Are REITs essentially taboo for years now with rising rates?

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BaylorBears
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Are REITs essentially taboo for years now with rising rates?

Post by BaylorBears » Sun Feb 11, 2018 2:26 pm

I've commented on here about O which has almost Buffett like returns since 1994. However with rates going up it's gone from $67 to $47 in no time at all with likely more pain to come.

How long until REITs may again become good DCA options?

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Re: Are REITs essentially taboo for years now with rising rates?

Post by KyleAAA » Sun Feb 11, 2018 6:37 pm

I am DCAing all the way down.

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nedsaid
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Re: Are REITs essentially taboo for years now with rising rates?

Post by nedsaid » Sun Feb 11, 2018 6:56 pm

I am keeping my REITs though I have no plans to purchase more. A while back, I sold about 20% of my REITs and elected to keep the rest. Historically, these yield 6% to 8% and with low interest rates and the income investors piling in, these rates got to be down to about 3%. I just checked the investor class of the Vanguard REIT Index and the yield now is 4.27%. So yields are definitely better now. Since REITs have to distribute most all of their income, this would imply an earnings multiple of less than 20. Not what I would call "buy" territory but this looks better now than it did a couple of years ago.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by denovo » Sun Feb 11, 2018 7:00 pm

BaylorBears wrote:
Sun Feb 11, 2018 2:26 pm
I've commented on here about O
What's that?
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livesoft
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Re: Are REITs essentially taboo for years now with rising rates?

Post by livesoft » Sun Feb 11, 2018 7:03 pm

I've commented on REIT index funds in the past few weeks. I have owned them in the past. Now I do not own any, but if they dropped 5% in one single day, then I would buy some shares in order to sell them within a week. Otherwise, I'm gonna stay away.

VNQ seems to be a day trader's dream ETF. The volume is huge.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by Starchild » Sun Feb 11, 2018 7:04 pm

Ugh. real estates have been killing me. It’s a small portion of the portfolio, but still. When everything went up this Fall, these didn’t. I don’t even have much faith in commercial real estate in the long run. I’m gonna hang on to them for now, either being something that brings them up to respectability, or a lesson learned.

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Re: Are REITs essentially taboo for years now with rising rates?

Post by denovo » Sun Feb 11, 2018 7:05 pm

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Last edited by denovo on Wed Feb 14, 2018 6:26 pm, edited 1 time in total.
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livesoft
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Re: Are REITs essentially taboo for years now with rising rates?

Post by livesoft » Sun Feb 11, 2018 7:10 pm

denovo wrote:
Sun Feb 11, 2018 7:05 pm
Why do you not like REIT's?
I believe that such an enormously popular ETF should show some definite signs of capitulation before it will switch from trending down. It has nothing to do with underlying value, but only with the emotions of investors in this asset class.

VNQ used to drop more than 3% a day a few times a year. It hasn't dropped more then 2.97% since September 2016.

So I think there are better places to put one's money at the present time.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by denovo » Sun Feb 11, 2018 7:16 pm

BaylorBears wrote:
Sun Feb 11, 2018 2:26 pm
I've commented on here about O which has almost Buffett like returns since 1994. However with rates going up it's gone from $67 to $47 in no time at all with likely more pain to come.

How long until REITs may again become good DCA options?
I just checked, realized O is the ticker for Realty Income Corp. Their wikipedia page says

https://en.wikipedia.org/wiki/Realty_Income_Corporation
Realty Income Corporation is a real estate investment trust that invests in shopping centers in the United States and Puerto Rico that are subject to NNN Leases.
I suspect the reason they're being clobbered in the market is that there's a lot of dim projections about shopping centers because more people are shopping online, not just interest rates.

Since July 2016, the Vanguard REIT has dropped 12 percent, while Realty has dropped 25 percent per the below link.

https://finance.google.com/finance?chdn ... 2AbrsquYDw
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Re: Are REITs essentially taboo for years now with rising rates?

Post by abuss368 » Sun Feb 11, 2018 7:22 pm

We are staying the course with both the Vanguard U.S. REIT Index fund and also the Vanguard International REIT/RE Index fund. We have invested in REITs for a lot time and are pleased with the results.

There ia a lot of informative and educational information at www.reit.com if you are interested.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by midareff » Sun Feb 11, 2018 7:31 pm

I previously held REIT's in an IRA but migrated out of them last year building a larger position in VFIAX and VTIAX.

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Re: Are REITs essentially taboo for years now with rising rates?

Post by sleepysurf » Sun Feb 11, 2018 7:32 pm

I have a 5% allocation to the Vanguard REIT (VGSLX), and will continue rebalancing, as indicated, per my IPS. I expect it to continue working well as a long term portfolio diversifier. No market timing for me, despite the rising interest rate environment.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by jhfenton » Sun Feb 11, 2018 7:39 pm

If I were inclined to own a real estate fund again, now would be the time I’d consider getting back in. REITs have a history of reacting badly to anticipated rate increases, but holding up reasonably well when they’re actually rising.

As it is, I sold our 5% stake in Vanguard REIT Index Admiral in June 2016, 3 weeks before the peak. I decided at the time that I had more than enough real estate in our small value tilted portfolio, and I thought real estate was over-valued at the time.

Yeah, yeah, market-timing.

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Re: Are REITs essentially taboo for years now with rising rates?

Post by abuss368 » Sun Feb 11, 2018 7:43 pm

jhfenton wrote:
Sun Feb 11, 2018 7:39 pm
If I were inclined to own a real estate fund again, now would be the time I’d consider getting back in. REITs have a history of reacting badly to anticipated rate increases, but holding up reasonably well when they’re actually rising.

As it is, I sold our 5% stake in Vanguard REIT Index Admiral in June 2016, 3 weeks before the peak. I decided at the time that I had more than enough real estate in our small value tilted portfolio, and I thought real estate was over-valued at the time.

Yeah, yeah, market-timing.
I would suspect holding both a REIT fund and a Small Value fund may be a bit high allocation as REITs are 20% +- (I may be incorrect) of the Small Value fund?
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Re: Are REITs essentially taboo for years now with rising rates?

Post by F150HD » Sun Feb 11, 2018 8:38 pm

Ran across this....

Historically, research shows that REITs have tended to outperform the S&P 500 in periods of rising interest rates.

https://www.reit.com/investing/reits-and-interest-rates

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Re: Are REITs essentially taboo for years now with rising rates?

Post by livesoft » Sun Feb 11, 2018 8:42 pm

Since the Fed began to normalize monetary policy in 2013, however, REIT share prices have generally declined on days that interest rates have risen.
from the same article.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by staythecourse » Sun Feb 11, 2018 8:52 pm

Data supports that REITS actually INCREASE in value when rates increase. So that urban legend needs to die.

Personally, I have 20% in it and will keep throwing new money at it. Does it feel like what Dr. Bernstein describes in IAA as "throwing money down a rat hole"? Yes, but that is how it felt throwing money down the EM rat hole as well until that took off. The reason you have an asset allocation is to STICK with it. There is NO DATA supporting the essence of REITS have changed OR tax laws make them less desirable (actually the contrary it looks).

BTW, don't you want to increase your stake in anything when it is getting hammered? Funny how folks act like they are ironclad and have no problems in times of rough water, but then just reverse course because it has not done well for a whole 1-2 years. WOW.

Good luck.

p.s. In my short investing career I have learned you do pretty well sticking to the plan and not jumping ship, but make a TON of money continuing to throw money at the asset class when it is getting hammered if it is already part of your asset allocation. So I have NO PROBLEM saying I will continue throwing money at it. Think I have thrown 20-30k alone into it this year and will continue every month up to my asset allocation.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by livesoft » Sun Feb 11, 2018 9:04 pm

staythecourse wrote:
Sun Feb 11, 2018 8:52 pm
BTW, don't you want to increase your stake in anything when it is getting hammered? Funny how folks act like they are ironclad and have no problems in times of rough water, but then just reverse course because it has not done well for a whole 1-2 years. WOW.
Yes, I do want to increase my 0% stake in REIT index fund when it gets hammered. I don't think it has been hammered yet. :) And it is not just 1-2 years now, but going now 3 years.

Some of the bad days in the past few years:

Last 8 really bad days in the last 900 days occurred on
2015-08-24: -4.68
2016-09-09: -3.96
2015-03-06: -3.32
2015-11-06: -3.11
2014-09-12: -3.07
2018-02-05: -2.97
2015-02-06: -2.91
2018-02-08: -2.87

So I will be there when you are ready to sell your shares. In the meantime, there are always the total market index funds to invest in.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by F150HD » Sun Feb 11, 2018 9:15 pm

And....from that same article....

In the past, there have been episodes of declines in REIT share prices during transition points in monetary policy that were followed by a rebound, as the higher earnings trend of REITs began to outweigh the effects of higher interest rates.

....would be nice to see this outcome anyway. TBD

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Re: Are REITs essentially taboo for years now with rising rates?

Post by JBTX » Sun Feb 11, 2018 9:25 pm

denovo wrote:
Sun Feb 11, 2018 7:16 pm
BaylorBears wrote:
Sun Feb 11, 2018 2:26 pm
I've commented on here about O which has almost Buffett like returns since 1994. However with rates going up it's gone from $67 to $47 in no time at all with likely more pain to come.

How long until REITs may again become good DCA options?
I just checked, realized O is the ticker for Realty Income Corp. Their wikipedia page says

https://en.wikipedia.org/wiki/Realty_Income_Corporation
Realty Income Corporation is a real estate investment trust that invests in shopping centers in the United States and Puerto Rico that are subject to NNN Leases.
I suspect the reason they're being clobbered in the market is that there's a lot of dim projections about shopping centers because more people are shopping online, not just interest rates.

Since July 2016, the Vanguard REIT has dropped 12 percent, while Realty has dropped 25 percent per the below link.

https://finance.google.com/finance?chdn ... 2AbrsquYDw
Shopping centers, including some in Puerto Rico. Sounds like a real winner (sarcasm intended)

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Re: Are REITs essentially taboo for years now with rising rates?

Post by bhsince87 » Sun Feb 11, 2018 9:27 pm

It's a common myth that all REITs do poorly in a rising rate environment.

But REITs that have locked in financing for longer terms can actually outperform the market as rates raise.

Due diligence is required.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by AlohaJoe » Sun Feb 11, 2018 9:31 pm

BaylorBears wrote:
Sun Feb 11, 2018 2:26 pm
How long until REITs may again become good DCA options?
My REITs are up 30% over the past year, despite the Fed hikes.

If you limit yourself to the U.S. market you really only have yourself to blame.

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Re: Are REITs essentially taboo for years now with rising rates?

Post by J295 » Sun Feb 11, 2018 9:36 pm

We will keep our modest 4% allocation.

VNQ returns are around 6 % for past 5 years and 7% for past 10 years.

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Re: Are REITs essentially taboo for years now with rising rates?

Post by livesoft » Sun Feb 11, 2018 9:38 pm

VNQ returns are -1% for past 3 years.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by White Coat Investor » Sun Feb 11, 2018 9:45 pm

A lot of performance chasing going on around here. Bail out as soon as you see a little tracking error with the overall market. Diversification works, even when you don't want it to. If you have a reasonable plan, stay the course with it. Your ability to stay the course matters more than what the course is.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by heyyou » Sun Feb 11, 2018 10:11 pm

has almost Buffett like returns since 1994. However with rates going up it's gone from $67 to $47 in no time at all
There's that dang risk & reward again, seems like I just can't get away from it when I'm investing.

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Re: Are REITs essentially taboo for years now with rising rates?

Post by truenorth418 » Sun Feb 11, 2018 10:42 pm

My VNQ allocation was a real drag on my overall results last year. When my portfolio hit a major rebalancing band in December I decided to rebalance back to my target stock allocation by just eliminating the VNQ portion entirely.

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Re: Are REITs essentially taboo for years now with rising rates?

Post by MoonOrb » Sun Feb 11, 2018 10:48 pm

I don't see any reason to change my plan, which includes some (smallish) allocation to REITs. My expectation is that when I own a bunch of different asset classes, it's normal for some to be down when others are up. So when REITs are down, I just buy more and when they're up and something else is down, I'm buying fewer REITs and more of something else. Not sure why I'd want to change this--this is working exactly as planned.

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Re: Are REITs essentially taboo for years now with rising rates?

Post by topper1296 » Sun Feb 11, 2018 11:21 pm

I will keep my 10% allocation to REITs and rebalance as needed (5% in a domestic REIT index and 5% in an int'l REIT index).

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Re: Are REITs essentially taboo for years now with rising rates?

Post by staythecourse » Mon Feb 12, 2018 11:28 am

livesoft wrote:
Sun Feb 11, 2018 9:04 pm
staythecourse wrote:
Sun Feb 11, 2018 8:52 pm
BTW, don't you want to increase your stake in anything when it is getting hammered? Funny how folks act like they are ironclad and have no problems in times of rough water, but then just reverse course because it has not done well for a whole 1-2 years. WOW.
Yes, I do want to increase my 0% stake in REIT index fund when it gets hammered. I don't think it has been hammered yet. :) And it is not just 1-2 years now, but going now 3 years.

Some of the bad days in the past few years:

Last 8 really bad days in the last 900 days occurred on
2015-08-24: -4.68
2016-09-09: -3.96
2015-03-06: -3.32
2015-11-06: -3.11
2014-09-12: -3.07
2018-02-05: -2.97
2015-02-06: -2.91
2018-02-08: -2.87

So I will be there when you are ready to sell your shares. In the meantime, there are always the total market index funds to invest in.
My answer to that is WHO CARES. How is any of that actionable? What if it was only a -2.99% drop as the max? Does that make it okay? Or if the worst was only -4.211111111% does that make it okay? These are just imaginary lines in the sand you are dropping to explain why you decided to get out of REITS and not science related.

My point is you are using rationalization to explain your choice of active management. That is fine, but just admit it and don't come up with numbers that make it seem like dogma that REITS has fundamentally changed.

I know you know that Dr. Bernstein has said it can take up to a decade for assets to move like they should. ANYTHING can do ANYTHING in a 2, 4, 5 year period.

Good luck.

p.s. I really am disappointed at the level of active management that has become such a strong voice on a forum that espouses passive investing.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Are REITs essentially taboo for years now with rising rates?

Post by bikechuck » Mon Feb 12, 2018 11:33 am

midareff wrote:
Sun Feb 11, 2018 7:31 pm
I previously held REIT's in an IRA but migrated out of them last year building a larger position in VFIAX and VTIAX.
What in heavens name do VFIAX and VTIAX stand for?

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Re: Are REITs essentially taboo for years now with rising rates?

Post by midareff » Mon Feb 12, 2018 12:35 pm

bikechuck wrote:
Mon Feb 12, 2018 11:33 am
midareff wrote:
Sun Feb 11, 2018 7:31 pm
I previously held REIT's in an IRA but migrated out of them last year building a larger position in VFIAX and VTIAX.
What in heavens name do VFIAX and VTIAX stand for?
Ahhhh... bread and butter? Sorry, I though the "heads" would know those right off. They are the Vanguard 500 Index Admiral and Vanguard Total International Admiral.

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Re: Are REITs essentially taboo for years now with rising rates?

Post by livesoft » Mon Feb 12, 2018 12:42 pm

staythecourse wrote:
Mon Feb 12, 2018 11:28 am
My answer to that is WHO CARES.
Somebody cares or they would not have started this thread. I've stated exactly when I will buy the REIT index fund VNQ. I've stated the fact that VNQ has lost money for a single purchase 3 years ago. I know that buy and hold folks from 3 years ago could have done something else with their money. You have stated you have 20% in a REIT fund.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by zaboomafoozarg » Mon Feb 12, 2018 12:55 pm

bikechuck wrote:
Mon Feb 12, 2018 11:33 am
midareff wrote:
Sun Feb 11, 2018 7:31 pm
I previously held REIT's in an IRA but migrated out of them last year building a larger position in VFIAX and VTIAX.
What in heavens name do VFIAX and VTIAX stand for?
They are very common mutual funds and it takes 5 seconds to Google them...

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Re: Are REITs essentially taboo for years now with rising rates?

Post by staythecourse » Mon Feb 12, 2018 1:04 pm

livesoft wrote:
Mon Feb 12, 2018 12:42 pm
staythecourse wrote:
Mon Feb 12, 2018 11:28 am
My answer to that is WHO CARES.
Somebody cares or they would not have started this thread. I've stated exactly when I will buy the REIT index fund VNQ. I've stated the fact that VNQ has lost money for a single purchase 3 years ago. I know that buy and hold folks from 3 years ago could have done something else with their money. You have stated you have 20% in a REIT fund.
I'm not trying to be confrontational, but I have NO CLUE how this makes sense. So you are basically stating since you know that the asset has done poorly the last 3 years one should have KNOWN that 3 years ago and not put money into the asset? Since that information is ex post it is not helpful for that investor 3 years ago since folks invest in real time (obviously). Or are you implying that since it has done poorly the last 3 years it means that is an indicator it will continue to do poorly going forward which is why you are not investing in it currently? If so, Is there any data to support that notion? Since autocorrelation returns of nearly EVERY asset class is zero from year to year I doubt that is true.

Do as you want as it is your money of course, but why would past performance have any impact on the asset class having a role in your portfolio if one is a passive investor. Doesn't that defy the logic of having a static asset allocation? What you are implying is market timing based on valuations which is a part of an active management approach which the data is pretty clear from the BSB and BHB studies is a losers game. Or do you feel that either a. REITS are somehow different that valuations DO matter or b. you have some valuations that you can interpret better then others to come to the conclusion one should not be invested in it.

Good luck.

p.s. The reason I have 20% in it is because I have always had that much in it. IF it does well or not I don't see any fundamental reason to kick it out now just because it is doing poor. Heck, the same thing was said of foreign equities and EM just prior to last year, no?

p.s.s Just to be clear my position is if asset class X has a role in your portfolio it should remain in your portfolio unless there is no use for it anymore. That is very different then saying, "Well it has done poor last x years so let me kick it out".
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Re: Are REITs essentially taboo for years now with rising rates?

Post by iceport » Mon Feb 12, 2018 1:11 pm

topper1296 wrote:
Sun Feb 11, 2018 11:21 pm
I will keep my 10% allocation to REITs and rebalance as needed (5% in a domestic REIT index and 5% in an int'l REIT index).
Exactly the same here. 8-)
truenorth418 wrote:
Sun Feb 11, 2018 10:42 pm
My VNQ allocation was a real drag on my overall results last year. When my portfolio hit a major rebalancing band in December I decided to rebalance back to my target stock allocation by just eliminating the VNQ portion entirely.
You started with a REIT allocation, and when the asset sub-class disappointed you, you "rebalanced" by "eliminating the allocation?"

Sorry, that's not rebalancing. That's changing your asset allocation, otherwise known as NOT staying the course. I understand that you stuck with your overall equity/fixed income ratio, but what you did is still a change in course. How often do you allow yourself to change your asset allocation? Just curious...
staythecourse wrote:
Mon Feb 12, 2018 11:28 am
p.s. I really am disappointed at the level of active management that has become such a strong voice on a forum that espouses passive investing.
I hear you, staythecourse. I've noticed quite a few experienced investors here sharing their active management exploits and promoting the idea that they can reliably enhance their performance through their uncommonly clever techniques. :shock: I doubt the individuals involved will do themselves any serious harm, and I find it mildly entertaining, though I hope less experienced (or less wealthy) investors are not somehow encouraged to try to emulate them. And I am surprised how much deference the various strategies are afforded before being called out.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by saltycaper » Mon Feb 12, 2018 1:15 pm

abuss368 wrote:
Sun Feb 11, 2018 7:43 pm

I would suspect holding both a REIT fund and a Small Value fund may be a bit high allocation as REITs are 20% +- (I may be incorrect) of the Small Value fund?
I think that's too high. Morningstar small-cap value category indicates an average of about 8% in "real estate." Vanguard's fund has a bit more, S&P 600-based iShares fund has a bit less.

I would think REITs as highly leveraged companies ought to perform better in the long run if rising rates were due to rising inflation.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by iceport » Mon Feb 12, 2018 1:22 pm

staythecourse wrote:
Mon Feb 12, 2018 1:04 pm
What you are implying is market timing based on valuations which is a part of an active management approach which the data is pretty clear from the BSB and BHB studies is a losers game.
Actually, it's even more "interesting" than that. As far as it's been explained to me (not very far), livesoft bases his market-timing moves on how he feels about an investment, and the emotional evaluation process is triggered by some form of extreme volatility.
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Re: Are REITs essentially taboo for years now with rising rates?

Post by livesoft » Mon Feb 12, 2018 1:22 pm

@staythecourse, I stated that REIT VNQ has done poorly for the past 3 years because you stated it had done poorly for 1-2 years. I wanted others to know that you should have added one more year (1+2 = 3) to your statement. The historical record is there for all to see.

I was asked by denovo why I did not like REITs. I answered.

You asked me: "don't you want to increase your stake in anything when it is getting hammered? " I answered that, too. I even defined what "hammered" meant to me.

I have not said that you should not have 20% in REITs and should not stay the course. I have simply answered questions asked of me.
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david1082b
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Re: Are REITs essentially taboo for years now with rising rates?

Post by david1082b » Mon Feb 12, 2018 1:53 pm

BaylorBears wrote:
Sun Feb 11, 2018 2:26 pm
I've commented on here about O which has almost Buffett like returns since 1994. However with rates going up it's gone from $67 to $47 in no time at all with likely more pain to come.

How long until REITs may again become good DCA options?
O has outperformed BRK.A a lot since O was first listed http://quotes.morningstar.com/chart/fun ... 2%3A955%7D

Not simply Buffett-like, but beyond Buffett! I think that is why O has been such a popular stock in the last few years, the historical outperformance, plus there is a cultish interest in stocks with monthly dividends on the internet.

staythecourse
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Re: Are REITs essentially taboo for years now with rising rates?

Post by staythecourse » Mon Feb 12, 2018 2:20 pm

iceport wrote:
Mon Feb 12, 2018 1:11 pm
I hear you, staythecourse. I've noticed quite a few experienced investors here sharing their active management exploits and promoting the idea that they can reliably enhance their performance through their uncommonly clever techniques. :shock: I doubt the individuals involved will do themselves any serious harm, and I find it mildly entertaining, though I hope less experienced (or less wealthy) investors are not somehow encouraged to try to emulate them. And I am surprised how much deference the various strategies are afforded before being called out.
Personally, I have no problem with folks going the active management route. I only get upset when they don't admit it is active management and describe it as something else. The psychology of it is very interesting. Many of the folks doing it are quite knowledgeable so they KNOW what is active management (security selection and/ or market timing), but somehow rationalize or intellectualize (2 common defense mechanisms in psychology) as being okay for x, y, and z reason. If you want to do active management go for it just doing put lipstick on the pig and call it something else.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

staythecourse
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Re: Are REITs essentially taboo for years now with rising rates?

Post by staythecourse » Mon Feb 12, 2018 2:21 pm

iceport wrote:
Mon Feb 12, 2018 1:22 pm
staythecourse wrote:
Mon Feb 12, 2018 1:04 pm
What you are implying is market timing based on valuations which is a part of an active management approach which the data is pretty clear from the BSB and BHB studies is a losers game.
Actually, it's even more "interesting" than that. As far as it's been explained to me (not very far), livesoft bases his market-timing moves on how he feels about an investment, and the emotional evaluation process is triggered by some form of extreme volatility.
I can not quote any better then your signature line. Dr. Bernstein's line pretty much explains it all.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

livesoft
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Re: Are REITs essentially taboo for years now with rising rates?

Post by livesoft » Mon Feb 12, 2018 2:25 pm

I have many times mentioned market timing on this forum. Here is just one of many:
livesoft wrote:
Thu Nov 03, 2016 3:27 pm
I love, love, LOVE market timing. I would not be offended just because someone called me a Market Timer. So what?

There are lots of ideas about Market Timing and everyone has one. And many people have many ideas. I'll give folks one of my ideas:

1. You cannot predict the future.

Or perhaps more properly

1. You cannot alway predict the future successfully.
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Buddtholomew
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Re: Are REITs essentially taboo for years now with rising rates?

Post by Buddtholomew » Mon Feb 12, 2018 2:30 pm

livesoft wrote:
Mon Feb 12, 2018 1:22 pm
@staythecourse, I stated that REIT VNQ has done poorly for the past 3 years because you stated it had done poorly for 1-2 years. I wanted others to know that you should have added one more year (1+2 = 3) to your statement. The historical record is there for all to see.

I was asked by denovo why I did not like REITs. I answered.

You asked me: "don't you want to increase your stake in anything when it is getting hammered? " I answered that, too. I even defined what "hammered" meant to me.

I have not said that you should not have 20% in REITs and should not stay the course. I have simply answered questions asked of me.
...but your responses indicate that an alert, active investor like yourself could clearly have avoided the asset class 3 years ago and invested the funds elsewhere. This is a disservice to the community where the objective is to eliminate emotion and feelings from investment decisions. If you dont believe others are digesting your perspective and attempting to follow your guidance then I stand corrected.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.

livesoft
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Re: Are REITs essentially taboo for years now with rising rates?

Post by livesoft » Mon Feb 12, 2018 2:47 pm

Buddtholomew wrote:
Mon Feb 12, 2018 2:30 pm
...but your responses indicate that an alert, active investor like yourself could clearly have avoided the asset class 3 years ago and invested the funds elsewhere. This is a disservice to the community where the objective is to eliminate emotion and feelings from investment decisions. If you dont believe others are digesting your perspective and attempting to follow your guidance then I stand corrected.
Many posters on this forum avoided REITs as a separate asset class. The 3-fund portfolio of Total US, Total Int'l, and Total Bond has been prominently advertised as the way to go for a number of years. I haven't seen anybody advocate 20% in REITs for awhile either.

I don't even think in this thread that I stated that I avoided REITs. I did state that my current allocation is 0% and that I have owned VNQ in the past. Let me look up when I last owned it .... I last sold VNQ on May 4, 2016 (sale price $84.57). I can tell you when I bought, but if you like. I may have even posted in the forum around that time that I sold my shares.

For this thread, I have stated when I would buy VNQ. Others have stated that they own VNQ and are buying more. I have no problem with that. I am no more convincing both non-owners and owners of VNQ to buy/sell than others are.

Is it a disservice to the community to advocate a separate allocation to REITs instead of following the 3-fund portfolio? I don't think so.
Last edited by livesoft on Mon Feb 12, 2018 2:53 pm, edited 1 time in total.
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Church Lady
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Re: Are REITs essentially taboo for years now with rising rates?

Post by Church Lady » Mon Feb 12, 2018 2:53 pm

FYI ... http://www.etf.com/sections/daily-etf-w ... es-changes

I think this topic has been discussed here before but thought a reminder wouldn't hurt. The point is vnq is no longer a pure REIT play.

Good points raised already about REITs selling off on interest rate rises, but eventually bouncing back. At least, they have in the past.

My 401K has a rolled-its-own REIT index fund. Its 200 day moving average crossed below its 50 day moving average, and the closing price line looks like a stone dropping from the side of a building for the month of February. That's chart gibberish for 'world of pain' coming. I am watching said chart for a rebalancing opportunity. Of course, charting is not a Boglehead thing to do. If you are offended by the idea of charting, just ignore what I said 8-) .

Good luck!
He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity. Ecclesiastes 1:8

staythecourse
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Re: Are REITs essentially taboo for years now with rising rates?

Post by staythecourse » Mon Feb 12, 2018 4:06 pm

Church Lady wrote:
Mon Feb 12, 2018 2:53 pm
FYI ... http://www.etf.com/sections/daily-etf-w ... es-changes

I think this topic has been discussed here before but thought a reminder wouldn't hurt. The point is vnq is no longer a pure REIT play.
Much thanks for the link. Maybe I skimmed it to quick, but did it mention the % that is to be REITS vs. real estate companies?

Do you or others have suggestions for a more pure REIT fund like VNQ used to be with its old benchmark? This is DEFINTELY a reason to change from VNQ IF (big IF) a large portion is going to be nonREIT real estate. I want a low cost diversified REIT fund. Any suggestions?

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Church Lady
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Re: Are REITs essentially taboo for years now with rising rates?

Post by Church Lady » Mon Feb 12, 2018 5:11 pm

staythecourse,
VNQ, REET, USRT, IYR, FREL, XLRE, RWR, ICF, SCHH were listed in a recent article on VNQ. I'd link the article, but the author was not aware of the VNQ reconfiguration so I won't bother. I haven't looked at these myself because my 401K has that proprietary REIT fund, and hasn't got any of these except VNQ. I could try my broker's ETF screener if you need more names.
He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity. Ecclesiastes 1:8

selters
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Re: Are REITs essentially taboo for years now with rising rates?

Post by selters » Mon Feb 12, 2018 6:13 pm

Remember that if a fund manager knows which parts (sectors, factors, whatever) of the market will underperform, then they can beat the market by investing in the total stock market minus the part of the market that will underperform.

It is just as hard to lose against the market as it is beat the market (before costs).

So, no, REITs are fine if you want them.

skime
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Re: Are REITs essentially taboo for years now with rising rates?

Post by skime » Mon Feb 12, 2018 6:22 pm

denovo wrote:
Sun Feb 11, 2018 7:16 pm
BaylorBears wrote:
Sun Feb 11, 2018 2:26 pm
I've commented on here about O which has almost Buffett like returns since 1994. However with rates going up it's gone from $67 to $47 in no time at all with likely more pain to come.

How long until REITs may again become good DCA options?
I just checked, realized O is the ticker for Realty Income Corp. Their wikipedia page says

https://en.wikipedia.org/wiki/Realty_Income_Corporation
Realty Income Corporation is a real estate investment trust that invests in shopping centers in the United States and Puerto Rico that are subject to NNN Leases.
I suspect the reason they're being clobbered in the market is that there's a lot of dim projections about shopping centers because more people are shopping online, not just interest rates.

Since July 2016, the Vanguard REIT has dropped 12 percent, while Realty has dropped 25 percent per the below link.

https://finance.google.com/finance?chdn ... 2AbrsquYDw
I'm not sure who created the wiki page, but they don't invest in shopping centers. They own free standing single use/tenant buildings.

Check out the investor fact sheet: https://www.realtyincome.com/investors/ ... fault.aspx

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