I think this is just how markets are. People predict the future, but they also predict what other people do. So when one person starts to buy, some others might see that and just buy, because there could be more guys like the first one buying. And then of course you have people like Cramer who declare that the homebuilders are great buys, because “they have stopped going down”. (He was right, but for how much longer….?)
Clearly, not everyone in the universe thinks that housing prices and home-builders will go down. Some people could be totally stupid, too. There are already plenty of people declaring that this is the bottom, we had our correction, and now it will recover again. There are also people who look at static numbers, and they just buy when P/Es are 6.
This is just how markets are, otherwise we would drop every single day, and no day would be higher than the previous until the bottom is reached. This is obviously not how it works.
Anyways, I declared this to be the stock market top in my other post. (Note, how slick I linked to a particular post on a follow-up page, using page and comment number.) So let’s see what happens.
