BUY REITS? ARE YOU EXPECTING A FED RATE CUT?
HOW ABSURD THAT PEOPLE REALLY THINK THAT BERNANKE CAN ACTUALLY LOWER RATES!!! AT 75 DOLLARS A BARREL AND PROBABLY HEADING UP THINGS DONT LOOK GOOD TODAY, AND TOMMOROW AINT GONNA BE ANY BETTER. THERE IS NO WAY THAT BERNANKE CAN LOWER INTEREST RATES. NO WAY WHILE OIL IS AT THESE LEVELS. HOW LOW MUST OIL BE? OFF HAND I WOULD PUT IT AT ABOUT 60, BUT FRANKLY THIS IS ONLY A GUESS, THE ACTUAL NUMBER COULD BE EVEN LOWER TO JUSTIFY LOWERING RATES, DEPENDING ON THE WORKING MODEL WHICH THEY ARE USING.
MOREOVER, THE EURO-DOLLAR DOLLAR-YEN RATES ARE ABSOLUTELY PROHIBITIVE FOR A RATE DROP. IT IS WELL NIGH IMPOSSIBLE TO DROP RATES BECAUSE THIS WOULD MOST LIKELY CAUSE A CATASTROPHIC FALL IN THE DOLLAR THAT WOULD ALMOST CERTAINLY BRING IN A WIERD MIXTURE OF TEMPORARY STAGFLATION THAT CAN ONLY RESOLVE INTO AN HONEST TO GOODNESS DEPPRESSION. HE CANNOT LOWER RATES!!! DONT BUST YOUR WALLET WAITING FOR IT EITHER. THERE IS A CORRECTION COMMING TO THE STOCK MARKET, AND IT'S GOING TO BE A BIG ONE. MORE THAN TEN PERCENT I THINK, PERHAPS MUCH MORE. HEY BUT THEN AGAIN WHO AM I RIGHT!!!!
LOLOLOLOLOLOL HEY MAYBE I COULDN'T HIT THE SIDE OF A BARN WITH MY PREDICTIONS!!!! LOLOLOL.
P.S. THE REAL PROBLEM? CHINA, INDIA. THEIR ECONOMIES CAN ONLY PUT A HUMONGOUS STRAIN ON RESOURCES, AND IN ALL LIKELYHOOD, THE ECONOMY WILL FAIL TERRIBLY.
MIDEAST DOES NOT HELP, IN FACT HURTS NOW, BUT WILL HURT MORE LATER, PERHAPS MUCH MORE.

I own several REITs, but not a mutual fund of them. The article states the average is down 7%-- maybe reit mutuals, but mine aren't at all. I love my reits-- i have them on DRIPS, so the dividends keep adding to my shares. Overall, I don't like mutuals. I use them for research and can usually find the dog that will drag down the stock. If I like their main holdings-- I'll just buy them. However-- while a stock like TCO is up 5x for me-- other than my reinvesting dividends, I'd never buy at those prices. I also researched medical reits and are doing well without being too pricey.

Let's not get confused about REITs and interest rates. The last plunge in value for REITs was in the late 80's and early 90's because they owned office space that no one wanted because the economy was bad (although Bush still disputes that today). Interest rates did come down, but what sank the REITs was the economy and over building not interest rates. In fact, the faster interest rates rise, the less likely there will be a problem with REITs because construction will halt sooner and keep pressure off of the negative ccupancy levels that hurt their income.

I, too, own REITs and have no intention of selling them at this point. I have, however, sold my interest rate sensitive stocks and mutual funds.

Other than that, thanks for the swell analysis folks. It was really informed and helpful.

There is another point that needs to be made here as well. The Fed has become largely irrelevant with regard to mortgage interest rates over the last few years. If you have followed mortage rates you would have noticed that month after month, year after year, the Fed raised their rate while mortgage rates remained the same. Why? Take a look at who is buying Fannie Mae and Freddie Mac securities as an investment for their lopsided balance of trade. Imagine what would happen if the Chinese suddenly decide that the Euro is a better investment than the dollar and start turning in their T-bills and mortgage securities. Then the REITs would really have something to worry about.

Buying securities just because prices have fallen is not an action I want to take. I wrote an article a couple of weeks ago here: http://reittrends.com/2007/08/17/reit-prices-must-come-down/

Buy REITs when values are attractive, or growth rates are under-appreciated, or dividend yield compensates you for risk. These situations might come into play as a result of headline shock, but headline shock does not automatically meant that REITs are undervalued.

Also, REITs do not all march in lockstep with each other. The categories of REITs available...Hotel/hospitality, office, retail, industrial, medical, timber/ag...operate in different industries that are subject to fluctuation at different times for different reasons. You need to dig a little deeper to find good investments. Saying "I'm going to buy REITs because REITs are down" is wishful thinking. Hope kills account balances.