April 20, 2007
Jim Grant Calls Top #28,378
It’s a good thing my friend John reads Jim Grant at Forbes. By faithfully reading ControlledGreed’s feed, I’m alerted to things written by people like Grant who (foolishly) don’t have RSS feeds. I would add Grant (and Dreman) to my feed reader in a heartbeat if I could. Anyway, enough kvetching about dumb publishers who refuse to adapt.
Grant’s column is titled REIT bubble. Here are the key bits:
“At the low March 2000 valuations REIT investors had that sleep-enhancing cushion known as a margin of safety. At the much, much higher prices now prevailing, they have no such protection, only the smug knowledge of past returns … the Bloomberg REIT index yields a mere 4%, a discount of 0.6 percentage points to the ten-year Treasury note–and a most expressive contrast to the REIT’s 8.1% yield in March 2000, which at the time was a two-point premium to the ten-year note.”
True, but calling a top is something that only guys who put out $850 a year newsletters can harmlessly engage in.
Last July I wrote a post called REITs Still Outperforming After All These Years, an excerpt:
Folks with long memories know that the REITs were totally out of favor and huge underperformers in 1998 and 1999. But when the bubble burst in the first quarter of 2000, people who were paying attention noticed that the sector was strong as everything else came crashing down.
Savvy investors shifted into REITs in May 2000 and held until April/May 2004 when they were shaken out. It didn’t take long for the trend to reassert itself though — long positions were reestablished in June 2004 and are still being held today.
… and are still being held today, though everyone is keeping a wary eye on the trend in the IYR, believe me.
April 20th, 2007 at 12:48 pm
why i love trends and this site .
Same freaking $850 newsletter people selling you undiscovered stocks. If they could pick em they wouldnt need to sell you anything. they would be on an island
April 20th, 2007 at 7:51 pm
there’s a book from about 30 years ago - confessions of a stockbroker, by brutus - which never received much attention, and doesn’t have a lot of ‘unknown’ information today, but is great for its time.
anyhow, the author mentions someone a newsletter writer who was bearish almost perfectly in the early 70s (around 72, 73) in his newsletter, and if you followed his (bullish) picks pre-bear market, and (bearish) picks bear market, you’d have done quite well.
however, he suffered a decent number of cancellations. the reason why his took a much bigger hit than normal? all the others were still bullish - and his was bearish. the author speculates that people don’t want to know about selling, or about bad news, but only of great news / buying (ie. undiscovered stocks).
i believe that as well.
April 21st, 2007 at 12:47 am
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