nedsaid wrote: ↑Sun Apr 18, 2021 12:06 am
What I would tell newer investors is not to include these in your portfolios unless you are an inflation fanatic like I am. I still remember the 1970's. I have gone from being very enthusiastic about REITs to being neutral on them. REITs are also a way of stretching for yield but you assume additional risks. REITs can be extremely volatile.
Re: inflation
Vanguard's paper on TIPS and commodities found REITs to be a hair better than regular stocks at dealing with inflation, but not nearly as good as the top tier inflation fighting choices:
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
nedsaid wrote: ↑Sun Apr 18, 2021 12:06 am
What I would tell newer investors is not to include these in your portfolios unless you are an inflation fanatic like I am. I still remember the 1970's. I have gone from being very enthusiastic about REITs to being neutral on them. REITs are also a way of stretching for yield but you assume additional risks. REITs can be extremely volatile.
Re: inflation
Vanguard's paper on TIPS and commodities found REITs to be a hair better than regular stocks at dealing with inflation, but not nearly as good as the top tier inflation fighting choices:
Commodities might be a cheap asset class here, particularly energy. It is an area that I don't know much about and I am pretty reluctant to put money down to buy them. I view commodities more as inflation insurance than as an investment.
nedsaid wrote: ↑Sun Apr 18, 2021 10:36 am
I view commodities more as inflation insurance than as an investment.
Yes, they have a long term near zero real return.
From 1900-2018, real returns from commodities were 0.39%.
That is why I don't invest directly in commodities. I have over the years invested in natural resource stocks that produce such things as oil and timber. It isn't a perfect way to invest as you take general equity risk but it is better to invest in the companies that produce commodities than in the commodities themselves.
This thread was the nudge I needed to drop my last 5% sub-allocation to REITs, top off my bond allocation to target AA, and up TSM holdings a bit. Of course we all know market timing is bad, but I don't hate doing this trade on a day when I sold REIT high and bought TSM on a small dip. Always better to be lucky than good . . .