Sept 25, 2024 podcast. In hindsight, this was absolutely NOT a rotation into the space. A rotation doesnt undergo a 2 month bleed. Oct 1, the shorts began to feast diving XRE 12% and other REITS almost 20%. This looks like a "reverse" rotation. Absolutely brutal.
source:
https://nuggetcapitalpartners.substack.com/p/podcast-some-updated-thoughts-on?utm_source=profile&utm_medium=reader2
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Overall while the sector may appear overbought, I think we are still quite aways from topping out for a number of reasons. In my view, the real estate sector is currently amidst of a powerful sector rotation given the macro conditions and falling bond yields. This isn’t a dead cat bounce, but a true rotation into the space. In the podcast I discuss several catalysts that exist on the horizon: improving transaction liquidity, potential M&A which we have saw as of only last week, analyst upgrades as cap rates compress and NAVs go up as well as a rotation out of things like guaranteed income certificates as investors are forced to find alternative yield instruments. Numerous factors to look forward to in the coming months.
Over the past week interest rates have come down more then expected in the United States which was a boost for the space. This week we have seen more soft macro data which has led to an increased rate cut expectation of 50 basis points for November, in both Canada and the United States which could further be a macro tailwind for real estate into the end of year. Ultimately, I see no reason to rotate out of the space or reduce exposure and instead have continued to buy some laggards."