Dominion Homes Sold (Good Riddance!)

You can refer to my last post about investing in Dominion Homes here.

I am beginning to believe that the marvelous bull market we’ve enjoyed the last few years has finally reached its inevitable end and we’re entering bear market territory.

This week’s US stock market drop, more gloomy US home-building news and yet another bad news quarterly report pushed Dominion Homes stock (NASDAQ:DHOM) down low enough to trigger my stop loss and my holdings were automagically sold. My loss amounted to 19% since purchasing the stock in January.

Well, I can use the capital loss to offset some of my capital gains on my next tax return.

This afternoon I took the cash and bought some more Johnson & Johnson (NYSE: JNJ) shares. This will be a relatively safe place for my money for awhile.

I hope.

Johnson & Johnson is a large, well established and diversified healthcare business in pharmaceuticals, medical devices and consumer products. The fundamentals look good, analysts like the stock and it also has a very nice dividend yield of about 2.5%. While it’s recently recovered some ground, the stock is down significantly since its peak in April 2005, down along with other big pharma companies. This is helping make JNJ more attractive from a value point-of-view. I’m not a big believer in technical analysis but I also happened to notice that the current stock price and the 50-day moving average price have both just crossed above the 200-day moving average price.


Instead of buying JNJ, I could hang on to the cash and watch for some other interesting yet safe dividend-paying blue chip stock to drop low enough during the bear market (or correction if that is what this really is) to become an even better buy. But I don’t like sitting on cash in my investment accounts. I’ve been thinking about buying some more JNJ for a couple of months and this is an obvious opportunity. The quicker I get this money working for me again, the quicker I can make up the loss from DHOM.