It was a nasty day in the markets. The TSX was down 2.7%, the Dow was down 1.8% and the S&P 500 was down 2.3%.
In particular Toll Brothers was down 7.7%. Apparently this was mostly due to a report that home builder sentiment was down.
Higher costs for building materials and rising concerns about the supply of developed lots…
Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,” said Rick Judson, National Association of Home Builders Chairman and a home builder from Charlotte, N.C.
However, Toll Brothers has said that it has an advantage in that it has its own large supply of developed building lots and has access to credit due to its strong balance sheet. Also its customers are higher end and have less difficulty obtaining mortgages. Toll Brothers is not a company that is “unable to respond to the rising demand for new homes”.
Overall I suspect Toll Brothers is doing well. But perhaps the stock had gotten too high. I was aggressive in buying on the recent dips and should have bought slower or waited to see if this bigger dip would happen. Nevertheless I added again to my position in Toll today.
The other day I wanted to check the P/E ratio of the Toronto Stock Exchange Index. My ETF article has links to where the TSX shows the P/E ratios for the index and all the segments. But the links had changed and I can no longer find the P/E ratios. It would not surprise me if they simply stopped publishing it. Few investors are interested in such matters. I will look into this with the TSX. Possibly the data is still available on a paid subscription basis.
I suspect that the sharp drop in Gold was partly responsible for a nervousness in the market today that led to equities falling. And certainly the explosions at the Boston Marathon later in the trading day would have added to the fear.
This sort of thing is in the nature of markets and it’s why investors need to be able to handle risk and to take advantage of dips rather than fearing them.