quote:
REITs in particular are more complicated than a vanilla stock, its a different asset class and people shouldn't look at them like they do vanilla common stock (imo of course) for the reasons you mentioned among others.

That is for sure, but if anyone had more than a half arse understanding of what an equity REIT is in 2007, and did cursory research regarding the valuations of properties purchased and how much debt was coming due over the ensuing 5-yr period, in addition to how low the yields were due to the massive run up, they would have sold or greatly reduced their holdings. Sam Zell looked brilliant after selling. That's where having knowledge and a sound investment plan that is adhered to comes into play. I don't dislike equity REITs in general, but I would do a lot more DD on them than I would buying many other sectors/sub-asset classes. You know this already, but many don't.

Continued extend and pretend by the banks might be used on an ongoing basis over the next 3-yrs and many REITs could do fairly well, but I can't count on that happening, which coupled with mediocre current yield makes it very unappealing to me. And, if investors hold them in tax advantaged accounts, which they should,and lose their asses they don't get to generate tax loss carry forwards, either.

I chose small cap international and domestic equities, energy, dividend ETFs/funds, and utilities coming out of the 2009 bottom and did very well. If someone had invested in VNQ then, which if I recall correctly was yielding close to 9.5% due to its huge NAV/price decline, then they would have done very well too, as in > 120% in 9-months, but the yield now deducting return of capital from dividends is less than 2.5%. That is at the wrong end of the risk continuum from my perspective, although I can't say that REITs as an asset class will perform extremely poorly this year.

1 ...

Report Post

Posted by kfizzle85

Member since Dec 2005

22022 posts

Posted on 2/23/12 at 4:36 pm to tirebiter

quote:
half arse understanding

Would be mostly no one, but certainly not

quote:
regarding the valuations of properties purchased and how much debt was coming due over the ensuing 5-yr period, in addition to how low the yields were due to the massive run up

quote:
If someone had invested in VNQ then, which if I recall correctly was yielding close to 9.5% due to its huge NAV/price decline, then they would have done very well too, as in > 120% in 9-months, but the yield now deducting return of capital from dividends is less than 2.5%. That is at the wrong end of the risk continuum from my perspective, although I can't say that REITs as an asset class will perform extremely poorly this year.