Interview with Richard Dugas, CEO
Pulte Homes (PHM)
See PHM's official
investor relations' site
here.
See the Yahoo!
Finance profile for
PHM
here.
See Opening Segment 2,
below...
After this segment, you
can see Jim's
Sudden:Death picks
here...
Jim's comments BEFORE the
interview:
Time to give you my
irony thesis... the fact
that the brokers are
getting killed for the
sins of the home buyers
and, more important, the
homebuilders... the
borrowers and the
housing construction
companies that started
the whole housing
morass... the ones that
are supposed to be at
the epicenter of the
problem, while the
homebuilding stocks
rallied, and rallied
convincingly... judging
by the housing index,
the one I use... the Housing Sector Index
(^HGX)...
which is up an
astounding 44.3% from
its low... these have
bottomed for housing,
even as the rest of the
world is still reacting
to the problem, thinking
I'm dead wrong.
Before I talk to you
about what the market
believes, now I want to
tell you what I
believe...
Judging by the index,
homes are in the process
of bottoming, albeit at
much lower levels...
Cancellation rates - the
best measure I know -
which show whether
people are walking away
from deposits, because
they can't sell their
own homes - are going
down, and that should
eventually lead to a
peak in foreclosures...
not an end, but a
peak... and then down.
We could be on the cusp
of a major turn by June
30th of next year.
That's been my target
date. Home construction
has dropped 6.7%, to a
17-year low, and we have
40 million more people
than we did 17 years
ago, so I'm not taking
that that seriously...
although the number of
homes being built now is
really way too low
versus the population
growth.
I think the heart of the
problem seems to be
working itself out...
But I don't want to say
for sure until I talk to
the CEO of one of the
biggest homebuilders in
the country... one
that's been rallying,
rallying, rallying...
even as the stocks of
the investment banks,
that are supposed to be
so fraught with
dangers... as home
ownerships are
tanking...
That's why I'm bringing
on Richard Dugas, the
CEO of
Pulte Homes (PHM)...
who's been honest the
whole darn way... the
whole darn way, he's
told you if it stunk. It
reported a
better-than-expected
quarter in late July.
We've got to get him to
help us figure this
out... whether I'm too
Pollyannaish... whether
the homebuilders are on
an upswing, while the
investment banks are on
the downswing... or,
because maybe things are
just getting better.
Mr. Dugas, thank you for
coming on Mad Money...
. . . .
.
Jim's comments AFTER the interview:
He told me a year and a half ago
that this market stunk. You didn't hear
that. And, by the way, are you living in
a 2-year bond note? Are you living in
the stock of Exxon? Go live in a home.
Maybe even buy one.
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Second
Segment
Opening
Segment 2
Title:
'Boost Of Confidence'
. . . .
.
Featured
Stock(s):
General comments about the rally
in the market today, and the
rumors of government
intervention.
After this segment, you
can see Jim's Lightning
Round picks
here...
Jim:
When the market is down, and
down big, I tell you to stay in
this game, because there are
better days ahead to sell. Today
was one of those better days...
much, much better.
If you now decide to sell, you
know that I never fight someone
selling some stocks to get
themselves in better shape for
another downdraft... especially
not on an up-410 point day...
In fact, I endorse it...
Look, it's really nuts out
there, and where she stops...
down or up... nobody seems to
know.
I never throw acetylene on the
bonfire of down days, but nor do
I like to break out the s'mores
on the upside, and sing around
the campfire on the good days.
In fact, I want all of you
tonight to look at your
portfolios, and make some sales
tomorrow, especially if you
couldn't handle the pain of
yesterday's 500-point action...
because I'm going to make you a
promise, right here, right
now...
There will be more pain... even
if the Feds do exactly what I
want... which it sounds like, at
last, they might do.
I never will ever, on this show,
endorse selling into panics,
because no one has ever made a
dime panicking. I do like
selling into up days... days
like today...
Why did we have the rally?...
Some of the rumors that the
government is beginning to
debate doing... my keystone
idea... that I've come out here
and talked about every night...
the resolution mortgage trust...
where the Treasury issues $400
billion in the most cherished
asset in the world... in the
world... which is 1-year
T-bills. They say, here's some
resolution mortgage trust 1-year
T-bills, and takes that money
and buys distressed bonds of
mortgages that I believe are
well, well, well, well, well
below what they would actually
be worth if someone were rich
enough just to sit on them for a
year or two... Only the
government is.
That would go so far toward
ending this madness. I've been
proposing this idea for a while
now. It was the one I
outlined... on the Today Show,
back on July 16th...
And the fact that we could rally
410 points on it tells me that
maybe someone is listening...
I've said over and over again
that this would be the most
substantive way to turn things
around. I hope the government is
listening...
. . . .
.
The Bottom Line!:
We rallied so hard today because of
rumors that the government would finally
adopt a resolution mortgage trust. Now
you know the details of how we'd pay for
it, and what it should be. Please
though... given what we have seen in
this market, do not just sit there if
you couldn't handle the pain of
yesterday's (down) market... I want you
to make some sales. Get into position
for the next big decline. Make some
sales... For all we know, this rally at
the end of the day was artificial...
just some sort of coordinated buying by
a couple of major brokerages and hedge
funds to rally the market - just like we
had on Terrible Tuesday, the day after
the Monday of the 1987 Crash... That
worked for a couple of days, but then
you fell back down again. I don't want
that to happen to you. Do me favor...
lighten up into the gains! Live to play
again!
■
Stock Snapshots - Includes
all stocks mentioned above
■
Jim
Cramer's
rating on
this stock
STOCK
SYMBOL
Closing
price
that
day
Opening
price
next
day
Full Company
Name/Comments
(see comments above for
each)
na
na
na
General comments about the rally
in the market today, and the
rumors of government
intervention.
No specific stock picks.
Go to the LIGHTNING ROUND from
tonight's show
here >>
See current quotes on Yahoo!
Finance from
tonight's show stocks
here >>
Symbol keys:
A Charitable Trust stock.
- An asterisk next to a
stock symbol indicates that
Jim mentioned it is a stock
that he manages within
his
charitable trust portfolio.
You can see the complete
portfolio
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here >>
Thumbs up - indicates
he would buy the stock or,
at the very least, not sell
the stock. We do our
best to interpret Jim's
opinion on stocks, as we
think it is indicated by his
comments during the show.
Please read his comments to
decide for yourself.
Thumbs down -
indicates he has said not to
buy or to sell the stock,
based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
show. Please read his
comments to decide for
yourself.
Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition:'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
See more
"Cramerisms" & other
financial phrases
here >>
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