Act Now to Profit from This Just-Ignited Boom

[TradeSmith Power Trends logo] [TradeSmith Power Trends logo] September 21, 2024 Act Now to Profit from This Just-Ignited Boom William J. Levitt was part of the almost two million soldiers returning home at the end of World War II. His father happened to be a real estate attorney in Brooklyn, which surely helped spark the question in his mind: Where are all of our returning GI's going to live? He didn’t just ponder the question. He recognized the housing shortage and seized the opportunity. In March of 1947, outside of New York City in Nassau County, William Levitt took the potato fields on Long Island and built more than 17,000 single family homes. Thus, was born Levittown, which is an actual suburb of New York and the name of several other housing developments in Pennsylvania, New Jersey, Maryland, Virginia… even Puerto Rico. Gottscho-Schleisner Collection – Library of Congress Levitt saw the future, acted on what he saw, and rode a massive wave to success and fortune – even becoming the richest man in America. There is a new wave coming our way, and this week’s rate cut has something to do with it. We as investors don’t have to become developers to make a lot of money. Another Big Housing Shortage (That’s About to End) Levitt’s fortune-building wave was the baby boom that followed World War II as 1.9 million American GIs returned home to continue their lives. Roughly 76 million “baby boomers” were born in the U.S. between 1946 and 1964. Nearly 14 million Americans also served at home, and to help veterans transition back to civilian life, Congress passed what become known as the GI Bill. It provided funding that helped veterans pursue education, find jobs, and buy homes. Levitt capitalized on the need for housing and became a pioneer in mass-produced homes, eventually building them in less than six weeks. He amassed an estimated $100 million and lived not in one of his own rapidly built dwellings but a 30-room estate in Mill Neck, New York. It sold nearly two years ago for $5.5 million. The data points to a similar wave and opportunity starting in just a few months and building for a few years. The door opened this week when the Federal Reserve cut interest rates for the first time in four years. More cuts are all but certain, which will unlock what has become a significant housing crisis. The U.S. is estimated to have a shortage of over 7.3 million homes, which is quite surprising when you think about it. It’s one of the lesser-known impacts of the Covid-19 pandemic. When Covid reared its ugly head in the first quarter of 2020, most business activity stopped amid the ensuing shutdowns. No one built homes during the lockdowns, and after they were lifted, global supply-chain issues hampered delivery of necessary materials. Building schedules were severely curtailed. Then, as we came out of Covid, the housing industry couldn’t participate in the recovery. The Federal Reserve cut interest rates to 0% to save the economy during Covid, which sparked stubborn inflation that required the central bank to raise rates over 16 months. Mortgage rates soared to 7.8% last October, which crushed the housing industry. It was a double whammy as inflation also spiked the costs of materials and labor. That made new homes more expensive to build and less affordable. They say time heals all wounds, and we are now thankfully back to full employment. Inflation is under control, and rates are coming down. This sets us up for a new housing boom. Riding the Next Wave We aren’t emerging from a world war (thank goodness), but we are emerging from a worldwide pandemic. And to the surprise of most experts, the birth rate shot up during Covid-19. Birth rates usually drop during economic recessions or disasters, and Covid checked both those boxes. But that’s not what happened. (I guess the experts didn’t factor in what people do if they’re stuck at home.) Births bucked the trend and exceeded not only pandemic estimates but the pre-pandemic trend. Credit: Amanda Montañez, Scientific American; Source: “The COVID-19 Baby Bump in the United States, by Martha J. Bailey Janet Currie and Hannes Schwandt, in PNAS, Vol. 120; August 15, 2023 The data: We have a sudden influx of younger families and a shortage of 7 million homes. Explosive demand coupled with a significant shortage. The algorithm: Lower rates + not enough housing = a new boom. 2025 and 2026 are shaping up to look a lot like 1947 economically. SPONSORED AD [ALERT: The “Alternative” AI Stock Set to Crush Nvidia in September?]( [image]( TradeSmith analyst Jason Bodner recommended Nvidia in February of 2017. The stock has since soared 4,000%. He then recommended another AI stock in 2023. It has outperformed Nvidia by 460% since Jason’s recommendation. But now, he’s revealing the name and ticker for his next AI stock pick. It’s an off-the-radar stock that’s just 1% the size of Nvidia right now. Yet he believes it’s set to power the whole world economy with AI. And it could crush all other AI stocks starting in September. Jason has agreed to reveal his new AI pick for free. For full details — down to the ticker symbol — go [here]( and check out his latest video bulletin. [Click here.]( The Big Winners If that’s the case, we need to look at the leaders set to deliver monstrous stock returns. We’ll talk a lot more about this going forward, but let’s start with the direct beneficiaries. Homebuilders and suppliers will spike thanks to the Fed’s "super fuel" of lower interest rates. That means lower mortgage rates, which will make housing more affordable and unleash demand. When homebuyers return in force, they will need homes to buy. That makes homebuilders one of the top opportunities in the market right now that can add juice to any portfolio. The juice has already started flowing. In June 2023, I recommended D.R. Horton (DHI), the largest homebuilder in the United States, to readers of TradeSmith Investment Report. Mortgage rates were still rising, but we knew about the housing shortage, could see rate cuts in the future, and the key data showed it was a good buy. DHI is up nearly 80% since then, including the dividends we’ve collected. I see much bigger gains ahead as it remains the top-ranked homebuilder in my [Quantum Edge system](. Source: [Quantum Edge Pro]( DHI is strong fundamentally and technically, and Big Money is flowing in – everything we look for in a stock. Shares have soared nearly 40% in just the last three months on exactly the opportunity we’ve talked about today. Not surprisingly, [my Master Algorithm detected multiple Big Money buy signals]( in that time – seven in all, including one on Thursday after the rate cut was announced. Source: MAPsignals.com This is the money that moves stocks, and [we can see where it’s flowing](. The good news is that there are other juicy homebuilders out there that already enjoy growing sales, earnings, and profits. They rank high in both fundamentals and technicals, which produce excellent Quantum Scores in our buy range. For example, here’s the second-ranked homebuilder in my system. I’ve blacked out the ticker in fairness to Quantum Edge Pro subscribers who have access to this widget, but you can see the strength. (If you’d like to access the widget and score stocks, [click here to learn how]( Source: [Quantum Edge Pro]( This opportunity is big enough that we can invest in multiple stocks to take full advantage. I might call it the Powerhouse Portfolio (see what I did there?), a suite of stocks poised to explode based on the coming boom in housing. These can be homebuilders, suppliers, infrastructure companies, home services companies, and more. Just make sure they have the fundamental and technical strength to go along with Big Money inflows. Recognizing the opportunity is the first step. Knowing what to do is the second. (My [Quantum Edge system]( takes care of that.) And taking action is the last step. We’ve started with some of the bigger homebuilders in TradeSmith Investment Report, where we focus on larger stocks. I’m analyzing smaller homebuilders right now and hope to add at least one soon in [Quantum Edge Pro]( where we go after big gains in smaller stocks that also historically benefit from rate cuts. Some early gains have already been made, but the biggest and best are still to come in this next housing boom. Talk soon, [Jason Bodner signature] [Jason Bodner signature] Jason Bodner Editor, Jason Bodner’s Power Trends P.S. I go into more detail about the Master Algorithm in a special briefing on [“Project Greenlight.”]( It’s what fuels my investing services like [Quantum Edge Pro]( which focuses on small- and mid-cap stocks. The ones that, like homebuilders, are poised to benefit from the round of rate cuts that just started this week. [Click here now for all the details on Project Greenlight and Quantum Edge Pro](. © 2024 TradeSmith, LLC. All Rights Reserved. P.O. Box 340087 Tampa, FL 33694 To unsubscribe or change your email preferences, please [click here](. [Terms of use]( | [Privacy Policy](