Contrarians: Time to Ditch Gold, Look at REITs

by: Investment U

The World Gold Council released a survey of investment advisers that shows gold at the top of the list of preferred investments this year.

When everyone is in agreement that gold is the place to be, that’s when you should be heading for the exits. Two of the interesting things from this survey stuck out to us – apart from the fact that gold may be getting ahead of itself…

One, almost 60% of the respondents expected better market conditions next year. Interesting, considering the broader markets have been hammered to the point beyond rational flights to safety. It tells us there’s a lot of advising of clients to “wait.” But wait for what? When will these “advisers” encourage their clients to get back in?

Two, at the bottom of the list was property. Apparently, no one wants to buy property. And as a good contrarian, that tells us that there are bargains within the REIT and real estate sectors.

“Throwing out the baby with the bathwater” is an old expression, but it reminds us that as investors have been running for the exits from sinking REITs, they’ve been trampling the good ones in the process. Recently, we highlighted First Trust/FIDAC Mortgage Income Fund (NYSE:FMY) for its ability to withstand the collapse of the mortgage-backed securities market.

The REIT market is a junkyard of wreckage. Therein lie companies like General Growth Properties (NYSE:GGP) – which is eying bankruptcy after years of aggressive acquisitions that have come back to haunt them. There are also companies like Alexander’s Inc (NYSE:ALX), which just beat numbers expectations and is holding up well.

For contrarians, there are lots to pick through, but the rewards will be great for the successful bargain hunters. Luckily, you know you’re one of the few “hunting,” right now.