One look at Toll Brothers' (NYSE: TOL) (Cramer's Take) quarter today tells us we aren't there yet. They still have plenty of money. They still have plenty of cancellations. They still need a tax credit for more business, which we know they aren't going to get because this administration doesn't want it. No bottom. In fact, Toll and all the others are still where they were a year ago. Independent, hanging on.
This stubborn group refuses to merge or to die. Yesterday Centex (NYSE: CTX) (Cramer's Take) and Horton (NYSE: DHI) (Cramer's Take) got downgraded, the latter to a sell, and the market just yawned. Who cares, right? A bunch of $5 and $6 stocks. Still hanging on. Still building. Still adding to the problems. No mergers. No bankruptcies. Toll will plead for help, it will be denied, and why not given how the tax breaks have been so generous for them for their losses? Everyone in Washington thinks they are overpaid anyway. So nothing changes.
Look, I am not saying we need people to be out of work to put people to work. That's ridiculous. I am not saying that we need companies to go out of business to have a better market.
I am simply saying that if everyone hangs on, zombie-like, as is happening, then no one wins and they all go down. That's what is happening in every industrial industry I follow. No one is taking advantage of the situation and no one is going under, so capitalism is failing to produce winners and losers, so there is no one to back. Hence, the whole group is and remains a sale.
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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Reader Comments (Page 1 of 1)
3-04-2009 @ 12:26PM
Steve said...
Is merging the solution? Did bank mergers really help the situation?
Come on, Jim, you know it's time to drive a silver stake through the hearts of the zombie banks. Until that happens, you're right... the zombie homebuilders will keep shuffling along without a credible financing system behind them.