Around The Block

The Long Ballgame.

Most non-professional investors don’t have the time or the inclination to follow markets and economies closely. Many of them believe – contrary to all evidence – that they can take advantage of experts, i.e., analysts, strategists and various self-proclaimed pundits, to enable them to make investment decisions that, for the most part, will be wise, prescient, and beneficial. And today’s investors are often impatient, reflecting increasingly short attention spans in a world spinning ever faster. It is, perhaps, for these reasons that we so often encounter the question, “Is it time to get back into REITs?” – or whatever other asset class the inquirer may be interested in.

I wish I were given a dollar each time someone asked me that question; I’d earn enough money to keep Sammy in Mother Hubbard’s biscuits for the rest of his life. But market bottoms, of course, are known only with hindsight, and this is as true of REIT stocks as anything else. So my response to the question, “Is it time to…?” is always the same: “I don’t know. If you are interested in investing in REITs (or oil, or junk bonds, or gold, or Mickey Mouse memorabilia), ease into it slowly, and over time.”

With those caveats in mind, I’d like to offer a few thoughts on where we might be in the current multi-year REIT investment cycle – perhaps it might help some of you to answer that unanswerable question, “Should I get back into REITs?” (Of course, all of us got out at the peak in early 2007, right?) What follows, of course, is pure speculation on my part. Knowing the future is something that’s not part of the human experience, and I am nothing more than a lowly mortal who failed to forecast the Great Tsunami that has inundated us over the past two years…

Click here to read the entire June 5, 2009 issue of The Essential REIT

Revisiting Odd Ducks: The REIT Preferreds.

My foray into REIT preferreds began too early. I began buying them late in 2007, at just over 8% yields, but by March of this year that giant sucking sound you may have heard was caused by a virtual implosion of their valuations. At its nadir in March, my Kimco Pfd G, for example, yielded over 19% and was down nearly 60% from my original cost. I felt as though a gang of Harry Potter’s dementors, exhaling cryogenic breath, had drained me of all investment life.

But when the ducks quack, you feed them – so I bought even more REIT preferreds. And now, finally, while I am still bleeding red ink, the paper losses have become much more bearable, and I don’t feel quite so stupid. But let’s back-track a bit, and review the personalities of these odd ducks…

Click here to read the entire May 6, 2009 issue of The Essential REIT