RE:RE:RE:I Smell OppertunityFrankie10 wrote: i was speaking generally - not specifically about reits sir. per my understanding of the the 70's... rate hikes stopping are not the saving grace you believe it to be... if i'm wrong and this time is different: that's nice; if i'm right and history is repeating: you're rekt.
the fed isn't dropping rates... there is no fed put this time... if the fed blinks its GG... pain for the rest of the year is the only path forward. a decrease in rates, triggering a speculative rip would mark armageddon should inflation flare back up (see the 70's).
that said, even if there are no further hikes - rates at this level for the entire year, while the fed sells off its balance sheet, will strangle the market (and earnings), resulting in a slow liquidation bleed across all asset classes.
i hope i'm wrong, but managing risk means respecting the potential downside.
all the best.
SNAKEYBOY wrote: Lol REITS are back at August highs....a pullback might be due, but the rate hikes are pretty much over....inflation has cooled signficantly. Its about to monster rally into earnings!
The economy was totally different in the 70s (labour market, international trade, etc).
As to REITs, while in the short term the cap rates increased and it hurt the NAV/share price, in the long term, higher rates/inflation mean higher rents in a stable economy. New starts in all classes of assets (housing, commercial, industrial) can't keep up with demand, so the long term pricing prospects on assets is still good.
However, we're headed into a slow economy and this will likely hurt occupancy for REITs.
It won't be smooth sailing, but in the end a combination of higher rents (the higher the rates, the "cheaper" rents are compared to owning the asset) and a recovering economy in 24 months should put REIT valuations back at the top.