Analysing REITS

[Big Toe]

Longer term interest rate are slowly heading up. There was a significant gap between the short term and long term US T bills previously. But at this very moment the 30yr bills are >5% and thus the spread is not significant. I am no expert in interest rates but the inverted curve yield is going to normalize in time. (ie short term lower than long term) and inflation is unlikely to stay >5% in the very long term. What this means is the investor can put in some funds to work in both short and long term T bill/related funds/ETF. 5% is a somewhat comfortable number for the long term, risk free.

The higher for longer rates will put the conservatively managed businesses with a sizable cash hoard at an advantage. I get the feeling that investors are slightly on edge now and negating this fact. Ie the sell-off of sheng shiong is irrational, cash hoard is growing, business is growing and staying above the $130M level(nett profit). Bearing in mind it was in the 70+M range pre pandemic.

Then we have the other side of the coin, REITs, Property Investment, Cash burning start ups, ... ... Property investment right now is just very very very unfavorable, may it be commercial or residential. Unless one is buying for own use, there is just no investment merit in buying one now. of course your agents will show you how much people have made in the past 3 years and extrapolate it into infinity.