thinking about adding some REIT

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watchnerd
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Re: thinking about adding some REIT

Post by watchnerd »

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:

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Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
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nedsaid
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Re: thinking about adding some REIT

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watchnerd wrote: Sun Apr 18, 2021 9:30 am
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:

Image
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.
A fool and his money are good for business.
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watchnerd
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Re: thinking about adding some REIT

Post by watchnerd »

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%.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
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nedsaid
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Re: thinking about adding some REIT

Post by nedsaid »

watchnerd wrote: Sun Apr 18, 2021 10:51 am
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.
A fool and his money are good for business.
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Re: thinking about adding some REIT

Post by Outer Marker »

Well, thanks, everyone.

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 . . .
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