Strictly by the rules of this cycle, it is a 2 year hold. That does not guarantee that is starts right on the dime in the fall. We just know from history that the fall represent s the best buying time window. As we put all of the pieces together in constructing an investment or trade, we want to have all the best pieces. I showed the difference between buying stocks in July and exiting in November vs. buying them in November and exiting in May in the newsletter last month. That just by itself shows the difference timing can make.
I will not hold the stocks for 2 years. Years ending in 7 (2007) are notorious for intra year sharp declines, so I will want to dodge that if I can. I do recall finding one year that was very close to a scratch trade with this cyclical pattern, but I do not have that info in front of me right now.
The one comment about earnings that I would make is as follows. They are not dropping yet, you are assuming they will and you may or may not be right. For trading purposes and research, we can only view historically what they were doing at the time of an entry into a trade. We cannot factor in what we thought they would do in the future. There is no way to project back in time and know what our opinion might have been at a specific point in time, as to what earnings would do in the future.
Right now earnings are not dropping, so history would show for example that a trade entered on 8/15/06 was done during a period of increasing earnings. That chart I sent you (poway) on Lennar showed the uptrend in their earnings over the last 12 months. Even though we all expect that to change, currently their earnings as reported are still good.
As a result research into Lennar stock trading in relation to earnings done today would have to feature increasing last 12 month earnings as a variable.
