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Are real estate stocks low now?
Old 08-17-2011, 12:43 PM   #1
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Are real estate stocks low now?

I have 30k in cash that I'd like to put into either a real estate mutual fund or a general stock mutual fund, over the next few months, say at about $1000/week into one of the two funds. What's a reasonable way to estimate which part of the market is lower: real estate or stocks in general? My idea about estimating the level of stocks is to listen to investor sentiments -- if people are saying stocks are low (like now), then I think they're low, too. But I don't know how to compare real estate.
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Old 08-17-2011, 01:01 PM   #2
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I added some money to a real estate mutual fund earlier in the summer. Mostly based on gut impression and anecdotal evidence that stocks had "come back" but real estate hadn't. Sometimes when I have new money, I'll look at what is down most from its recent highs, to identify and buy what's cheaper. And of course you can compare P/E's in some situations.
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Old 08-17-2011, 02:08 PM   #3
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Investors often have it wrong. A contrary strategy often works wonders. PE and PE10 are great indicators of value but are not infallible.

The best real estate indicator I know of is the outlook for gainful employment, both now and in the foreseeable future.
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Old 08-17-2011, 02:21 PM   #4
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Were it me, I'd stay away from commercial real estate - O was suggested within the last couple weeks as a dividend paying stock, but I think they are heavy on strip malls, and I am thinking those may not do so well over the next few years. OTOH, my look at O was cursory, I've never owned it, and I'm not too hot in the stocks game.
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Old 08-17-2011, 02:36 PM   #5
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Quote:
Originally Posted by MasterBlaster View Post
Investors often have it wrong. A contrary strategy often works wonders.
I had it in mind to buy when investors think stock prices are low. Would the contrary strategy be to buy when investors think prices are high?
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Old 08-17-2011, 02:53 PM   #6
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Were it me, I'd stay away from commercial real estate ...
I'm afraid I haven't done that, so far. I bought some shares yesterday of TRPrice Real Estate Fund (PE 66.3), and judging by the names, its top holdings appear to be commercial real estate:
AvalonBay Communities, Boston Properties, Equity Residential, Federal Realty Investment Trust, ProLogis, Public Storage, SL Green Realty, Simon Property Group, The Macerich Co, Vornado Realty Trust.
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Old 08-17-2011, 04:30 PM   #7
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Market Fair Value by Sector, Industry, Super-Sector, Index | Morningstar

Click on Industry
Click on Real Estate
Click on ... ? General? Diversified?

-CC
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Old 08-17-2011, 04:44 PM   #8
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I've been investing in real estate funds (FRESX and VGSLX) since 2005, after reading Burton Malkiel's "A Random Walk Down Wall Street", in which he advocated viewing real estate as a separate asset class from stocks or bonds. The real estate funds have had their ups and downs and can be pretty volatile compared to a total market index, but overall I have been very pleased with them. If you are patient you might want to consider investing the amount you have over time (dollar-cost average).
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Old 08-17-2011, 05:07 PM   #9
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I have been investing in individual stocks since 1993, both large-cap dividend growth stocks and REITs. At times I have been very heavily into REITs. Currently I own none as their valuations are all high (IMO) compared to the other stocks I track/own.
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Old 08-17-2011, 06:26 PM   #10
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You could take a look at IYR as a possibility.
Of the ETF's I track, it along with DVY, have the strongest 6 month performance and the strongest current relative strength.
Also been quite pleased with the FIDO offering--FRESX.
But to your question of whether to go with stocks or real estate, I would say analyze them separately and perhaps invest in one of each.
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Old 08-17-2011, 06:56 PM   #11
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But to your question of whether to go with stocks or real estate, I would say analyze them separately and perhaps invest in one of each.
I have done that, and I am invested in each, but now there's the question of timing over the coming months. When shall I buy some real estate mf stocks and when should I rather buy general mf stocks? I want to buy low, but how to decide which is lower?

I'm taking careful note of your and others' suggestions, and thank you, all. The Morningstar values by sector look especially useful, CC.
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Old 08-31-2011, 01:59 PM   #12
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Earlier this month I started taxed accounts for a mixed cap mutual fund and a real estate mutual stock fund with the idea of buying additional small amounts over the coming months in one or the other fund, whichever appeared to be lower priced. Two weeks later now and, while the mixed cap fund is up a little, the real estate fund has made no progress. Accordingly, I just bought some more shares of the real estate fund. I hope that makes sense.
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Old 08-31-2011, 04:17 PM   #13
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Bought a very small 100 shr VNQI, Vanguard Global Real Estate ex-US for my few good stocks collection.

Why? Because regular season football is near and I need something to keep the hormones happy lest the Saints have another rocky up and down year. I suppose I 'could' add the Chiefs to my list - ? or not??

You were expecting some kind of rational analysis? Eh? May add Vanguard REIT Index which I owned a while back. But only in small amounts - say Octoberish.

heh heh heh - in retirement my real money is Target Retirement 2015.

Geaux Saints. Of course one good stock to allow me to trade my Chevy for a Buick would be nice. Lexus is too much of a stretch.
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Old 08-31-2011, 08:09 PM   #14
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May add Vanguard REIT Index which I owned a while back. But only in small amounts - say Octoberish.
Target date is October. Gotcha.
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