Tackle Today: Real Estate Exposure
October 27, 2021
≈ Pick Yer Poison. ≈
Real estate offers an exciting diversification component to stock portfolios. Like equities, real estate has grown over time. More recently, real estate has been booming alongside the S&P 500. Decades ago, the only option for you to get exposure to the asset class was buying physical real estate.
While doing so comes with perks, it’s also loaded with drawbacks. For example, it’s expensive, illiquid, undiversified, time-intensive, and can require a great deal of expertise.
Fortunately, with technology and the evolution of financial markets, two other paths popped up: private equity REITs and publicly traded REITs. Most of you probably haven’t heard of the first one, but the second one includes such ETFs as XLRE, IYR, and VNQ. REIT is an acronym that stands for Real Estate Investment Trust. Each REIT is slightly different, but they generally offer a diversified way to buy a basket of real estate companies. Thus, their fate is tied to the trend of property values.
Due to the higher cash flows generated by real estate, REITs offer have higher dividend yields than traditional stock funds. They still appreciate over time too.
Much hay has been made about how rapidly the S&P 500 has recovered from last March’s crash. SPY is up 110%. Did you know most REITs have also doubled off the lows, though?
Consider researching the variety of real-estate-based ETFs out there to see if they’re a good fit for your portfolio.
#TeamTackle
Chart of the Day: The Rousing REIT Recovery
XLRE is the REIT you see us reference the most alongside the other sector funds. It nearly kept up with the percentage gain of SPY, and it still has a beefier dividend yield (2.17% vs. 1.25%).
Video of the day
Trading Concept Check: Market and sector correlation
Market and Sector Correlation is simple, does the stock in question tend to move in the same direction as the broad market indices, and does the stock march to the beat of the same drum as its sector?
When we identify that a stock is highly correlated with the market and or sector trends this gives us an extra layer of technical confirmation and can help us better trade with the broader market trends.
Today’s line up
Tales of a Technician: Record Highs and Nonlinear Stock Market Returns
The S&P 500 closed at a record high today. That means yet another correction has come and gone without derailing the bull. From peak to trough, SPY fell 6% over just over 30 calendar days. For what it’s worth, the recovery took less than 20 days.
Who says stocks fall faster than they rise!?
Traders Lounge 11 PM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
The Coaches Show Replay
If you missed last night’s episode where Coaches Gino Poore and Greg Holmes talked about Trading Long Calls using the Options Report or would like to watch it again, check it out here.
Bear Market Survival Guide MasterMind Group 9:30 PM EST
Owners of our premium system The Bear Market Survival Guide are invited to attend. System architect, Tyler Craig, will be showing how to apply the principles taught in the course.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.
Trading Justice Podcast Episode 448: The Long Call
In this episode, Coach Tyler Craig joins us to discuss the Long Call options strategy. A Long Call involves buying an options contract with a set expiration date and strike price on a tradable product. Listen to the episode in the player below:
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