So claims Alex Tabarrok. Alex and his blogmate Tyler are two of my favorite bloggers, but on this matter I think Alex is wrong. Unlike for some, his argument doesn’t invite scorn, because humility should teach us that sometimes things are differe…

Anti REIT’s (e.g. SRS) seems like the best hedge on the economic issues here. They have both bad valuation and bad outlook.

For housing’s effect on the economy, IMO it is best to think about three main factors – one is related to number of home sales and all the economy that hinges off that (realty, furniture, mortgage banking, etc.), the second is the wealth effect on consumers and bank balance sheets, and the third is the demand for new homes and the effect on homebuilders. Those are listed in what I believe to be their order of importance to the overall economy and also the order in which they will probably recover. Perhaps Bernanke really means that (he hopes) the first will get untracked by next Fall and the second will stop getting worse by then?

One stock I am long here and regard as a very good deal in terms of both valuation and macro themes is XFML, a Chinese advertising and media company. Valuation wise, the price is very low relative to both book value and growth. Macro wise, we can think of the housing and credit crisis as big picture caused by a class of buyers/sellers overestimating the sustainable consumption levels; they borrowed too much against too little real income. In contrast, XFML is in the business of reaching a class of consumers that are growing in wealth, have underspent their collective income, and hold/earn in an appreciating currency. Another short term positive is the upcoming Beijing Olympics. I’ve seen negative comments on XFML due to worries about fraud in China small caps and concerns about some of the founding principals; I’ve also seen inchoate concern about the large shareholder interest by the PRC; in my mind, the PRC interest goes some way to cancel vague concerns about fraud and sovereign risk.