“Even a broken clock is right twice a day” is really what the title of this thread is all about.
Now, don’t get me wrong: being bearish on housing and stocks in 2005-2007 was the right attitude, and most (if not all) Piggs were. But correlating the NAHB housing index (which is a range-bound index between 0 and 100) with the S&P500 (which has a positive long-term slope) is plain stupid. If one looks hard enough, one could find correlations everywhere. If I gave someone a 10-inch thick stack of DVDs with meteorological data, I’m sure one could find that the S&P500 correlates with the water temperature somewhere off the coast of Tasmania.
