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Friday, September 12, 2008

REIT Real Estate Investment Trust Update

Real Estate Investment Trusts (REITS) have had a nice, 20% gain off their 2008 lows, but they remain 30% below their 2007 highs, set at the beginning of the REIT bear market.

Click charts courtesy of to see full size images
For long-term REIT investors, REITs have been great relative to stocks. The graph above clearly shows that despite being 30% off their peak, REITs are still up about 200% from early 2000 when the S&P500 was about 20% higher than it is today. (More S&P500 charts)

Disclaimer: In 2001 I added REITs to my "Kirk's Investment Newsletter" core portfolios to diversify into what I thought was an under valued asset class relative to stocks and bonds. Click for more information and a free sample.

Perfect Market Timing:

A perfect market timer, something that does not exist, or even a very good market timer would have sold equities in late 1999 or early 2000 and bought REITs, gold, oil (Crude Oil Charts) or a general commodities fund. All have been great investments relative to stocks.

The best most of us can hope for is to recognize under valued asset classes before they take off so we can add them to our diversified portfolios.

Are REITs a good buy now? It is hard to say. They are still up 200% from early 2000 so they are by no means cheap. The chart below shows two possible very bullish developments are in the works.

Click chart to see full size image
  1. Breaking above the 200-day-moving-average (DMA) is one key sign a new bull market is possible. If this 200 DMA, currently at 886, becomes support, rather than resistance, then that is bullish.

  2. The inverse-head-and-shoulder pattern developing is very bullish if the dashed red resistance line is broken with volume.
Until either happens, the REIT index remains in a bear market the trend down.


Hard assets like land, real estate and gold have been great investments. Have they run their course? Are stocks so out of favor now with investors that they are great values? I am interested in what do you think.

Disclaimer: I personally own REITs and SPY (SPY is the ETF for the S&P500.) I also follow both in "Kirk's Investment Newsletter" . Click for more information and a free sample.

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