REIT market is changing, is your allocation?

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torius71
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REIT market is changing, is your allocation?

Post by torius71 » Tue May 17, 2011 7:09 pm

I understand and appreciate some of the rationale behind overweighting REIT's. I don't personally overweight, but it's mostly due to TA space limits, rather than dissent. With REIT's standing to benefit from the almost certain eventual downsizing of Fannie Mae/Freddie Mac, do you see it effecting your allocations? I'm NOT interested in the recent short term run-up, just curious on others thoughts on the long term implications (ie. TSM correlations, etc.).

http://www.reit.com/Videos/Mortgage-REI ... ssets.aspx

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LH
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Re: REIT market is changing, is your allocation?

Post by LH » Tue May 17, 2011 8:38 pm

torius71 wrote:I understand and appreciate some of the rationale behind overweighting REIT's. I don't personally overweight, but it's mostly due to TA space limits, rather than dissent. With REIT's standing to benefit from the almost certain eventual downsizing of Fannie Mae/Freddie Mac, do you see it effecting your allocations? I'm NOT interested in the recent short term run-up, just curious on others thoughts on the long term implications (ie. TSM correlations, etc.).

http://www.reit.com/Videos/Mortgage-REI ... ssets.aspx
Well, with "overweighting" REITS, the question is relative to what, since most real estate is not in investable form on the market, and is privately held. Most small business, is not readily investable form either of course. So things get kinda blurry when one talks about "overweighting" REITS. But sure, if you own TSM, and own US REITS, one way to look at it is you are then overweighting REITS relative to whats in TSM.

I am uncertain REITS as represented by Vanguard REIT will get a boost from the FMs being downsized or not. Long term, it will not effect my holding of them.

Beneficial correlations, between REITS and stocks/bonds, should continue, because REITS are land based investments in mother earth with income from renting mother earth, versus business stocks, made from selling products/services, just naturally different entities.

business ownership, land ownership, capital ownership have been with us for thousands of years. Not much has fundamentally changed.

My thought in general on such things is that there are always structural changes, and always a "story" why things will be better or worse than before, and usually two pretty good stories on either side. I basically buy the class, not the current news, and buy and hold long term.
Last edited by LH on Tue May 17, 2011 9:06 pm, edited 2 times in total.

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Post by gkaplan » Tue May 17, 2011 8:40 pm

No.
Gordon

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Post by abuss368 » Wed May 18, 2011 8:18 am

Bogleheads choose to Stay the Course.

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Post by KyleAAA » Wed May 18, 2011 8:41 am

Well, to the best of my knowledge the total value of all real estate in the United States absolutely dwarfs the total value of the stock market. So really, by investing only in TSM you are dramatically under-weighting real estate. I propose a 50% real estate allocation. Let the arguments begin...

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ofcmetz
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Post by ofcmetz » Wed May 18, 2011 9:06 am

abuss368 wrote:Bogleheads choose to Stay the Course.
Ditto.

Keeping my REIT allocation around 7%.
Never underestimate the power of the force of low cost index funds.

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Post by stevewolfe » Wed May 18, 2011 9:08 am

I propose the Wolfenstein CCG Explorer Fund. What is the Wolfenstein CCG Explorer Fund you ask?

Well, Wolfenstein CCG Explorer Fund is the Wolfenstein Collectable Card Game Explorer fund. It is a play on the popularity of collectible cards and collectible card games - not just the baseball, football, basketball and hockey cards of your youth but also the rarities - Star Wars, Mork and Mindy, Battlestar Gallactica and other collectible theme based cards and sets. But that's not all, collectible card games like Pokemon, Magic the Gathering, etc have been all the rage the last 15 years or so.

With Wizards of the Coast acquisition by Hasbro and Topps being taken private, the Collectible Card Game market is dramatically under represented in the Total Stock Market index. The total value of Collectible Cards in the United States is nearly incalculable!

Your shares in the Wolfenstein CCG Explorer Fund are backed by temperature controlled warehouses of physical collectible card assets. Our approach is to hold no less than 80% of assets in investment grade* Collectible Card Game assets. However, because we have a deep bench of talented analysts that scour the web, yard sales and flea markets - we can hold up to 20% of the fund in self graded assets for which we will determine a fair mark to market value.

Diversify your investments today while Collectible Card Game assets are still under represented as a share of the investment universe vs the economy.

;)

* Investment grade Collectible Card Game assets are considered to be graded mint (9) or better by a major card grading firm such as PSA, etc.

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ofcmetz
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Post by ofcmetz » Wed May 18, 2011 9:35 am

stevewolfe wrote:I propose the Wolfenstein CCG Explorer Fund. What is the Wolfenstein CCG Explorer Fund you ask?

* Investment grade Collectible Card Game assets are considered to be graded mint (9) or better by a major card grading firm such as PSA, etc.
Kinda off topic or is this a joke?
Never underestimate the power of the force of low cost index funds.

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Post by matt » Wed May 18, 2011 9:43 am

The fates of Fannie and Freddie have not been decided, so it's premature to say who exactly will benefit from changes.

And the discussion from the OP's link is only on Mortgage REITs, which are a fairly small portion of the REIT sector and NOT INCLUDED in most REIT index funds, which are focused on Equity REITs. I would discourage anyone from buying Mortgage REITs unless they have done significant research on the companies.

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Post by stevewolfe » Wed May 18, 2011 10:11 am

ofcmetz wrote:
stevewolfe wrote:I propose the Wolfenstein CCG Explorer Fund. What is the Wolfenstein CCG Explorer Fund you ask?

* Investment grade Collectible Card Game assets are considered to be graded mint (9) or better by a major card grading firm such as PSA, etc.
Kinda off topic or is this a joke?
Just a joke officer.

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Random Musings
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Post by Random Musings » Wed May 18, 2011 10:17 am

With REIT's standing to benefit from the almost certain eventual downsizing of Fannie Mae/Freddie Mac, do you see it effecting your allocations? I'm NOT interested in the recent short term run-up, just curious on others thoughts on the long term implications (ie. TSM correlations, etc.).
Wouldn't the current pricing in REIT's (including that recent short-term run-up) already reflect the markets take on the probability that downsizing will occur?

RM

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torius71
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Post by torius71 » Wed May 18, 2011 10:57 am

Random Musings wrote: Wouldn't the current pricing in REIT's (including that recent short-term run-up) already reflect the markets take on the probability that downsizing will occur?

RM
Absolutely, many believe it has.
LH wrote: Well, with "overweighting" REITS, the question is relative to what, since most real estate is not in investable form on the market, and is privately held.
Agreed. My initial impulse was to think that the industry may be getting much more investable. Some of my past reluctance to overweight REITs has been due to their small representation of the real estate/equity markets as a whole. With the rental market poised to gain a greater share of the residential market, this could change a little bit.
matt wrote:And the discussion from the OP's link is only on Mortgage REITs, which are a fairly small portion of the REIT sector and NOT INCLUDED in most REIT index funds, which are focused on Equity REITs. I would discourage anyone from buying Mortgage REITs unless they have done significant research on the companies.
Good point. I didn't catch that. I am more interested in how it will be changing the equity REIT market. Afterall, most of us didn't overweight REITs until the early 90's with the explosion of IPOs. The recent increases in REIT IPO's really triggered my question.

http://www.bloomberg.com/news/2011-04-0 ... llion.html

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torius71
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Post by torius71 » Wed May 18, 2011 11:02 am

stevewolfe wrote:I propose the Wolfenstein CCG Explorer Fund. What is the Wolfenstein CCG Explorer Fund you ask?

Well, Wolfenstein CCG Explorer Fund is the Wolfenstein Collectable Card Game Explorer fund. It is a play on the popularity of collectible cards and collectible card games - not just the baseball, football, basketball and hockey cards of your youth but also the rarities - Star Wars, Mork and Mindy, Battlestar Gallactica and other collectible theme based cards and sets. But that's not all, collectible card games like Pokemon, Magic the Gathering, etc have been all the rage the last 15 years or so.

With Wizards of the Coast acquisition by Hasbro and Topps being taken private, the Collectible Card Game market is dramatically under represented in the Total Stock Market index. The total value of Collectible Cards in the United States is nearly incalculable!

Your shares in the Wolfenstein CCG Explorer Fund are backed by temperature controlled warehouses of physical collectible card assets. Our approach is to hold no less than 80% of assets in investment grade* Collectible Card Game assets. However, because we have a deep bench of talented analysts that scour the web, yard sales and flea markets - we can hold up to 20% of the fund in self graded assets for which we will determine a fair mark to market value.

Diversify your investments today while Collectible Card Game assets are still under represented as a share of the investment universe vs the economy.

;)

* Investment grade Collectible Card Game assets are considered to be graded mint (9) or better by a major card grading firm such as PSA, etc.
Interesting. :idea:

Although the ER can't be cheap. :lol:

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ofcmetz
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Post by ofcmetz » Wed May 18, 2011 11:34 am

stevewolfe wrote:
ofcmetz wrote:
stevewolfe wrote:I propose the Wolfenstein CCG Explorer Fund. What is the Wolfenstein CCG Explorer Fund you ask?

* Investment grade Collectible Card Game assets are considered to be graded mint (9) or better by a major card grading firm such as PSA, etc.
Kinda off topic or is this a joke?
Just a joke officer.
Lol. Cause I have a big baseball card collection that your fund might want to look at and invest in. ;)
Never underestimate the power of the force of low cost index funds.

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Watty
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Post by Watty » Wed May 18, 2011 11:52 am

You need to be more selective with REIT's now than in the past because the " REIT Modernization Act of 1999" (google this) allows REITS to get much more involved and own the businesses that use the property instead of having to just sit back and collect rent like they were limited to before.

In some cases how well the REIT performs will depend a lot more on how the business does than the real estate market.

Greg

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abuss368
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Post by abuss368 » Wed May 18, 2011 4:05 pm

I find it interesting that David Swensen of Yale Management has advised a 15% to 20% allocation to REITS and that they are a separate asset class.

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Post by CrankyManager » Wed May 18, 2011 4:53 pm

stevewolfe wrote:Diversify your investments today while Collectible Card Game assets are still under represented as a share of the investment universe vs the economy.
I would say that around the ages of 10-12, about 90% of my net worth was invested in Topps, Donruss, and Fleer. 8-)

To be more on topic, Vanguard's VNQ REIT ETF makes up about 6% of my investment portfolio.
"Does not Dionysius seem to have made it sufficiently clear that there can be nothing happy for the person over whom some fear always looms?" -- Cicero

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Post by Pacific » Wed May 18, 2011 5:41 pm

ofcmetz wrote:
stevewolfe wrote:I propose the Wolfenstein CCG Explorer Fund. What is the Wolfenstein CCG Explorer Fund you ask?

* Investment grade Collectible Card Game assets are considered to be graded mint (9) or better by a major card grading firm such as PSA, etc.
Kinda off topic or is this a joke?
You gotta be kidding me.

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abuss368
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Post by abuss368 » Wed May 18, 2011 7:02 pm

Unfortunately, baseball cards from the 1980's and the 1990's to the present are not really worth anything!

Thank the companies for mass producing them!

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Post by stratton » Thu May 19, 2011 5:25 pm

It appears everyone in this thread has missed the linked article is discussing mortgage REITS.

There are no mortgage REITs in the MSCI REIT index vanguard's REIT fund follows.

Mortgage REITs are not real estate. They are companies that follow a REIT legal structure that invest in mortgages.

Paul
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