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The markets are melting, banks are having epileptic seizures, the credit market is frozen solid… and short selling suddenly is illegal, so where are you supposed to hide out? Are there any safe harbors in which to weather the storm?
Something that has been working for me (so far) is Canadian REITs. In almost any crisis situation, it is important to remember that there is always some part of the financial markets which are strong.
Temple REIT (TR.un) is a tiny real estate investment trust which I’ve held for more than a year now:
This beautiful chart is actually just part of the story because on top of the capital gains, Temple REIT has offered a monthly distribution - similar to a dividend but taxed differently.
Before June the distribution was $0.08/unit and afterward it increased to $0.10/unit. So even if Temple REIT had gone sideways, thanks to the distributions, it returns +10%.
That might seem paltry but compared to the carnage that is going on in the rest of the financial markets, I’ll take it.
The Canadian real estate market has been shielded for the most part from the shenanigans in the US. Most of that is because our regulatory structure is different and much more stringent. And as a whole, culturally Canadians are much more conservative. We’re like the Swiss, except we like maple syrup on our crepes, instead of caviar.
Surprisingly, though, you don’t have to look far to find US REITs which look very strong - technically speaking. Take a look at Ventas REIT (VTR), which I mentioned briefly the last time I covered real estate investment trusts:
Sure, the yield is only 4.4% but notice how close it is to its all time high? Plus, I can’t imagine the US Fed or any major central bank in the world embarking on a tightening cycle anytime soon. If anything, we are about to see some fiscal and monetary kick into hyperdrive.
In any case, this is just an idea I’m throwing out. Remember to always perform your own due diligence.
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