In case you can't read the caption, it shows the NAHB (National Association of Home Builders) Housing Index vs. the S&P lagged by 12 months.
If you trade on this information, please send a portion of proceeds to me. Note, though, that past performance is no guarantee of future returns :-)
2 comments:
Well, you didn't really need a newsletter for that one. Check this out:
http://randomroger.blogspot.com/2006/08/interesting-housing-chart.html
Doh! I guess everybody already knew about it :-(
The correlation is a bit too good to be true. We know the bumpiness around 2000 was from the tech bubble and probably had little to do with housing. Possibly the correlation is coming from interest rates, which are affecting both housing and equities, but with different lags?
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