ThaBigFella LSU Fan baton rouge Member since Apr 2006 2043 posts
man all the reits I own are all at 52 week highs...Posted by ThaBigFella on 1/24/13 at 8:29 am
WTF its that time of the month to add more as I dollar cost average, but its getting to the point of when is the market going to have a pullback and go down....the economy is in the tank after all right? what is going on....anyone care to enlighten me as to how this is happening? where should I go besides reits....and no hookers and blow arent an option
REIT prices are based off market expectations but their dividends are based off profitability. Market has been expecting a housing rebound since early last year and it's coming to somewhat of a fruition, hence your price action. Housing prices look to be increasing by a mean of around 5% for the next couple years so, depending on the REITs, I would just hold on and collect on the dividends.
You aren't going to get that type of return many other places unless you're sophisticated enough to pick up some EM, short-term European debt, or can find non-agency mortgages that won't rip off your face on bid/ask. If you really want to dollar cost average, that's not a bad idea, but if it was me I'd just hold on. I'm doing so with my portfolio.
Won't have a big correction outside of unexpected news, huge NFP misses, or until the debt ceiling negotiations kick in late April-May. Fundamentals and markets always have some sort of divergence.
You'll have up and down days but I doubt you'll see a downtrend until any of the above factors. Housing will be insulated because there are several other factors in play, so I'd just enjoy the income. That will mitigate most price drops you'll see outside of some issue specific news.
It definitely has credence, and there is a good amount of investors that believe it so it always happens somewhat. Even news seems to hit at weird times in May: Spain in 2012, Greece in 2011, BP in 2010.
Also the way seasonal adjustments work with BLS statistics kind of pushes this. For example, last year we had a warmer winter and construction jobs were hired early. Seasonal adjustments made these numbers look even better as most construction jobs aren't hired until spring. Then when the time came where construction was supposed to hire, they already had and the downward seasonal adjustment was in full force in May, making figures look really bad.
All that being said, I wouldn't ever invest based on this. Trading is a different story, you have to play on the behavioral finance and irrational actions of others, that's just how it goes. If you're a trader then I would definitely buy into it. If you're just investing then I wouldn't buy into it at all.