REA warns

You may recall that some time ago I discussed REA as the ideal housing bust short. It half played out then rallied again post-election. But some chickens are home to roost today:

The result was marred by a big write down:

But that is not the problem. This is:

A dubious outlook with EPS growth of only 6% does not justify 36x forward PE:

Not in any market.

David Llewellyn-Smith

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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