Beazer Homes USA Inc.  (BZH) Trade Now »     Rate BZH  -  Discuss BZH  -  Add to Watch List        

I was watching the housing stocks back in August and September of 2007 when they were falling to new lows everyday but switched out of the industry in favor of banks, autos and financials. But after seeing an old name reaching a new low after-hours, I started to re-examine the old names.

Yesterday, I explained short-selling as an investment strategy. Today, I’m going to explain my favorite short-sale. <!---->Be warned, if you, like the Wall Street CEOs, believe that the “worst is over” in terms of the US credit contraction and housing bust, you should stop reading now.

I think investors should short homebuilders.

A week ago, the Beazer Homes (NYSE: BZH) Exec VP & CFO resigned effective immediately . Now the news breaks, apparently from Business Week, that the company is being investigated for mortgage fraud. The stock is down -12 pct after-hours to $27.65 (and falling).