The past two days have resulted in quite an amazing activity in particular the resurgent run for Reits as the odds for a rising rate for this year were slashed virtually to zero as a result of further uncertainty due to Brexit. There were even news that the Fed could launch another quantitative easing (QE4) on the back of all these uncertainties.
What has resulted from the news is a flight to safety to Reits as a potential safe haven for investors. It is interesting because the traditional safe haven used to be the gold and treasury bond but demand have been so rampant that investors are running to Reits as an alternative.
If you recall a few years back, the run was somewhat similar to what happened back then in 2013 when Reits were running high to such an amazing level that the spread between the yield it offered vs the treasury yield were compressed to the lowest. That was a sign that prudent investors should take profits off the table, regardless of whatever happens afterwards because it was simply unsustainable.
The run this time has a lot of room to run if we were to witness something similar to 2013 and given that the alternatives are poor and economic driven in nature, it appears that Reits are a safety net which investors are comfortable with.
Having said that, my approach has always been more towards taking off profits when I see there are opportunities to do so. I will definitely miss to sell at the highest but divesting them also means passing on the risk to the next person who thinks it’s prudent to do so at this time. I could be dead wrong at the end of the day and miss those gains other people are enjoying but at least this prudent approach has served me very well over the past few years since I started investing.
I have taken profits off the table for FCT partially over the past couple of days at $1.985 and will continue to divest the other Reits that have been either fair or over valued at this time. You can be sure I will divest more as they continue to give me the opportunity to do so over the next couple of days.
Be fearful when others are greedy. This is herd investing at the very best.