I don’t have a compelling story to dig into today, so I’ll just share a couple updates and some of my thinking.
Everything still seems to revolve around the Fed — will they raise rates? Will long-term rates get ahead of the Fed if they don’t? Will they have to try to find some new way of stimulating the economy if the actual government remains completely ineffective and we slide into recession again? There’s no shortage of reasons for hand-wringing.
But, of course, there’s also nothing you can do about it. We obsess over the Fed because we want some kind of guidance and answers about the economy, and because cable business news has hours to fill… but we’d all be better off focusing on the things we can control, like buying investments that are appropriate to our investing time frame and our willingness to accept both volatility and the risk of permanent losses (which aren’t the same thing). Spending a lot of time thinking about whether the Fed is now going to be unable to raise rates in December because Wal-mart is having trouble competing is not going to help… but it might be that the fretting about short-term interest rates can bring us some bargain-priced investments.
I’ve harped on the foolishness of falling REIT prices before, and I still think there’s great opportunity in REITs — most of them have been crushed because of fears of rising interest rates, and they’ve failed to recover very much in recent months even with the increasingly dovish talk about Janet Yellen and the Fed maybe not raising short term rates this year. Investors have gotten it firmly in the heads that a rate hike means REITs will do terribly, and I think any kind of possible rate hike is abundantly priced in to many of the REITs we follow. I wouldn’t be chasing Coresite Realty (COR) right now, given their huge run, but they’re really a different kind of REIT… the healthcare REITs like Physicians Realty Trust (DOC) and Medical Properties Trust (MPW) look very appealing to me still, with growth and a strong non-cyclical sector and high yields (5.5% and 7.75%), and those were brought down further than most REITs so the pricing looks fairly compelling… and I continue to like Retail Opportunities Investment Corp (ROIC) as a more mainstream (shopping center) REIT with a yield of ...