Editor's Note:The IRS’ Worst Nightmare — How to Pay Zero Taxes

Kass suggests investors put together a shopping list to use after the pullback, one that includes Home Depot, Lowe’s, Bank of America, Citi and ETrade, all of which will benefit from the housing recovery Kass believes is about to begin. (ETrade has a large home equity loan portfolio.)

“I do think we’re facing a lengthy and durable recovery in the housing market and the possibility exists that it lasts for the balance of the decade,” says Kass. “Interest rates are at the lowest they’ve been in several generations.”

Mortgage Rates and Trends reports that, despite some improvement at the end of the week, mortgage rates ended up rising last week, partially as a result of the slowly improving U.S. economy, and partially as a result of a (temporary) resolution to the Greek debt crisis.

Editor's Note:The IRS’ Worst Nightmare — How to Pay Zero Taxes


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