Thursday, February 08, 2007

REITs on a tear!

REITs have moved up nearly 20% over the past month in a largely flat market, and it's definitely time to consider taking profits. This is one of the great benefits of owning non-correlated assets -- some make huge moves up while others languish with the rest of the market. With the clarity on the EOP deal and information about SPG's offer to buy MLS, there is a lot of optimism in the sector and I personally believe it's time to take money off the table.

I'm not trying to show my investing brilliance here, but I wanted to raise the flag for others who may own REITs as well. The fact is, they've REALLY outperformed and if you own them, you should at least evaluate your position. (Again, do not consider this investment advice, but just some insight into my actions as a REIT owner myself.)

Check out this chart vs. the S&P for the period after Jan 5th:

REIT chartThat is a gigantic move! Moves like that just aren't sustainable and I'll be closing my positions when the market opens today. If they pull back over the next few months, I will probably buy back in, but I can't see owning them any longer given the risk in the market and this huge move. For what it's worth, REITs make up 6.3% of my portfolio, primarily invested in ICF.
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5 comments:

  1. Anonymous2/09/2007 10:19 AM

    Wow, I was under the impression they ran out of steam, amazing! That sounds like a good idea to realize the gains instead of leaving them unrealized after a run up like that. congrats on a good call!

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  2. fin_indie2/10/2007 9:43 AM

    Well, I'd say there was some educated guessing and a lot of luck going on there. The stars certainly aligned -- they're down another 3% the day after I sold.

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  3. mOOm2/11/2007 11:57 AM

    I shorted IYR too early :(

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  4. fin_indie2/11/2007 6:01 PM

    Ouch. I'm sure that one hurt pretty bad.

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  5. Anonymous3/03/2007 3:09 PM

    That's a fair comment, but consider that as a REIT investor myself, I've heard that advice many, many times. Everyone seems to think the REITs are going to lose steam "tomorrow" and that you should sell.

    Well, I did take that advise a couple years back --- and regretted it. After selling my positions a couple years back, I re-entered the REIT market a month of two later and have been invested in them since.

    http://finance.yahoo.com/q/bc?s=ICF&t=5y&l=on&z=m&q=l&c=%5EGSPC

    For the past 5-years the REIT stocks have been outperforming the S&P500. I don't know when to sell them either, but when it comes time to sell, I probably won't sell them all. (not sure what the point of my post is anymore, other than wanting to share the chart from Yahoo! Finance). :)

    -NetWorth
    http://www.networthchallenge.com

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