Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19
The Unknown Tech Stock Transforming The Internet - 10th Sep 19
More Wall Street Propaganda - 10th Sep 19
Stock Market Price Structure Still Suggests We Are Within Volatile Rotation - 9th Sep 19
Stock Market Still Treading Water - 9th Sep 19
Buying Pullbacks in Silver & Gold - 9th Sep 19
Government Spending - The High Price of a "Free Lunch" - 9th Sep 19
Don't Worry About a Recession - 9th Sep 19
Large Drop in Stocks, Big Rally in Gold and Silver - 9th Sep 19

Market Oracle FREE Newsletter

The No1 Tech Stock for 2019

Nothing Performs Better in Times Like These Than Real Estate REITs

Stock-Markets / Housing Stocks Mar 17, 2010 - 10:44 AM GMT

By: DailyWealth


Best Financial Markets Analysis ArticleDr. Steve Sjuggerud writes: Darn it. I should have known better... 

A fantastic idea sat right under my nose, and I missed it. I will try not to let it happen again.

Let me show you what this investment is... how it was so obvious... and how to NOT miss it next time.
The investment is, historically, the best-performing asset in our current economic situation (at least by one measure).
Before I get to the specifics, let me back up and explain something about investing...
When it comes to investing, I know everything will work out just fine as long as I follow my rules.
I don't worry about my returns year to year (though I do have a few accounts up more than 100% in the last year). I know the returns will come if I just stick to the rules.
I don't beat up on myself at all for taking losses, either. Losses these days don't faze me a bit... Giving up small battles is simply a part of winning the war. Never let a small loss turn into a big loss. It's part of the rules.
So I don't get worked up over winners or losers... What do I get worked up over? NOT sticking to my rules. Argh! The worst is when your brain overrides your rules. If you do that, the rules aren't even rules anymore.
In this case, it was a missed opportunity...
I didn't follow my rules and invest heavily in an asset class I knew would perform best in the current situation. Why didn't I? Darn it, I have no idea!
The missed opportunity... the asset I SHOULD have bought... was real estate investment trusts (REITs).
Yes, real estate stocks. By my rules, a year ago, REITs were exactly what I look for...
REITS were 1) hated, 2) cheap, and 3) in an uptrend.
If I had simply, mechanically, pulled the trigger a year ago, I would have made another 100% gain in a year, by simply investing in a fund that tracks the REIT market (like the iShares Dow Jones REIT Index Fund, IYR).
My friend Meb Faber reminded me of my missed opportunity when he published a table showing what asset classes perform best when the spread between short-term and long-term interest rates is wide.
In short, you make a fortune in real estate stocks when the spread is wide. Right now, the spread between short-term interest rates (near zero percent) and long-term interest rates (approaching 4%) is at near-record levels.
Meb did a historical test, going back to 1973, of how various asset classes perform when the spread is at different levels. When the spread is above three percentage points, REITS are the top-performing asset class by a long shot – earning an astounding 24% a year.
Even when you step down a level (when the spread is between two and three percentage points), REITS are STILL the best-performing asset class, making you 15% a year.
These numbers are exceptional. So is now a time to buy REITs? I don't think so. They don't fit my rules anymore...
The uptrend is strongly in place. And investors still expect bad things from commercial real estate. But they're far from cheap.
The index of REITS is up over 100% in the last year. The real estate those companies hold, those buildings, didn't double in value... The shares went from underpriced a year ago to overpriced today. Now, REITs have a dividend yield of only 4% and are selling at near two times book value...
That's not a deal worth chasing.
Don't worry about your returns. And don't worry about taking losses. If you follow the rules (which we've laid out over the years in DailyWealth), you will be just fine.
Don't celebrate your winners or kick yourself for having losers. Instead, beat up yourself over not following your rules... like not cutting your losses or missing opportunities that fit your rules (like REITs a year ago).
It works for me... and it will for you, too. I'm certain of it.

Good investing,


The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2010 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules