General S-REITs Discussion Thread

[Senthil1179]

I don't understand this. It says "dont buy REITS now", but the rationale is not clear. Yes, the REITS value may go down because of 2 factors which are (a) DPU will go down materially because they have to borrow money at higher interest and (b) market perception will unncecessarily bring the value down because of market panic.

In both cases, the long term for REIT looks good right ? Once the interest rates go down in 1 to 1.5 year from now, both the DPU and value of REIT should go up. So this is the best time to accumulate REIT. The youtube video's views are very shallow and does NOT go in depth.

 

[sohguanh]

I don't understand this. It says "dont buy REITS now", but the rationale is not clear. Yes, the REITS value may go down because of 2 factors which are (a) DPU will go down materially because they have to borrow money at higher interest and (b) market perception will unncecessarily bring the value down because of market panic.

In both cases, the long term for REIT looks good right ? Once the interest rates go down in 1 to 1.5 year from now, both the DPU and value of REIT should go up. So this is the best time to accumulate REIT. The youtube video's views are very shallow and does NOT go in depth.

Often mentioned phrase be greedy when everyone is in fear. It works not only for US,SGX etc stocks but S-Reit too. But of cuz if you think S-Reit story is gone then yes exit.

What I like about S-Reit is their mandate to give dividends so during the long wait for them to shine again you get paid for waiting. But S-Reit can close shop aka delisted like any SGX stock so take note don't all in.

 

[DevilPlate]

I don't understand this. It says "dont buy REITS now", but the rationale is not clear. Yes, the REITS value may go down because of 2 factors which are (a) DPU will go down materially because they have to borrow money at higher interest and (b) market perception will unncecessarily bring the value down because of market panic.

In both cases, the long term for REIT looks good right ? Once the interest rates go down in 1 to 1.5 year from now, both the DPU and value of REIT should go up. So this is the best time to accumulate REIT. The youtube video's views are very shallow and does NOT go in depth.

Maybe that what he is doing due to his circumstances right now…..
He already heavily invested in the stock market rn…..so naturally he is building up warchest.

If someone else is 100% hoarding cash rn then different story altogether.

The only way to tell whether a person is bullish or bearish is to see how much cash/risk free asset he is holding (% relative to his total portfolio)

 

[stanlawj]

Once the interest rates go down in 1 to 1.5 year from now, both the DPU and value of REIT should go up. So this is the best time to accumulate REIT. The youtube video's views are very shallow and does NOT go in depth.

The words in bold are exactly what the current US commercial property investors stuck with negative equity are also thinking:

Here is the problem:

UST 10Yr:
2023 4.8%
2024 4.9%
2025 5.0%
2026 4.9%? (Powell steps down as FOMC chair)

UST 1Yr:
2023 5.4%
2024 5.2%
2025 5.0%
2026 4.8%? (Powell steps down as FOMC chair)

Interest rates going down??? Which one?? REITS borrow based on which interest rate?

The reason UST 10 yr yield will keep going up is simple: bond oversupply https://wolfstreet.com/2023/08/02/h...monthly-auction-sizes-60-by-august-next-year/

https://www.crfb.org/blogs/new-projection-federal-debt-will-reach-record-levels-sooner-expected

The money from bond sales go to the Federal spending: 70% is Social, Health and Defense. Do you think the Americans, both rich and the average, will vote for a party that decreases this spending?

 

[DevilPlate]

The words in bold is exactly what the current US commercial property investors stuck with negative equity are also thinking.

Here is the problem:

UST 10Yr:
2023 4.8%
2024 4.9%
2025 5.0%
2026 4.9%

UST 1Yr:
2023 5.4%
2024 5.2%
2025 5.0%
2026 4.8%

Interest rates going down??? Which one?? REITS borrow based on which interest rate?

US office gone case liao….tiagong transact at zero value? Heard from some random podcast.

 

[Mephist0pheLes]

I don't understand this. It says "dont buy REITS now", but the rationale is not clear. Yes, the REITS value may go down because of 2 factors which are (a) DPU will go down materially because they have to borrow money at higher interest and (b) market perception will unncecessarily bring the value down because of market panic.

In both cases, the long term for REIT looks good right ? Once the interest rates go down in 1 to 1.5 year from now, both the DPU and value of REIT should go up. So this is the best time to accumulate REIT. The youtube video's views are very shallow and does NOT go in depth.

how do u know interest rate will go down 1 to 1.5 years from now? I doubt even fed chairman knows the interest rate 1.5 years later.

And the low interest rate in the past 15 years is more of an exception rather than the norm.

The average fed fund rate since the 1950s is about 4.6%, jus slightly below the rate today. Of the last 71 years, only 21 years the fed fund rate was below 2%. Of these 21, 14 of them were from 2008 to 2022.

 

[elvintay07]

how do u know interest rate will go down 1 to 1.5 years from now? I doubt even fed chairman knows the interest rate 1.5 years later.

And the low interest rate in the past 15 years is more of an exception rather than the norm.

The average fed fund rate since the 1950s is about 4.6%, jus slightly below the rate today. Of the last 71 years, only 21 years the fed fund rate was below 2%. Of these 21, 14 of them were from 2008 to 2022.

Many are still studying the hard text book and using old theory. Haha! Last time why interest so high? Our grandfather open posb account last time 8% interest. So future interest may become 8%.

We need to understand the reason why interest is high. Because inflation is high mah. If tomorrow deflation, then interest still high? Inflation won’t go down in a straight line one so expected to have up and downs. Also not sure why suddenly war breakout in Israel. Seems like a planned script lei. Oil high who wins?

Those holding oil today can be the new leaders lei. Every turmoil new leaders will emerge

 

[stanlawj]

After seeing FCT (J69U) falling, now MIT (ME8U) keep falling. MLT (M44U) also going lower than last week.
Generally not seeing consistent price action in the important REITS.

 

[churnmaster]

Investors are conditioned to think that interest rates would never rise and even if they rise they would eventually fall back to the earlier ultra low levels . . Let’s see what happens.

 

[direbmem]

Is now considered blood in the streets for REITs?

 

[Senthil1179]

For some reason, I cant reply to the post from - stanlawj. It says "I cant post URL". So I am sending a new post.

The links you sent are difficult for me to consume. If we go with what you said, then we are looking at high interests for a long period of time. So in that case, where to put the money then ? Because the majority of the world stocks will also go down and they are all waiting for the interest rates to go down. In particular the US tech stocks. Once the AI hype is over, it is almost the interest rates which are going to impact them. The very indication of "reduction in increase rate" pushes the stocks up. And the opposite is true as well.

So the question is "where to put the money for next 2 years ?"

 

[Senthil1179]

Maybe that what he is doing due to his circumstances right now…..
He already heavily invested in the stock market rn…..so naturally he is building up warchest.

If someone else is 100% hoarding cash rn then different story altogether.

The only way to tell whether a person is bullish or bearish is to see how much cash/risk free asset he is holding (% relative to his total portfolio)

I like what you said here ...... "The only way to tell whether a person is bullish or bearish is to see how much cash/risk free asset he is holding (% relative to his total portfolio)"

So to get it right (sometimes, you can misunderstand things and get it completely wrong).....you are saying that the person is bullish if he has invested all and does not have any cash left. And he is bearish if he is holding lot of cash left ?

 

[churnmaster]

For some reason, I cant reply to the post from - stanlawj. It says "I cant post URL". So I am sending a new post.

The links you sent are difficult for me to consume. If we go with what you said, then we are looking at high interests for a long period of time. So in that case, where to put the money then ? Because the majority of the world stocks will also go down and they are all waiting for the interest rates to go down. In particular the US tech stocks. Once the AI hype is over, it is almost the interest rates which are going to impact them. The very indication of "reduction in increase rate" pushes the stocks up. And the opposite is true as well.

So the question is "where to put the money for next 2 years ?"

What is your return expectation ?

 

[churnmaster]

I like what you said here ...... "The only way to tell whether a person is bullish or bearish is to see how much cash/risk free asset he is holding (% relative to his total portfolio)"

So to get it right (sometimes, you can misunderstand things and get it completely wrong).....you are saying that the person is bullish if he has invested all and does not have any cash left. And he is bearish if he is holding lot of cash left ?

Does it matter whether you are bullish or bearish? All that matters is how much return your portfolio generates vis-a-vis your return expectation.

 

[stanlawj]

For some reason, I cant reply to the post from - stanlawj. It says "I cant post URL". So I am sending a new post.

The links you sent are difficult for me to consume. If we go with what you said, then we are looking at high interests for a long period of time. So in that case, where to put the money then ? Because the majority of the world stocks will also go down and they are all waiting for the interest rates to go down. In particular the US tech stocks. Once the AI hype is over, it is almost the interest rates which are going to impact them. The very indication of "reduction in increase rate" pushes the stocks up. And the opposite is true as well.

So the question is "where to put the money for next 2 years ?"

Is there anything wrong holding cash or buy T-bills?

In fact, if you just leave your cash in Interactive Brokers trading account, it pays you 4.83% p.a. interest on USD, tax-free. This is an example that I can give where you just hold cash in a suitable place and still earn interest, yet that cash is still ready to buy stocks when the opportunity arrives. No need to lock up in fixed deposit.

As long as Powell is FOMC chair, I don't see any significant drop in US Fed Fund rates until he is out (2026). He and the US Treasury dept (i.e. Biden admin) are not cooperating in their policies to reduce inflation. FOMC is keeping short duration rates up to combat inflation, while Biden admin is worsening the inflation problem by overspending and hence causing the long duration bond rates up.

You know it will be time to buy stocks, when IBKR starts cutting the 4.83% interest down aggressively.

 

[zeroX26]

Is now considered blood in the streets for REITs?

No ah, some are still above their Oct 22 lows leh like Keppel DC.

 

[churnmaster]

Is there anything wrong holding cash or buy T-bills?

In fact, if you just leave your cash in Interactive Brokers trading account, it pays you 4.83% p.a. interest on USD, tax-free. This is an example that I can give where you just hold cash in a suitable place and still earn interest, yet that cash is still ready to buy stocks when the opportunity arrives. No need to lock up in fixed deposit.

As long as Powell is FOMC chair, I don't see any significant drop in US Fed Fund rates until he is out (2026). He and the US Treasury dept (i.e. Biden admin) are not cooperating in their policies to reduce inflation. FOMC is keeping short duration rates up to combat inflation, while Biden admin is worsening the inflation problem by overspending and hence causing the long duration bond rates up.

Just adding the condition - IBKR’s 4.83% pa for an account with a NAV of USD 100K and above.

For lower NAV it’s lower.

 

[direbmem]

Is there anything wrong holding cash or buy T-bills?

In fact, if you just leave your cash in Interactive Brokers trading account, it pays you 4.83% p.a. interest on USD, tax-free. This is an example that I can give where you just hold cash in a suitable place and still earn interest, yet that cash is still ready to buy stocks when the opportunity arrives. No need to lock up in fixed deposit.

As long as Powell is FOMC chair, I don't see any significant drop in US Fed Fund rates until he is out (2026). He and the US Treasury dept (i.e. Biden admin) are not cooperating in their policies to reduce inflation. FOMC is keeping short duration rates up to combat inflation, while Biden admin is worsening the inflation problem by overspending and hence causing the long duration bond rates up.

You know it will be time to buy stocks, when IBKR starts cutting the 4.83% interest down aggressively.

Yup, same as me, holding majority cash here (more than 70%), in money market and high interest bank accounts ( non FD). Cash is a good asset class now. Buying a few stocks here and there but overall still 70%+ cash. The other 30% in stocks fluctuating still pains me a bit though.

 

[DevilPlate]

I like what you said here ...... "The only way to tell whether a person is bullish or bearish is to see how much cash/risk free asset he is holding (% relative to his total portfolio)"

So to get it right (sometimes, you can misunderstand things and get it completely wrong).....you are saying that the person is bullish if he has invested all and does not have any cash left. And he is bearish if he is holding lot of cash left ?

Yeah unless an investor/bagholder like simi Master Leong.

 

[DevilPlate]

Yup, same as me, holding majority cash here (more than 70%), in money market and high interest bank accounts ( non FD). Cash is a good asset class now. Buying a few stocks here and there but overall still 70%+ cash. The other 30% in stocks fluctuating still pains me a bit though.

So u have always been holding so much cash in the past? Or u power cash out alot in 2021?