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Is Now the Time to Buy Paper/Forestry or Building Materials?

 Jun 17, 2008 10:17 AM UTC
Return Risk
-49.49% MID
Tracked Blogger
Symbol Sentiment Start Return Closed
WY Positive 06/17/08 -40.70% --
RYN Positive 06/17/08 -38.72% --
NUE n/a

Graphic_arrow1 Via Long Investment Ideas from Seeking Alpha:  

As part of David Merkel’s rules on industry selection, he lists the following:

  • Buy strong companies in weak industries when the industry pricing outlook seems hopeless.
  • Buy moderate to strong companies in strong industries where the earnings power and duration are underestimated.
  • Underweight/ Ignore/ Short industries where pricing power is likely to be negative for several more years, and especially industries that are in terminal decline.
  • Avoid fad industries. There are P/E levels that no industry can grow into.

My best example of #1 is the P&C insurance industry in early 2000. Total gloom. I bought a lot of The St. Paul (STA) then. Another example: Steel in 2001-2002. I bought Nucor (NUE).



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guliamo   45%     1 point   commented 162 days ago reply

I think RYN is a great idea and own it myself. The beautiful thing about this industry is that if the price isn't right - you can keep your inventory to grow - literally. With the way the market is looking, this is as good a time as any to pick up some RYN.
http://www.marketguru.com/opinions/inventory-that-keeps-growing-ryn/1002,405

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