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  • vgsix

    why has it been struggling for past three years?  I feel like real estate opportunities have been reasonably good.

    pardon my ignorance.  feel free to start from basics.

    I'm trying to decide on diversification.  I'm stocks and cash currently.  is now the time to get in?

     

     

     

  • #2
    Spreads on the interest rates maybe. I don't own REITs in funds or stocks because of the unwanted non-qualified dividends and because VTSAX already has some in it.

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    • #3
      I just googled "why are reits down", and there are lot of articles that offer explanations. One is that interest rates are on the rise, and sectors do go in and out of favor. Many suggest that "now" is a good time to get into REITs.

      My take is that:

      1) REITs are an "optional" asset class, and primarily by dilution, I have been reducing exposure to REITs in my portfolio.

      2) There are probably better ways to capture real estate return -

      a) Some require a lot of work, like buying your own property to lease and or resell.

      b) Some require some due diligence but not nearly as much work, like real estate crowdfunding.

      3) REITs are included in the S&P 500, so there is no need for an additional allocation or overweighting.

      4) International REITs are perhaps more compelling as a diversifier but also even more "optional".

       

      So, as usual, I have not offered any help (or advice), but here's a Paul Merriman article that fills in some more of the detail:

      https://paulmerriman.com/10-things-need-know-reits/

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      • #4
        Can we get a Crixus "critique my portfolio" post? ;-)

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        • #5
          So are you 100% cash?

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          • #6




            why has it been struggling for past three years?  I feel like real estate opportunities have been reasonably good.

            pardon my ignorance.  feel free to start from basics.

            I’m trying to decide on diversification.  I’m stocks and cash currently.  is now the time to get in?

             

             

             
            Click to expand...


            Basically rates.

            Why are you in cash?

            Comment


            • #7
              Real estate peaked June 2016; the same time TNX was at it's low. Real estate dividends became a proxy for dividends when retirees were desperate for income. It is still working off it's excess while bond dividends are rising.
              Invest now? can't predict the future, but like ENT doc stated, the broad indexes include some real estate.

              Comment


              • #8







                why has it been struggling for past three years?  I feel like real estate opportunities have been reasonably good.

                pardon my ignorance.  feel free to start from basics.

                I’m trying to decide on diversification.  I’m stocks and cash currently.  is now the time to get in?

                 

                 

                 
                Click to expand…


                Basically rates.

                Why are you in cash?
                Click to expand...


                no real thoughtful reason.   basically was 100% stocks and thought I might try to diversify.  accumulated some cash by not investing as much in index funds.

                long term investment horizon.

                 

                Comment


                • #9










                  why has it been struggling for past three years?  I feel like real estate opportunities have been reasonably good.

                  pardon my ignorance.  feel free to start from basics.

                  I’m trying to decide on diversification.  I’m stocks and cash currently.  is now the time to get in?

                   

                   

                   
                  Click to expand…


                  Basically rates.

                  Why are you in cash?
                  Click to expand…


                  no real thoughtful reason.   basically was 100% stocks and thought I might try to diversify.  accumulated some cash by not investing as much in index funds.

                  long term investment horizon.

                   
                  Click to expand...


                  You should make a plan.

                  Comment


                  • #10
                    I have owned VNQ forever.  I like having a little extra real estate exposure since I am not going to ever buy individual properties or crowdfunded stuff. I think it is less than 1% of my portfolio.

                    Comment


                    • #11













                      why has it been struggling for past three years?  I feel like real estate opportunities have been reasonably good.

                      pardon my ignorance.  feel free to start from basics.

                      I’m trying to decide on diversification.  I’m stocks and cash currently.  is now the time to get in?

                       

                       

                       
                      Click to expand…


                      Basically rates.

                      Why are you in cash?
                      Click to expand…


                      no real thoughtful reason.   basically was 100% stocks and thought I might try to diversify.  accumulated some cash by not investing as much in index funds.

                      long term investment horizon.

                       
                      Click to expand…


                      You should make a plan.
                      Click to expand...


                      That’s why I asked the question

                      Comment


                      • #12




                        Real estate peaked June 2016; the same time TNX was at it’s low. Real estate dividends became a proxy for dividends when retirees were desperate for income. It is still working off it’s excess while bond dividends are rising.
                        Invest now? can’t predict the future, but like ENT doc stated, the broad indexes include some real estate.
                        Click to expand...


                        Same reason all the "dividend growth investor" crowd has been chasing everything for years with a yield and trying to hide behind some kind of value philosophy while bidding up like mad companies with declining revenues and markets.

                        In the last year or so, Im sure its just coincidentally with bond yields rising, theyve been crushed. They were, after all the rationalization, bond proxies.

                        https://media.ycharts.com/charts/9c2ebe4a5ede1afac55148c5fb65bcb5.png

                        Comment


                        • #13
                          I wonder why VNQ and VGSLX have been stuck at an ER of 0.12% for so long.  I sold them and now just put all my REITs in SCHH.  Saves me almost $50 a year.

                          Comment


                          • #14
                            Well you asked one part of a potential plan and added market timing.
                            What's wrong with 100% stocks, what changed your mind?

                            Comment


                            • #15
                              My 2c. Sentiment and rotation probably.
                              Pull up a very long term chart. VGSIX is still not at the level it was in 2008. Which means it was very pumped then. In 2008 REITS got juiced with all manner of financial engineering. This cycle is more like the late 90's where REITS did poorly in a gradually rising low rate environment. Then as now tech is outperforming.
                              REITS are probably good relative value now. In an inflationary environment rents should also rise. But you might have to wait for a while. Possibly until the next cycle starts before you see overperformance. There might be better things to invest in late this pcycle but they would be more risky too.

                              Between REITS and cash, I'm not sure which I would prefer. The major choice is between these and tech currently. Do you want to participate more in a meltup or miss out on the party and the hangover ? If you have to buy more tech, better now than at the top. It could all fall apart anyday but doesn't look to be. It's very tempting. I am in two minds about putting a small stake on it. But that's just my gambling tendency.

                              I think the main risk if you bought more VGSIG or stay in cash, is watching tech and the general index melt up and feel you are missing out on this. Knowing my luck, the day I overweight tech is the day it starts going down the toilet.

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