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Time to dump REIT??
Old 12-21-2004, 12:57 PM   #1
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Time to dump REIT??

As interest rates rise, the housing sector may suffer because of reduction in money supply while price of housing continues to increase faster than incomes.

It seems prudent to dump REIT now. Any opinion?

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Re: Time to dump REIT??
Old 12-21-2004, 01:15 PM   #2
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Re: Time to dump REIT??

Seems prudent to me, but it also seemed prudent to me last year for the same reasons.

Since I got 'religion' I invested in Reits last February. My guts told me not to. YTD it is my best performing asset class - up over 20%

- What do I know
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Re: Time to dump REIT??
Old 12-22-2004, 03:57 AM   #3
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Re: Time to dump REIT??

That makes sense, but I've done just the opposite. I bought into REITs about a month ago to the tune of 12-13% of my portfolio. (Was aiming for 10% but goofed the online transfer, and there's a 1% redemption to withdraw funds before a year is up.) I figured it was probably a bad time, but so far I've been determined not to market time but to purchase based on my long term strategy. I finally got comfortable enough with VGSIX and decided to diversify some more for the long haul.

I'm no REIT expert, but from everything I hear I don't see much reason for it to keep going up in the near future.
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Re: Time to dump REIT??
Old 12-22-2004, 06:17 AM   #4
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Re: Time to dump REIT??

Looks a lot to me like REITs are overvalued. I helped my MIL set up her portfolio earlier in the year when she retired (this is all gravy money, the pension is more than she can spend) and we chose a 10% REIT allocation. When I go over it with her during the holidays, I am going to recommend that she sell down (from ~12% now) to 5% and make a 5 to 7% allocation to commodities.
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Re: Time to dump REIT??
Old 12-22-2004, 08:56 AM   #5
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Re: Time to dump REIT??

I was fortunate to get into REITS during the slump
in the spring. I will rebalance in January to 14.3%
of my stock allocation in my 60/40 "coffeehouse"


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Re: Time to dump REIT??
Old 12-23-2004, 12:00 PM   #6
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Re: Time to dump REIT??

The REIT I bought a little over 2 years ago is up about 56% since I bought it. I believe REIT's that are focused on commercial RE will remain good investments over the long haul. As I understand it, RE returns typically out perform the S&P500 over the long term. I wouldn't buy in now do to "peaking", but anyone whose been in them for a few years should consider them long term holds.

P.S. I'd never buy into REITs based primarily on residential, hotels, or similar. Way too cyclical.

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