Are REITS Ready For Future Interest Rate Hikes ? [View article]
Hello mgordon10 and thanks for your comment. This is a good question but I don't think I can provide an answer to that as the share price is dictated by market forces rather than just economics or accounting. I suggest you put on a graph side by side the interest rate vs. the share prices of selected REITs, same as I did for the entire REITs (^jdr) - this way you get the empirical results but they will not necessarily be the same in the future.
Are REITS Ready For Future Interest Rate Hikes ? [View article]
Hello Nesivos and thank you for the comment.
It is not necessarily a bad thing to conduct a reality check every once in a while, so although your style is one of the worst I met and although I disagree with most of what you say - I am happy with the comment.
With that out of the way I will try to answer your criticism: 1. You mention the effect of interest rate hike on national debt and unemployment. You fail to mention other effects as well: the effect on government investments in the real market (construction, infrastructure etc.), on consumer investments and the list goes on and on. Since this article was not meant to be a PHD study, these effect were indeed left out and I did mention that I assume all else remains the same. The extent to which I had to go for the aspect you mentioned and the ones you forgot are far beyond those of such an article. Yet, I agree the move of interest rate hike will not be an easy one to perform and as I mentioned - will not happen overnight but may take months (maybe more ?). But I do expect other market and global forces to make that move a necessity. However, since the hike will be gradual, I tested the effects of 1% - 4% range, not just 4% overnight. Right or wrong? I don't have a crystal ball, maybe you do but still I think your guess is as good as mine.
2. As for Obamacare - that was mentioned and discussed in a former article I published here. It is yet another risk among many others, again - you mention some but forget many others. I didn't have any intention to cover all possible risks and their effects on REIT prices or performance - this article is just about the interest rate risk.
3. Regarding the dividend yields and the % over 30 year treasury rate - IMHO - you're completely missing the point. Even if in the past there was an empirical connection - the only law REITs have to comply with is the 90%, the link you mention is irrelevant and will not necessarily be kept if performance deteriorates.
To conclude my response: 1. I am sorry you see this article as "just a bad piece of FUD", especially when considering the points you try to make to support that. 2. I don't really care if you think I live in a bubble. To be honest I don't see the connection between your comments and my bubble.
The article never intended to cover or map all possible types of risks to REITs, especially healthcare ones you stick to. It just tries to cover the effect of interest rate hike which - as mentioned - will probably gradual. Hence the 1%-4% range.
Despite your comment - I do think it will happen once inflation picks up. By the way - I think inflation does exist at a higher level than reported, just not measured as it should be.
I do hope other readers can see the point I tried to make and make a note to themselves to keep an open eye on the subject and act accordingly.
Are REITS Ready For Future Interest Rate Hikes ? [View article]
It all depends on the contracts they sign and during renewals - on the market condition. The market will not always let you raise rent despite inflation and even though real estate is considered inflation-protected. Thanks for the comment!
My 2012 Top And Bottom Performing Dividend Stocks [View article]
That's one of the problems I have with DG investing: the idea of holding a DG stock as long as its dividend is secure and growing misses huge fluctuations that you can predict. While timing the market or a stock is almost impossible, Intel at $28-29 was simply too expensive. Sold @ $27 and bought again @ 20.3. My strategy is to sell even DG stocks when the stock gets pricey, regardless of the dividends: the few annual dividend percentages you collect simply do not cover a -20% or -25% decline in the stock price.
Hello Legend, Thanks for your comments. Basically I think you and I see things the same; that's some of what I wrote in the article. The main issue is how long it will take, no doubt it will be quite some time until smartphones kick in to these populations. Good luck!
Was Caterpillar's Warning Actually A Positive? [View article]
Hello Timmy, Thanks for your comment, glad you liked the article. It is kind of trying to time the market (not a good idea generally...) but I think with current atmosphere we will see more declines. Good luck with your portfolio construction!
3 Opportunities The Arriving Bear Market Should Provide [View article]
Hello Derrick, Thanks for your comment. It's hard for me to invest in a stock that has a valuation which is not supported by its fundamentals. When it goes up too fast it will either go down or freeze until fundamentals rise accordingly, which might take some time. I'll stay on the sideline and wait for either to happen. Good luck anyway!
Reasons I'm Long Government Properties Income Trust [View article]
bhoff, We're both happy then. Maybe you bought it expensive to begin with, but that doesn't mean the stock is a "sell". Maybe it means NOW it sells at good prices? I think @ around $21 you have a margin of safety here but we all have to do our own due diligence and arrive a possibly different result. Good luck with your new investments.
Reasons I'm Long Government Properties Income Trust [View article]
Hello Brad, Thanks for the comments. I don't think GOV is a risk-free investment. But then again - I don't know any risk-free stock, just CDs or T-bills.
Part of the reason I think GOV is cheap is BECAUSE its total return recently drags after the industry. I think O and NNN are simply more expensive now (at least for my investing type - I like to buy @ discounts, not necessarily at fair value), and I think so despite their still respectable dividends - compare their P/FFO to GOV's. I find a P/FFO of 20 too high for a REIT. I agree with most risks you mention and can provide some more. Most of them can be found in most REITs, like early terminations. However, after evaluating them, at the bottom line - I still consider GOV as a long term buy & hold (anyone said SWAN ?).
Harvesting Profits From The Agricultural Sector, Part 2 [View article]
Hello Old Trader. It is an article on an interesting industry (or industries) that I believe should be great for the investor in the future due to global macro trends. In order to reach a "go/no-go" investment decision I would consider several other metrics and data: 1. short term assets + LT investments +fixed assets to total liabilities. 2. Market cap to Free cash flow. 3. Payout ratio. Etc... If you use these metrics, you will see that for example ADM has net assets (forget intangibles) almost as high as market cap, not to mention the nice free cash flow. Even if net assets are worth less than that, to me that's much better condition than competition. Then, to get a clear picture you may also want to check the situation in commodities, after all results for the firms you mention are highly dependable on these markets.
I'll be happy for your thoughts about these points.
Are REITS Ready For Future Interest Rate Hikes ? [View article]
This is a good question but I don't think I can provide an answer to that as the share price is dictated by market forces rather than just economics or accounting.
I suggest you put on a graph side by side the interest rate vs. the share prices of selected REITs, same as I did for the entire REITs (^jdr) - this way you get the empirical results but they will not necessarily be the same in the future.
Are REITS Ready For Future Interest Rate Hikes ? [View article]
It is not necessarily a bad thing to conduct a reality check every once in a while, so although your style is one of the worst I met and although I disagree with most of what you say - I am happy with the comment.
With that out of the way I will try to answer your criticism:
1. You mention the effect of interest rate hike on national debt and unemployment. You fail to mention other effects as well: the effect on government investments in the real market (construction, infrastructure etc.), on consumer investments and the list goes on and on.
Since this article was not meant to be a PHD study, these effect were indeed left out and I did mention that I assume all else remains the same. The extent to which I had to go for the aspect you mentioned and the ones you forgot are far beyond those of such an article.
Yet, I agree the move of interest rate hike will not be an easy one to perform and as I mentioned - will not happen overnight but may take months (maybe more ?).
But I do expect other market and global forces to make that move a necessity.
However, since the hike will be gradual, I tested the effects of 1% - 4% range, not just 4% overnight.
Right or wrong? I don't have a crystal ball, maybe you do but still I think your guess is as good as mine.
2. As for Obamacare - that was mentioned and discussed in a former article I published here. It is yet another risk among many others, again - you mention some but forget many others. I didn't have any intention to cover all possible risks and their effects on REIT prices or performance - this article is just about the interest rate risk.
3. Regarding the dividend yields and the % over 30 year treasury rate - IMHO - you're completely missing the point. Even if in the past there was an empirical connection - the only law REITs have to comply with is the 90%, the link you mention is irrelevant and will not necessarily be kept if performance deteriorates.
To conclude my response:
1. I am sorry you see this article as "just a bad piece of FUD", especially when considering the points you try to make to support that.
2. I don't really care if you think I live in a bubble. To be honest I don't see the connection between your comments and my bubble.
The article never intended to cover or map all possible types of risks to REITs, especially healthcare ones you stick to.
It just tries to cover the effect of interest rate hike which - as mentioned - will probably gradual. Hence the 1%-4% range.
Despite your comment - I do think it will happen once inflation picks up. By the way - I think inflation does exist at a higher level than reported, just not measured as it should be.
I do hope other readers can see the point I tried to make and make a note to themselves to keep an open eye on the subject and act accordingly.
Are REITS Ready For Future Interest Rate Hikes ? [View article]
Thanks for the comment!
My 2012 Top And Bottom Performing Dividend Stocks [View article]
While timing the market or a stock is almost impossible, Intel at $28-29 was simply too expensive.
Sold @ $27 and bought again @ 20.3.
My strategy is to sell even DG stocks when the stock gets pricey, regardless of the dividends: the few annual dividend percentages you collect simply do not cover a -20% or -25% decline in the stock price.
Why Western Union Is Fairly Priced [View article]
Why Western Union Is Fairly Priced [View article]
Only thing bothering is that they didn't provide 2013 outlook.
Was Caterpillar's Warning Actually A Positive? [View article]
Since I'm not such a fan of dividend growth investing, I would like to ask you to read an article I wrote several months ago :
http://seekingalpha.co...
Whichever way you choose - good luck with your portfolio.
3 Opportunities The Arriving Bear Market Should Provide [View article]
Why Western Union Is Fairly Priced [View article]
Why Western Union Is Fairly Priced [View article]
Thanks for your comments. Basically I think you and I see things the same; that's some of what I wrote in the article. The main issue is how long it will take, no doubt it will be quite some time until smartphones kick in to these populations.
Good luck!
Was Caterpillar's Warning Actually A Positive? [View article]
Thanks for your comment, glad you liked the article.
It is kind of trying to time the market (not a good idea generally...) but I think with current atmosphere we will see more declines.
Good luck with your portfolio construction!
3 Opportunities The Arriving Bear Market Should Provide [View article]
Thanks for your comment. It's hard for me to invest in a stock that has a valuation which is not supported by its fundamentals.
When it goes up too fast it will either go down or freeze until fundamentals rise accordingly, which might take some time.
I'll stay on the sideline and wait for either to happen.
Good luck anyway!
Reasons I'm Long Government Properties Income Trust [View article]
We're both happy then.
Maybe you bought it expensive to begin with, but that doesn't mean the stock is a "sell". Maybe it means NOW it sells at good prices?
I think @ around $21 you have a margin of safety here but we all have to do our own due diligence and arrive a possibly different result.
Good luck with your new investments.
Reasons I'm Long Government Properties Income Trust [View article]
Thanks for the comments.
I don't think GOV is a risk-free investment.
But then again - I don't know any risk-free stock, just CDs or T-bills.
Part of the reason I think GOV is cheap is BECAUSE its total return recently drags after the industry. I think O and NNN are simply more expensive now (at least for my investing type - I like to buy @ discounts, not necessarily at fair value), and I think so despite their still respectable dividends - compare their P/FFO to GOV's. I find a P/FFO of 20 too high for a REIT.
I agree with most risks you mention and can provide some more. Most of them can be found in most REITs, like early terminations.
However, after evaluating them, at the bottom line - I still consider GOV as a long term buy & hold (anyone said SWAN ?).
Harvesting Profits From The Agricultural Sector, Part 2 [View article]
In order to reach a "go/no-go" investment decision I would consider several other metrics and data:
1. short term assets + LT investments +fixed assets to total liabilities.
2. Market cap to Free cash flow.
3. Payout ratio.
Etc...
If you use these metrics, you will see that for example ADM has net assets (forget intangibles) almost as high as market cap, not to mention the nice free cash flow. Even if net assets are worth less than that, to me that's much better condition than competition.
Then, to get a clear picture you may also want to check the situation in commodities, after all results for the firms you mention are highly dependable on these markets.
I'll be happy for your thoughts about these points.