Why did REITs drop today?

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InvestorNewb
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Why did REITs drop today?

Post by InvestorNewb »

Hello,

I'm trying to figure out why REITs fell 1.58% today, even though the rest of the stock market did okay.

Any ideas as to the reason behind this?
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)
livesoft
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Re: Why did REITs drop today?

Post by livesoft »

I suspect it is the news on mortgages.
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fdeanw
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Re: Why did REITs drop today?

Post by fdeanw »

Interest rates rose somewhat, and REITs generally fall when that happens. Could be profit-taking, too, since REITs have risen so much this year.
tibbitts
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Re: Why did REITs drop today?

Post by tibbitts »

InvestorNewb wrote:Hello,

I'm trying to figure out why REITs fell 1.58% today, even though the rest of the stock market did okay.

Any ideas as to the reason behind this?
Wouldn't you consider the fact that REITs sometimes move in the opposite direction to other equities an advantage to REITs? Being interest-rate-sensitive, REITs sometimes respond to changes in interest rates as much as to changes in the equity markets.
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Ged
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Re: Why did REITs drop today?

Post by Ged »

There was announcement by the Treasury Dept of a probe into some specific type of REITs.

http://thehill.com/policy/finance/21721 ... bama-rules
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baw703916
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Re: Why did REITs drop today?

Post by baw703916 »

If REITs are good diversifiers, they're supposed to drop when the rest of the market goes up. :)

Also, I notice that while VNQ (U.S. REIT ETF) is down, VNQI (international) is up. Yay for diversification.
Last edited by baw703916 on Wed Sep 10, 2014 7:36 pm, edited 1 time in total.
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inbox788
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Re: Why did REITs drop today?

Post by inbox788 »

fdeanw wrote:Interest rates rose somewhat, and REITs generally fall when that happens.
That makes sense. Sometimes, though not others. But probably does in this instance.

http://finance.yahoo.com/q/bc?t=1y&s=%5 ... c=vnq&ql=1
http://www.investopedia.com/articles/04/110304.asp
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jh
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Re: Why did REITs drop today?

Post by jh »

.....
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LAlearning
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Re: Why did REITs drop today?

Post by LAlearning »

I don't see why you care. What insight are you trying to glean?

I see it as a buying opportunity.
O wait, it didn't trigger a band.
Moving along.
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Phineas J. Whoopee
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Re: Why did REITs drop today?

Post by Phineas J. Whoopee »

InvestorNewb wrote:...
I'm trying to figure out why REITs fell 1.58% today, even though the rest of the stock market did okay.
...
I don't know, but let me ask you, are you an investor who weights REITs above their market cap for diversification? If so, you should be happy they and the total stock market don't track one another precisely every day. Otherwise, if you simply hold them at market weight as part of total stock, they're already included in the results.

Real estate is a market sector. The total market includes all sectors. Sector funds don't. Concentrating one's investments in one sector, at the expense of others, will result in a portfolio that doesn't track the total market. So long as that's the desired outcome there's no problem.

Full disclosure: I'm not at all sure REITs, which are stocks, diversify a total market stock fund, which is stocks including REITs, as opposed to concentrating it which is the opposite of diversification, but I've nothing personal against those who are sure or are leaning in that direction.

PJW
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LAlearning
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Re: Why did REITs drop today?

Post by LAlearning »

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Re: Why did REITs drop today?

Post by Steadfast »

Phineas J. Whoopee wrote:
InvestorNewb wrote:...
I'm trying to figure out why REITs fell 1.58% today, even though the rest of the stock market did okay.
...
I don't know, but let me ask you, are you an investor who weights REITs above their market cap for diversification? If so, you should be happy they and the total stock market don't track one another precisely every day. Otherwise, if you simply hold them at market weight as part of total stock, they're already included in the results.

Real estate is a market sector. The total market includes all sectors. Sector funds don't. Concentrating one's investments in one sector, at the expense of others, will result in a portfolio that doesn't track the total market. So long as that's the desired outcome there's no problem.

Full disclosure: I'm not at all sure REITs, which are stocks, diversify a total market stock fund, which is stocks including REITs, as opposed to concentrating it which is the opposite of diversification, but I've nothing personal against those who are sure or are leaning in that direction.

PJW
+1. I hold REITs as a separate asset class, slightly above whole economy weight (vs stock market weight). I was thrilled to see them move in the opposite direction of Total U.S. today. Doing the job I put them there to do: diversify.
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Re: Why did REITs drop today?

Post by Tigermoose »

I, for one, am outraged. I only include REITS for the diversification as defined by going up when the S&P goes down. This behavior is outrageous!
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Re: Why did REITs drop today?

Post by YDNAL »

baw703916 » Wed Sep 10, 2014 8:28 pm wrote:If REITs are good diversifiers, they're supposed to drop when the rest of the market goes up. :)
Love it!

Seriously, this *stuff* with REITS is not an isolated occurrence.

ps. I don't endorse the article's content (and never heard of the author).
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rob
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Re: Why did REITs drop today?

Post by rob »

I love how people rationalize and answer after the fact.... personally I think it was because less eggs are consumed in China on a Wednesday :D IMO it's far too complex a system to pick a single answer.

Now as to REIT's allowing copper wires underground able to be classified real estate and push off the tax... well, not sure what to say but in a world where corporations are people I guess all bets are off :oops:
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karltx1940
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Re: Why did REITs drop today? REIT conversion

Post by karltx1940 »

I saw the drop. I checked the Dividends and I think the VGSLX fund will declare on Sept. 22. Interesting so I don't think it was a distribution. Seems like some companies are considering REIT Status:

http://www.forbes.com/sites/taxanalysts ... out-reits/
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kenyan
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Re: Why did REITs drop today?

Post by kenyan »

Diversification. Sounds fine to me. They've had plenty of days this year of shooting up when the market was tame or down.
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bhsince87
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Re: Why did REITs drop today?

Post by bhsince87 »

News came out yesterday of a big solar storm on the way.

I'm sure that's it. Shares of gun makers went up too! :wink:
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Re: Why did REITs drop today?

Post by nisiprius »

During 2000-2002 it seemed that every morning they would report that the Nikkei and Hang Seng were down in response to U.S. declines, and then every morning they would report that the Dow and the S&P were down in response to Asian declines!
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: Why did REITs drop today?

Post by nisiprius »

It was Nassim Nicholas Taleb who really nailed it, in The Black Swan:
One day in December 2003, when Saddam Hussein was captured, Bloomberg News flashed the following headline at 13:01: U.S. TREASURIES RISE; HUSSEIN CAPTURE MAY NOT CURB TERRORISM.

Whenever there is a market move, the news media feel obligated to give the "reason." Half an hour later, they had to issue a new headline. As these U.S. Treasury bonds fell in price (they fluctuate all day long, so there was nothing special about that) Bloomberg News had a new reason for the fall: Saddam's capture (the same Saddam). At 13:31, they issued the next bulletin: U.S. TREASURIES FALL; HUSSEIN CAPTURE BOOSTS ALLURE OF RISKY ASSETS.

So it was the same capture (the cause) explaining one event and its exact opposite. Clearly, this can't be; the two facts can't be linked.
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sans souliers
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Re: Why did REITs drop today?

Post by sans souliers »

Second Wednesday of September.
Sometimes pessimism leaves me pretty well prepared for when things don't go my way, and pleasantly surprised when they do.
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LAlearning
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Re: Why did REITs drop today?

Post by LAlearning »

Down 3% today. Woohoo buying!
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Re: Why did REITs drop today?

Post by 123 »

I bought another 200 shares of VNQ today. It's hard to resist a sale.
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Re: Why did REITs drop today?

Post by 111 »

My guess on why they dropped is that I bought some VNQ the day before.
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Re: Why did REITs drop today?

Post by YDNAL »

InvestorNewb [OP] [color=#0000FF]» Wed Sep 10, 2014 7:39 pm[/color] wrote:Hello,

I'm trying to figure out why REITs fell 1.58% today, even though the rest of the stock market did okay.

Any ideas as to the reason behind this?

Current Holdings: VTI, VXUS, VNQ, VCE (largest to smallest)
InvestorNewb,

Thursday, I posted in this thread, but just now realized that you invest in 100% Equities - in Total Markets + overweights in US REITs and Canada. You are Canadian, I presume.

Yesterday (Friday), you again posted about Equities in general, and mentioned REITs specifically.

Don't you think it is about time to review your overall plan, risk tolerance, etc. in order to make this process less painful for you?
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
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StevieG72
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Re: Why did REITs drop today?

Post by StevieG72 »

LAlearning wrote:Down 3% today. Woohoo buying!
Just put my order in!
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placeholder
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Re: Why did REITs drop today?

Post by placeholder »

As I don't have have extra cash lying about my Roth accounts and it's not at a rebalance point then no impact.
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