tailieunhanh - INVESTING IN REITs PART 5

In this chapter we’ll look at some yardsticks for determining the investment value of a REIT’s stock. Sure, we want to buy high quality, moderate risk, and above-average growth, but only at prices that make sense. | Que st IFOR INVESTMENT VALUE 210 INVESTING IN REITS Success in REIT investing will be determined at least over the short term by the ability to buy REIT stocks at attractive prices. In this chapter we ll look at some yardsticks for determining the investment value of a REIT s stock. Sure we want to buy high quality moderate risk and above-average growth but only at prices that make sense. THE INVESTOR S DILEMMA BUY AND HOLD VERSUS TRADING One school of thought is that the key to investment success is to purchase shares of stock in the largest most solid companies or to buy index or mutual funds and to hold those stocks or funds indefinitely. The only time to sell say the buy-and-hold advocates is when you need capital. The other school of thought a more hands-on approach says that with hard work and good judgment an intelligent investor can beat the market or the broad-based averages either by astute stock picking or by clever market timing. Some advocates of this approach which rejects the theory that markets are efficient point to investors like Warren Buffett and Peter Lynch as examples of what a talented stock picker can accomplish while others in this group believe that certain signs technical or even astrological can indicate when either the entire market or specific stocks will rise and fall. Advice for the buy-and-hold crowd is simple Assemble a portfolio of blue-chip REITs or buy a managed REIT mutual fund or an index fund. Then if you ve chosen solid stocks or performing funds you can go off to Tahiti collect the steadily rising dividends and not worry about price fluctuations beating the competition or any other such irrelevancies. If history is any guide such a strategy may be able to average 8-12 percent in total returns over a long time horizon. Advice for the active trader or the REIT investor who desires to perform better than the REIT market is somewhat more complicated. First you must have a way to determine when a REIT stock is overpriced or .