Re: What's driving VGSIX (reit) for the last 2 yea
I'd like to hold 5-10% of my portfolio in a REIT index like VGSIX...but looking at the chart, it's had an incredible run up in the last two years and is now at an all time high. I would like to take a "set it and forget it" approach to investing but I would hate to buy in at the top of the market. This sounds like market timing to me (which I don't want to be doing) but I can't help looking at the chart and thinking that all these gains won't be sustainable over the short term (that is to say, I'll buy it today and it'll "correct" -20% next week).
Does anyone know what factors have contributed to the gains in REITS in the last two years?
Hi Soupcxan:
Actually, the last 5 years has been a sweet spot for Reits. Using Fidelity (Index), up 35% in 2000, up 9.1 in 2001, up 6% in 2002, and up 35% in 2003.
I purchased Reits in 1999, and was slightly down for the year. -2%
I took off half my gains in Jan. of 04., figuring they were in nose-bleed territory at that time. (They are now up another 18 percent since that time
)
The run-up in Reits, have been fueled (in my opinion) from the same dynamics that have given individual property owners something to smile about in the last 5 years or so. (Low interest rates, and the feeling that regardless of the underlying price of the property, if you don't get in now, you're likely to be left behind.
If you are going to establish a position in Reits for the long haul, you might consider DCA into them.
How much individual real estate you currently own, should be given also some weight.
Good luck, Jarhead