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Let's say your strategy is right and that if you could accurately predict a downturn, sell equity and buy REITs. The lesson to learn from last time is not to a

by basch 7y ago

Let's say your strategy is right and that if you could accurately predict a downturn, sell equity and buy REITs. The lesson to learn from last time is not to avoid REITs but to choose higher quality ones. Buy high quality US Core (USRT) and residential (REZ) and if you want to diversity further (REET) is 1/3rd global. Ive also left out ICF, REM, IYR. Blackrock alone has plenty of ways to stick your money in real estate.

dharma1 7y ago
Why REITs before a downturn? Looks like USRT took a beating in the last crisis
- basch 7y ago
  I wasnt arguing it was a good strategy, I took part of the assumption that it was, as the premise. it was moreso that just cuz you got lucky and got in and out of a scam at the right times, that in and of itself doesnt invalidate the strategy itself. And like the other person commenting said, the 2008 crash was a real estate crash.
- kevinrpope 7y ago
  The theory goes something like this: In a recession investors tend to have a "flight to quality", which usually means buying more government bonds, which pushes their interest rates lower. REITs tend to have relatively higher yields, so in comparison to government bonds, REITs become more attractive and their prices go up as well. In 2008 all real estate valuations were crushed due to the nature of the crisis, but real estate has historically been a pretty stable asset class in recessionary environments.
  - dharma1 7y ago
    Right, perhaps real estate won't be such a focal point of the next recession (beyond a few bubble areas). So in terms of recession proof REITs - commercial or residential?
    - basch 7y ago
      Careful on some of those ETFs. Even the residential one is only 50% residential, (its nearly a third health care.) And the global one is 15% residential (its second biggest sector behind retail, and ahead of office, diversified, industrial, specialized, health care, hotel and resort.) They are more diversified than their names may imply. You may end up with odd overlaps if you dont look at their underlying sector breakdowns.

by basch 7y ago

dharma1 7y ago

Why REITs before a downturn? Looks like USRT took a beating in the last crisis

basch 7y ago
I wasnt arguing it was a good strategy, I took part of the assumption that it was, as the premise. it was moreso that just cuz you got lucky and got in and out of a scam at the right times, that in and of itself doesnt invalidate the strategy itself. And like the other person commenting said, the 2008 crash was a real estate crash.
kevinrpope 7y ago
The theory goes something like this: In a recession investors tend to have a "flight to quality", which usually means buying more government bonds, which pushes their interest rates lower. REITs tend to have relatively higher yields, so in comparison to government bonds, REITs become more attractive and their prices go up as well. In 2008 all real estate valuations were crushed due to the nature of the crisis, but real estate has historically been a pretty stable asset class in recessionary environments.
- dharma1 7y ago
  Right, perhaps real estate won't be such a focal point of the next recession (beyond a few bubble areas). So in terms of recession proof REITs - commercial or residential?
  - basch 7y ago
    Careful on some of those ETFs. Even the residential one is only 50% residential, (its nearly a third health care.) And the global one is 15% residential (its second biggest sector behind retail, and ahead of office, diversified, industrial, specialized, health care, hotel and resort.) They are more diversified than their names may imply. You may end up with odd overlaps if you dont look at their underlying sector breakdowns.