The Other Big Three

When you hear investment people talk about the big three, they are usually talking about GM, Ford, and Chrysler. But what about the other big three?

As children, most of us dreamed of having three things when we grew up: a nice house, a nice car, and a nice job. Right now, the outlook for this big three is about as optimistic as the outlook for GM, Ford, and Chrysler.

Over the past year, home values have dropped sharply, auto sales have sunk like a rock, and unemployment has gone through the roof. Before the U.S. economy can turn around, at least one of these markets is going to have to turn higher.

Now that October payroll numbers have been released, it isn’t looking like it’s going to be the job market. October auto sales were just as dismal. The one area that is showing some improvement is housing.

Three recent reports – the August Pending Homes Sales Report, the September Existing Home Sales, and the September New Home Sales – were all slightly better than expected. While the housing market still has a long way to go, the sector could be forming a base.

If you are looking to add to your long-term stock holdings, the Spyders Home Builders ETF (XHB) could be a good buy at this time. Housing may not start shooting up as it did in the early part of this decade, but the homebuilders have reduced their inventory drastically and they look ready to start a nice slow path to the upside.

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