Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
opinions on move into VGSIX/VNQ ?
Old 07-25-2007, 02:19 PM   #1
Full time employment: Posting here.
 
Join Date: Sep 2006
Posts: 608
opinions on move into VGSIX/VNQ ?

I've been contemplating establishing a position in REITs
for awhile now, in line with my allocation targets. Looks
like VGSIX (aka. VNQ) is really down now, way down from
its recent 87+ peak.

Opinions on whether now is a good time ? I don't know anywhere
near enough about this stuff to know how the subprime crisis
plays into this.

Thanks.
__________________

__________________
JohnEyles is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-25-2007, 02:47 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Subprime shouldn't matter, although REITs thrive on cheap money so if the credit markets shut down it would not be good for them.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 07-25-2007, 03:08 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Its off a little, but I wouldnt even come close to putting it in 'bargain' or 'reasonably cheap' status.

I'd wait a little bit more...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 07-25-2007, 05:21 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,914
I have been considering buying either VNQ or O.

At what point would VNQ be a buy?
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Old 07-25-2007, 07:09 PM   #5
Thinks s/he gets paid by the post
twaddle's Avatar
 
Join Date: Jun 2006
Posts: 1,378
Quote:
Originally Posted by Brat View Post
I have been considering buying either VNQ or O.

At what point would VNQ be a buy?
Like any investment, you probably want to look at discounted cash flow.

I simply look at yield. Historically, REIT yields have paid a premium above treasury yields.

VNQ yield is about 3.5%. Treasuries are around 5%. Just a few years ago, REITs yielded about 200bp more than treasuries.

Even during the last REIT bull market (1993ish), REITs yielded about 200bp more than treasuries.

In theory, the spread shouldn't really be that high since REITs should be inflation protected in practice, but they still need a yield risk premium far in excess of TIPS to be attractive.
__________________
twaddle is offline   Reply With Quote
Old 07-25-2007, 08:08 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
I would think that nobody would be as surprised as I am that I agree with Wab/Twaddle.

I'd like to see REIT yields top 5.7-5.9% before I'd consider wading in.

Thats a LONG way from where they are today.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 07-25-2007, 09:02 PM   #7
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
What twaddle said.
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Old 07-26-2007, 01:59 PM   #8
Full time employment: Posting here.
 
Join Date: Sep 2006
Posts: 608
Quote:
Originally Posted by cute fuzzy bunny View Post

I'd like to see REIT yields top 5.7-5.9% before I'd consider wading in.

Thats a LONG way from where they are today.
Kinda thinking out loud here, but how are yields reported ?

If you go to finance.yahoo.com and enter VNQ, it shows a
yield of 3.55%, but the fine print says that was as of June 30th.

If I look at my portfolio I have set up at finance.yahoo.com, and
click on "Detailed" view, I see a yield of 5.23% based on the most
recent dividend of $3.53/share on June 25th, and computing
backwards ($3.53/0.0523) a price of $67.495, which looks about
like yesterday's close. So the yield RIGHT NOW is a bit higher.

If you accept CFB's trigger point of 5.8% yield, this says to think
about buying when price drops below $61 or so.
__________________
JohnEyles is offline   Reply With Quote
Old 07-26-2007, 02:06 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Unadjusted yield is 4.04%, adjusted yield is 3.5% - both as of 6/30. Get it from the vanguard site by looking up the fund and clicking 'note' next to the yield field.

By the way, that 'trigger point' is where I think owning it stops sucking, not necessarily a great buy.

Whether we'll visit those levels is another question. A lot of money has poured into reits since it became fashionable for everyone to have a slice in their asset allocation strategy.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 07-26-2007, 02:09 PM   #10
Full time employment: Posting here.
 
Join Date: Sep 2006
Posts: 608
Quote:
Originally Posted by cute fuzzy bunny View Post
Unadjusted yield is 4.04%, adjusted yield is 3.5% - both as of 6/30. Get it from the vanguard site by looking up the fund and clicking 'note' next to the yield field.
Ok, thanks for clarifying.

But I think my point remains, that one must manually calculate
yield, based on the current price, to see if the current
price represents a good buy based on some yield criterion.
__________________
JohnEyles is offline   Reply With Quote
Old 07-26-2007, 02:20 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Yeppers.
__________________

__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Server Update and Move Info Andy R Forum Admin 3 07-20-2007 05:26 PM
Some BCBS plans will let you move anywhere and keep the policy september Health and Early Retirement 14 05-05-2007 02:46 PM
24 years old: what's my next move? soupcxan Young Dreamers 50 07-03-2006 10:36 AM
Good move or Bad move?? JPatrick FIRE and Money 46 07-05-2005 08:25 PM
Need some advices - move to Asia Gates007ca Young Dreamers 16 01-21-2005 06:23 AM

 

 
All times are GMT -6. The time now is 06:55 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.