Post: #1

Here is my basic opinion, loaded the chart on rem as well, on my way back from the gym and typed this up. The return numbers are correct you can use google finance if you want to verify i didn't manipulate numbers from the ticker.

Again this is my opinion, do your own work make your own call listen to who you want.

1) Inflation Protection: The united states has been acting like a printing press. What this means is that inflation will be higher than normal. Asset prices go up. Bad news. So what you do is buy assets such as homes to protect against said inflation hike. Look at BitCoins the reason why they rallied is because people are looking for a store of value hence why Gold ran up. Not making a call on bit coins of course but basically coins went up as a store of value

2) Low Credit Risk Exposure: Given the increases in credit requirements it is my view that people purchasing homes are more credit worthy. Investing in single family homes or Mortgages (Reits and or otherwise, I mentioned several in the very old thread REM and DBLTX and look at how those have done YTD and over the course of time since posting including the 10% yield). Here’s the proof the thread was started in March of 2012. /thread-10970.html
Here is REM as of march of 2012 since I posted about it you can find the date for that as well.

[attachment=12186]

21.66% return not that bad IMHO basically 20% gains in a year. ($2.15 in dividends (14% and 7.5% off appreciation because the spreads have remained favorable - for newbs all you do is all up the Dividend payments and divide by current stock price to approximate dividend returns are part of your total profile)

3)Trading at Book Value: Looking across the reit indexes, you see they trade at roughly 1.0x book value. This means in general they are cheap. They trade in the range of 0.9x to 1.2x. At 1.0x it’s a pretty good bargain. Again this is my opinion, if things trade closer to 1.2x then I would be selling some shares and waiting for a dip again. But at a 10% yield on a REIT which should normally get 6-8% its worth the risk to own.

4) Reverse DCF: As many know cash becomes less useful the further out you have it, so for example $100 today is worth more than $100 in 10 years due to reinvestment. So if rates are low that means that the spread on a portfolio is likely to remain healthy near term I expect portfolio spreads are expected to remain at healthy levels in the 1.25%–1.75% range near-term this means you’re getting your payment (yield) earlier than later. This also means you’re calculating a reverse DCF because yields should return to normalcy but for now don’t see that happening you’re making money on the current investment cycle, would get out again when we’re near 1.1 or 1.2x book and yields are closer to 8% than 10%.

5) Carefully Choose the Reit - prepayments: If you want to buy them, again have said this a hundred times, do your own research and make your own call. So one of things that is occurring is prepayment speeds. Some of these reits have very high yields like AGNC where prepayment speeds can be at 10%+ this is a risk and should be understood.

There you go TL;DR. I like single family homes/mortgage reits whatever you want to call them, talked about them just over a year ago and they are up over 20% when you include the dividend (cash in your pocket)

Do your own work, that's my opinion have at it guys.

Post: #2

For the avoidance of doubt, the reason this thread is here is that the OP noted on another page that those that thought housing would go down as a result of Bernanke's "Quantitative Easing" program were simpletons. His actual quote was:

"Hahaha at all the guys talking about real estate bubbles again, that means they don't understand what the govt is doing."

I then posted this /thread-23985-...pid449054, and asked how this means that those who point to the possibility of another housing bubble "don't understand what the gov't is doing".

And so, after much too'ing and fro'ing, we have the above, uh, "analysis". Well, its a better than the "trust me" drivel we got on the other thread! But its still pretty weak. Point by point, in no particular order, here's where it is weak:

2) You refer to REITS, but the topic was whether investing in single-family homes/condos was called for in light of the Fed's actions. REITS, even residential REITS, are really a very different asset class, more akin to a stock than to real estate: The price correlation between REITS and other asset classes goes WAY up in a crisis. Single family homes don't do this. Chart CPT and AVB, two popular residential REITS, vs the S&P 500. You'll notice two odd things: First, they DON'T crash in 2006-7, like other real estate did. But they DID crash in late 2008, when equities did. In fact, if you graph the three of them together, you'll see a STRONG correlation. Meaning, buying a residential REIT is often more like buying the equity markets than housing! It trades like a security because it IS a security! This correlation goes up in times of stress - that is, when you most need the benefits of diversification. So, telling you to buy a residential REIT when the OP was talking about buying a home is bit off the mark.

Leaving aside the reference to fixed income investments, however, what's really weak about this point is the assertion that there is "low credit risk exposure". Credit risk may be lower now than during the last bubble, but that's only because there is so much lower housing activity now! Housing starts are ~700K per month this spring; in 2006, they were over 2.2M per month! That's because the LAST Fed-induced credit bubble was in full swing. And, of course, you know how THAT played out: The real estate bubble popped! Now, what has happened in the years since? Has disposable income of the average American gone way up? Is he richer today than in 2006? He's not. SO, the only way housing activity (not just housing starts, but household formation, and therefore the purchase of single-family homes) can increase is...wait for it...if credit is loosened! And that's exactly what QE is all about; see my original post.
3) REM is even a more peculiar choice - its a mortgage REIT. And DBLTX is a fixed income fund! I think most agree that the typical reaction of fixed income is to get killed if rates go up. In any event, this isn't really on point regarding housing, the post that brought us here.

So points 2) and 3)....don't really address your comment about housing and how people "know nothing". And 2) missed the mark on the loosening of credit entirely!

Now, let's look at points 1) and 4).

4) is the easiest to dispose of...it basically says that, because of the time value of money, a dollar today is worth more than a dollar in a few years, because of inflation. OK Anyone who doesn't know this, please stop reading immediately and go back to the 8th grade!

This leaves us with: 1) Inflation protection.

It's possible. But far from a guarantee. Sadly, other than a reference to Bitcoins (WTF??), the OP doesn't give any analysis WHY real estate is necessarily an inflation hedge. He just says so and we're all supposed to nod and believe.

It might be useful to remind people why real estate has any value at all: It generates income from rents. (Yes, I know, you LIVE in your home, but taht is also freeing you from paying the equivalent rent, i.e., it is avoided rent). Now, rents typically increase with inflation, and so the future value of the real esate would tend to increase with inflation as well.

The problem with reflexively proclaiming real estate as an inflation hedge is that the actual cash flow from rent eventually determines its future price. In the short run, prices can rise out of sync with expected future cash flows - this is what happened in the housing bubble. But eventually, that situation corrects itself (and we learned that lesson in the real estate crash!). If the cost of servicing an inflated mortgage associated with a rise in prices led by loose credit policy exceeds an equivalent rent on the same property, all in all, people will sell, pocket the cash, rent, and be way ahead of the game. The bid will drop and prices will crash. This is, of course, exactly what happened in 2006! That is, if cash flow in vs cash flows out move out of sync, WHAT FUNDAMENTALLY DRIVES THE INCREASE IN PRICES YOU EXPECT TO SEE FROM INFLATION? Its faulty logic to take it on faith that housing prices increase with inflation as a law, since ultimately prices are dependent upon the related cash flows, i.e., home values do not rise in and of themselves without cash flows rising as well. Unless there is speculation. And what leads to speculation? Too much credit chasing too few investments, as I discussed here: /thread-23985-...#pid449054 And that, i'm afraid, is EXACTLY what the Fed is doing. As it did in the last decade.

In a speculative bubble, where yields from cash flows are weak compared to other investments, it is not true that prices will necessarily move with inflation. They MAY, for a short while (we saw this briefly in the late 1970s) but it is FAR FROM CERTAIN in the longer term. We just saw, over the past decade, how extremely accommodative Fed lending practices can lead to a stock bubble, a housing bubble, and a credit bubble. In such an environment, its very possible that home prices may trail inflation at least until the underlying cash flows are competitive again. (Note that this doesn't mean home values will crash, it means there will be negative REAL returns, that is, returns will trail inflation).

Is this a sure thing? Nope; nothing in the capital markets are a sure thing. Is it highly possible? LOTS of smart people who fear that Ben Bernanke's fiat-currency, credit-expansionary monetary policy will lead to yet another bubble think so! Google any leading economics blog and see if you see similar views.

Then decide if you think there is merit in the underlying analysis, or are you more confident investing your money on the basis of "Hahaha at all the guys talking about real estate bubbles again, that means they don't understand what the govt is doing."

Post: #3

P.S. I think Cupcake deserves a nice hand for trying; hopefully the discussion will have been informative and useful to a few. Probably very few ...

P.P.S - he likes it when you call him "Cupcake", trust me.

Post: #4

1. I never said anything is a sure thing, again you keep returning to my quote and took it to heart when i wrote it in passing. You are again angry at my typing style, if i wrote the following you wouldnt care

"IMHO i don't believe there is a asset bubble in housing and would buy single family homes"

But i didn't because i am dick, oh well.

2. If you can't buy a single family home you can buy a REIT. That is one of the of the best things you can do.
3. Go ahead and pull up DBLTX as well and over lay that on the bond funds... you'll see it has also outperformed the bond index.
4. I never guaranteed profits yet again you are putting words in my mouth the OP has my OPINION which is that people should buy them for example on what i mean by posting style:

"I think people are retarded if they don't own single family homes"
vs.
"I believe this rate environment will be fine for now and people should buy since yields are at 10% and book value is close to 1"

The above is what i typed out because i don't give a shit, the below is the same answer "buy it".

5. Of course reits get smoked when shit hits the fan, you are making money on the spread and its levered books at about 10x today. Again I said i believe things are fine and spreads are fine, if you don't believe me then don't buy them. I recommended this what 1 year ago sooo at least my opinion is where my mouth is. We can simply put a time stamp here too lmk if you want to go heads up on a bet on returns as of today, i will take that bet.

6. Your attacks on my "DCF" explanation are lame because most people here don't even know what a DCF is or how to make one. I made my OP simple enough for anyone to understand.

7. Houses as an inflation hedge is quite obvious. It is one of the main life tenants food, water, shelter... people need all three so when the govn't prints money asses such as homes get bid up as well. You know this.

So to sum up. It is my opinion one should own single family homes, if you can't afford that then buy up some reits. If you think shit is going to hit the fan then don't listen to my opinion and take the opposite trade.

So there you have it we can just put a heads up bet here then I say REITs all in return we'll just use REM will be up over NTM period deal? This way you can call me cupcake if you are right in 12 months.

I don't care about your opinions now, just take the bet or move on because if someone cannot manage their own money i am not taking their advice.

(05-18-2013 08:25 PM)Dexter Morgan Wrote:  For the avoidance of doubt, the reason this thread is here is that the OP noted on another page that those that thought housing would go down as a result of Bernanke's "Quantitative Easing" program were simpletons. His actual quote was:

"Hahaha at all the guys talking about real estate bubbles again, that means they don't understand what the govt is doing."

I then posted this /thread-23985-...pid449054, and asked how this means that those who point to the possibility of another housing bubble "don't understand what the gov't is doing".

And so, after much too'ing and fro'ing, we have the above, uh, "analysis". Well, its a better than the "trust me" drivel we got on the other thread! But its still pretty weak. Point by point, in no particular order, here's where it is weak:

2) You refer to REITS, but the topic was whether investing in single-family homes/condos was called for in light of the Fed's actions. REITS, even residential REITS, are really a very different asset class, more akin to a stock than to real estate: The price correlation between REITS and other asset classes goes WAY up in a crisis. Single family homes don't do this. Chart CPT and AVB, two popular residential REITS, vs the S&P 500. You'll notice two odd things: First, they DON'T crash in 2006-7, like other real estate did. But they DID crash in late 2008, when equities did. In fact, if you graph the three of them together, you'll see a STRONG correlation. Meaning, buying a residential REIT is often more like buying the equity markets than housing! It trades like a security because it IS a security! This correlation goes up in times of stress - that is, when you most need the benefits of diversification. So, telling you to buy a residential REIT when the OP was talking about buying a home is bit off the mark.

Leaving aside the reference to fixed income investments, however, what's really weak about this point is the assertion that there is "low credit risk exposure". Credit risk may be lower now than during the last bubble, but that's only because there is so much lower housing activity now! Housing starts are ~700K per month this spring; in 2006, they were over 2.2M per month! That's because the LAST Fed-induced credit bubble was in full swing. And, of course, you know how THAT played out: The real estate bubble popped! Now, what has happened in the years since? Has disposable income of the average American gone way up? Is he richer today than in 2006? He's not. SO, the only way housing activity (not just housing starts, but household formation, and therefore the purchase of single-family homes) can increase is...wait for it...if credit is loosened! And that's exactly what QE is all about; see my original post.
3) REM is even a more peculiar choice - its a mortgage REIT. And DBLTX is a fixed income fund! I think most agree that the typical reaction of fixed income is to get killed if rates go up. In any event, this isn't really on point regarding housing, the post that brought us here.

So points 2) and 3)....don't really address your comment about housing and how people "know nothing". And 2) missed the mark on the loosening of credit entirely!

Now, let's look at points 1) and 4).

4) is the easiest to dispose of...it basically says that, because of the time value of money, a dollar today is worth more than a dollar in a few years, because of inflation. OK Anyone who doesn't know this, please stop reading immediately and go back to the 8th grade!

This leaves us with: 1) Inflation protection.

It's possible. But far from a guarantee. Sadly, other than a reference to Bitcoins (WTF??), the OP doesn't give any analysis WHY real estate is necessarily an inflation hedge. He just says so and we're all supposed to nod and believe.

It might be useful to remind people why real estate has any value at all: It generates income from rents. (Yes, I know, you LIVE in your home, but taht is also freeing you from paying the equivalent rent, i.e., it is avoided rent). Now, rents typically increase with inflation, and so the future value of the real esate would tend to increase with inflation as well.

The problem with reflexively proclaiming real estate as an inflation hedge is that the actual cash flow from rent eventually determines its future price. In the short run, prices can rise out of sync with expected future cash flows - this is what happened in the housing bubble. But eventually, that situation corrects itself (and we learned that lesson in the real estate crash!). If the cost of servicing an inflated mortgage associated with a rise in prices led by loose credit policy exceeds an equivalent rent on the same property, all in all, people will sell, pocket the cash, rent, and be way ahead of the game. The bid will drop and prices will crash. This is, of course, exactly what happened in 2006! That is, if cash flow in vs cash flows out move out of sync, WHAT FUNDAMENTALLY DRIVES THE INCREASE IN PRICES YOU EXPECT TO SEE FROM INFLATION? Its faulty logic to take it on faith that housing prices increase with inflation as a law, since ultimately prices are dependent upon the related cash flows, i.e., home values do not rise in and of themselves without cash flows rising as well. Unless there is speculation. And what leads to speculation? Too much credit chasing too few investments, as I discussed here: /thread-23985-...#pid449054 And that, i'm afraid, is EXACTLY what the Fed is doing. As it did in the last decade.

In a speculative bubble, where yields from cash flows are weak compared to other investments, it is not true that prices will necessarily move with inflation. They MAY, for a short while (we saw this briefly in the late 1970s) but it is FAR FROM CERTAIN in the longer term. We just saw, over the past decade, how extremely accommodative Fed lending practices can lead to a stock bubble, a housing bubble, and a credit bubble. In such an environment, its very possible that home prices may trail inflation at least until the underlying cash flows are competitive again. (Note that this doesn't mean home values will crash, it means there will be negative REAL returns, that is, returns will trail inflation).

Is this a sure thing? Nope; nothing in the capital markets are a sure thing. Is it highly possible? LOTS of smart people who fear that Ben Bernanke's fiat-currency, credit-expansionary monetary policy will lead to yet another bubble think so! Google any leading economics blog and see if you see similar views.

Then decide if you think there is merit in the underlying analysis, or are you more confident investing your money on the basis of "Hahaha at all the guys talking about real estate bubbles again, that means they don't understand what the govt is doing."

Post: #5

Good post. I love REITs as an asset class, maybe even more than I love high yielding stocks right now. Valuations aren't absurd and inflation protection is attractive if we ever get any inflation (inflation's not an issue right now, imo). I think low vol, yield hungry investing is here to stay for awhile which will put a floor in REITs.

With that I think REIT investing is a space where the vast majority of people are best suited to sticking with ETFs. Analyzing individual REITs isn't like analyzing Coca Cola or Lululemon. I'm not willing to put the time into understanding individual REITs (especially mortgages), and I suspect most investors aren't either. I also prefer property REITs right now over Mortgage REITs. Mortgages have been on a tear, but I'm personally not comfortable with the headline risk at this point having a longer term, lower turnover investment horizon.

Post: #6

The decision to purchase a home isn't just merely asset allocation.

The whole idea that a home is primarily a financial investment is part of the problem.

WIA

Post: #7

(05-18-2013 08:33 PM)trader Wrote:  Good post. I love REITs as an asset class, maybe even more than I love high yielding stocks right now. Valuations aren't absurd and inflation protection is attractive if we ever get any inflation (inflation's not an issue right now, imo). I think low vol, yield hungry investing is here to stay for awhile which will put a floor in REITs.

With that I think REIT investing is a space where the vast majority of people are best suited to sticking with ETFs. Analyzing individual REITs isn't like analyzing Coca Cola or Lululemon. I'm not willing to put the time into understanding individual REITs (especially mortgages), and I suspect most investors aren't either. I also prefer property REITs right now over Mortgage REITs. Mortgages have been on a tear, but I'm personally not comfortable with the headline risk at this point having a longer term, lower turnover investment horizon.

Glad it was helpful. Again everyone do your own work and invest in what you wish.

Post: #8

(05-18-2013 08:33 PM)WestCoast Wrote:  2. If you can't buy a single family home you can buy a REIT. That on the of the best things you can do.

No, it is one of the WORST things you can do - it is NOT a substitute for a home; it has eery correlation to the S&P 500! It's more like buying a share of GE. Here is a chart of a residential REIT you named, plotted against the S&P 500. BTW, you do know what "correlation" is, and why it is important, don't you? You DID pass the CFA, right??

http://finance.yahoo.com/echarts?s=CPT+I...undefined;

REITS are OK as an asset class all their own - but as a substitute for a bricks-and-mortar house? NFW.

(05-18-2013 08:33 PM)WestCoast Wrote:  Your attacks on my "DCF" explanation are lame because most people here don't even know what a DCF is or how to make one.

Anyone here not know what a discounted cash flow is?

(05-18-2013 08:33 PM)WestCoast Wrote:  Houses as an inflation hedge is quite obvious. It is one of the four tenants food, water, shelter...

That's three tenants. And I've just given you a page of fundamentals why it may not be true. WE JUST LIVED THROUGH A PERIOD, IN 2006-2008, WHEN THE NEED FOR FED-INDUCED BUBBLE-DRIVEN HOUSING PRICES TO EVENTUALLY RETURN TO PRICING MORE IN LINE WITH FUNDAMENTALS WAS ***PAINFULLY*** DRIVEN HOME TO WHOLE WORLD. Were you asleep during this time? Are you Rip-Van-Cupcake??

The definition of insanity is doing the same thing over and over, and expecting a different result.

Post: #9

(05-18-2013 08:33 PM)trader Wrote:  I'm not willing to put the time into understanding individual REITs (especially mortgages), and I suspect most investors aren't either.

I want to be on the other side of your trades. No offense.

BTW, I think most investors ARE willing to put the time in to understand ANYTHING in which they invest.

Post: #10

Find a better asset class to bet on single family homes then and lets go heads up. A mortgage reit is about as close as it gets, find a better one and again i'll take the bet so put your caps speak where your $$ is.

Post: #11

Can someone tell me how to include a picture in a post?

I know, I know. Don't hate!

Post: #12

(05-18-2013 08:27 PM)Dexter Morgan Wrote:  P.S. I think Cupcake deserves a nice hand for trying; hopefully the discussion will have been informative and useful to a few. Probably very few ...

P.P.S - he likes it when you call him "Cupcake", trust me.

We already have a Cupcake on the forum. I think it is time to stop with the immature name calling.

Post: #13

(05-18-2013 08:57 PM)WestCoast Wrote:  Find a better asset class to bet on single family homes then and lets go heads up. A mortgage reit is about as close as it gets, find a better one and again i'll take the bet so put your caps speak where your $$ is.

I'm not sure what you saying. In any event, I don't "bet". I invest. You should continue to bet, though...

Post: #14

Full post click attachment at the bottom and load up.

Again find a better asset class that we can "take opposite sides of an investment in (such as REM)" and lets go heads up with your CAPS !!!! typing. Again i don't care. Take the opposite side of an investment/bet whatever and go heads up with me or STFU with the trolling CAPS and !!!

(05-18-2013 08:59 PM)Dexter Morgan Wrote:  Can someone tell me how to include a picture in a post?

I know, I know. Don't hate!

Post: #15

(05-18-2013 09:01 PM)WestCoast Wrote:  Full post click attachment at the bottom and load up.

Again find a better asset class that we can bet on and lets go heads up with your CAPS !!!! typing. Again i don't care.

(05-18-2013 08:59 PM)Dexter Morgan Wrote:  Can someone tell me how to include a picture in a post?

I know, I know. Don't hate!

Thank you. I still have no idea what you are saying you want to "bet" on. Are you trying to say that you want me to name an asset class with a higher correlation to residential real estate than mortgage REITS? Is that what are trying to say? For god's sake, speak ENGLISH, son! Sincere apologies if you are ESL, otherwise, SHEESH!

Post: #16

(05-18-2013 08:55 PM)Dexter Morgan Wrote:  That's three tenants. And I've just given you a page of fundamentals why it may not be true. WE JUST LIVED THROUGH A PERIOD, IN 2006-2008, WHEN THE NEED FOR FED-INDUCED BUBBLE-DRIVEN HOUSING PRICES TO EVENTUALLY RETURN TO PRICING MORE IN LINE WITH FUNDAMENTALS WAS ***PAINFULLY*** DRIVEN HOME TO WHOLE WORLD. Were you asleep during this time? Are you Rip-Van-Cupcake??

The definition of insanity is doing the same thing over and over, and expecting a different result.

You are basing the bubble on loose credit. While that was a big contributing factor, you cannot also negate the banks and credit agencies bundling shit loans and selling them off with credit A ratings. Add to that the insurance purchased on those bad loans knowing they would default in mass, you got the shit storm we witnessed.

Post: #17

Not quite what I wanted. Will try again.

Post: #18

I again don't care about your analysis as of history, so you going to go heads up with me?

BTW in case you don't realize why i don't care that you keep calling me cupcake. You're basically trolling yourself and jocking me now.

Either put up on the heads up "investment/trade/bet" or STFU and stop trolling me.

Urban Dictionary
2. Cupcaking

Leaving a large group of your male friends, to go to another room and talk for prolonged periods of time with a girlfriend or girl you are interested in.
Carl - "JJ's been cupcaking for like 2 hours now."
Alex - "oh well, lets play some more guitar-hero"

Post: #19

(05-18-2013 09:04 PM)worldwidetraveler Wrote:  You are basing the bubble on loose credit. While that was a big contributing factor, you cannot also negate the banks and credit agencies bundling shit loans and selling them off with credit A ratings.

Right, but why did they do this? See my earlier post on the Fed's tweaking of reserve requirements -- that is, the reserve requirements that form the BASIS of what banks lend!

Post: #20

Yes find a better asset class correlated to single family homes.

Mortgage reits are about as good as it gets.

Then we take opposite investment positions on that stock/fund and see who is right over a NTM period... otherwise just GTFO

Post: #21

(05-18-2013 09:07 PM)WestCoast Wrote:  I again don't care about your analysis as of history

No reply required. If you don't care to learn how markets worked in the past, you are indeed "betting". Good luck! The so-called "smart money" can't get ahead unless there is...well, you know what kind of money!

(05-18-2013 09:07 PM)WestCoast Wrote:  Urban Dictionary
2. Cupcaking

Leaving a large group of your male friends, to go to another room and talk for prolonged periods of time with a girlfriend or girl you are interested in.
Carl - "JJ's been cupcaking for like 2 hours now."
Alex - "oh well, lets play some more guitar-hero"

Uh, ok. Did you know that in the military if you can't keep up, they call you "cupcake".

(05-18-2013 09:07 PM)WestCoast Wrote:  Are going to go heads up with me?

Possibly. As soon as you explain to me what the hell you are trying to say!

Post: #22

(05-18-2013 09:08 PM)Dexter Morgan Wrote:  

(05-18-2013 09:04 PM)worldwidetraveler Wrote:  You are basing the bubble on loose credit. While that was a big contributing factor, you cannot also negate the banks and credit agencies bundling shit loans and selling them off with credit A ratings.

Right, but why did they do this? See my earlier post on the Fed's tweaking of reserve requirements -- that is, the reserve requirements that form the BASIS of what banks lend!

You saying they did this because of the fed reserve requirements being relaxed? I know it contributed which is why I said loose credit contributed to the perfect storm.

Falsifying credit ratings doesn't really have anything to do with lending restrictions.

Banks had to do it in order to sell the shit loans.

Maybe I am missing something and you can explain to me.

Post: #23

Okay let me speak clear english for even retards.

I am saying if you buy REM today and wait 12 months it will give you a positive net return. REM is a mortgage reit which is almost as close as possible to single family home ownership as you can get (assuming you must buy an equity investment). Now we wait 12 months and see who is right, you would be saying REM including dividend payments will be down over the next twelve months.

We check in May 18, 2014 for results. So we stop bickering.

Put your money where your CAPS and !! is at.

Post: #24

(05-18-2013 09:09 PM)WestCoast Wrote:  Yes find a better asset class correlated to single family homes.

Mortgage reits are about as good as it gets.

Then we take opposite investment positions on that stock/fund and see who is right over a NTM period... otherwise just GTFO

Sadly there aren't many investments that substitute for residential housing - I wish there were! Years ago, there was an ETN by Metro Markets that tracked residential housing prices, but it did not survive.

I will tell you this: I would NOT advise someone who wants to invest in real estate to buy a mortgage REIT as a substitute! The mortgage REIT could have all kinds of tranche repayment risk that a homeowner never has to contend with. Also, because it is so liquid, it tends to converge with equity prices in a downtown.

Post: #25

So do we have a bet now?

May 18, 2014 put up or STFU.

(05-18-2013 09:15 PM)Dexter Morgan Wrote:  

(05-18-2013 09:09 PM)WestCoast Wrote:  Yes find a better asset class correlated to single family homes.

Mortgage reits are about as good as it gets.

Then we take opposite investment positions on that stock/fund and see who is right over a NTM period... otherwise just GTFO

Sadly there aren't many investments that substitute for residential housing - I wish there were! Years ago, there was an ETN by Metro Markets that tracked residential housing prices, but it did not survive.

I will tell you this: I would NOT advise someone who wants to invest in real estate to buy a mortgage REIT as a substitute! The mortgage REIT could have all kinds of tranche repayment risk that a homeowner never has to contend with. Also, because it is so liquid, it tends to converge with equity prices in a downtown.