Reit is lower risk than dividend stock generally.
because reit doesn't operate like ordinary business.

While reit has property as its backing.

It is just own the property and rent it out, similar to individual own a property and rent it out.

Business subjected to business risk generally which is more volatile.

Having said that, some dividend stocks, their business is stable, and less risky than reit, especially those old fashioned, necessity type of business nature.




It is not because reit is vulnerable or not.

It is about attractiveness of reit.
Reit needs to have some spread higher than bond, FD yield, out there.
Reit is always competing with bond.

Why invest in reit if reit yield is same with bond (that is less risky than reit)

There is no rise in interest rate, no central banks hiking rate at all.
But bond yield is rising across.

I don't think so.

Situation is different.
Prior before 97 crisis.

1. Currency appreciation (RM2.50 : USD)
2. Massive trade deficit and current account deficit.
3. Low foreign currency reserves
4. Corporate and gov like borrow from overseas or foreign currency denominated.

Actually, it is not high interest that lead to both crisis. Both crisis did not start with high interest rate.
A 6-7% interest rate back then was a norm for Malaysia prior before crisis.
A 3-4% interest rate was average level for US prior 2008.

It is excessive borrowing, complacency lending practice that lead to the crisis.

The most important is do not let your currency freely trade outside your border that can be speculated easy by hedge fund or speculators that with come with billions of fund.

Malaysia household debt level although is high, but it is not that severe compared to subprime loan.

At least locally, banks do screen borrowers income before lending, and most mortgage given has property backing, and most do not give full valuation on the property.

But if company announced generous dividend together with good result, then 99.9% price will shoot up.

From about 20 years + experience in the market, I only knew most prediction/expectation gone wrong one.
And the more people predict it or expect it to happen, the least it can happen.

Nobody or little people predicted 1997 Asian financial crisis, prior before 1996.

Little people expect dotcom bubble burst in big way. I still remembered many said, if your company has no website, you have no future at that time. I was puzzled how can?
In the future everything online, ya, more online facilities, but still we go to supermarket to buy groceries after rise of dotcom decade ago.
Lot of dotcom company went burst instead of conventional old type business.

Little expect 2008 global financial crisis as well.

So the more people talk about, predict/expect, the least change it may happen.
Those "shock", "crash" in the market, always come in a surprise way.

Same with stocks, the more people rush into the same stocks, the higher risk of it crashing down afterwards.
See how nobody interested in reit few years ago.
But now a lot of people interested in reit, and reit crashing down.

In other world, mass decision a lot of time was at the wrong end one. At least from my observation/experience.
Just my lousy conclusion based on experience.

This post has been edited by cherroy: Aug 14 2013, 06:46 PM

It is considered great if one considers that company cannot "fake" the profit, when you need to distribute 90% of the profit made

Also profit accumulated in the company (if no distribute), can be wiped out quickly due to poor decision by management, new management, or the cash of company being channeled elsewhere.
While minority shareholders earn nothing even company has earned billions in previous decade.


Reit is not actually beaten down badly, it is just those previously had great run up to the upside, correcting back.
In fact, at current moment, most reit price still higher than price 2-3 years ago, or average price on longer term.

It is just previous hot money that flowing in, now flowing out.

Most stocks including reit still higher than about 1-2 years ago.

Reit is not spared from market risk, it is not a totally defensive (even bond nowadays is not that defensive anymore), but the so called defensive come from lease signed aka reit only concentrate on leasing out the property and collect rent, while ordinary business need to make business daily, whereby input cost, selling price can be vary each day, while may be exposed to poor corporate management integrity issue.

This is the difference.

Then why many so concern about Fitch negative outlook a few weeks ago?

US also no AAA already... but DJ and S&P made new high...

In stock market, once leaking, means capital gone, and once no more capital, you are out of the game.

You have 30k capital, you go offensive in the market, make mistake, lose 20%, means left 24K.
To make back 30K, you need to win 25% to breakeven. <--- remember just break even, not yet make a gain.

If second time, loose 20% again, means left 19.2K, to make back 30K, then need to make 36.2% to breakeven.
Mountain to climb.

The more correct scenario is, go offensive, but once leaking 2 goal, you need to score 3, just for a draw (not win).

A mistake may need 2 correct decision to cover back.

So either you avoid/eliminate to make mistake, or one is very good in offensive, and seldom make mistake.

Not mean to discourage people go for offensive, as said, if one is good, go ahead.
Just remind that stock market is about capital, once do not have capital, then already out of game.
And capital aka hard earned money is not easy to come by.

And market sometimes behave not as many predicting one.
Once mistake done, it can hugely affect one's capital.

Many do lose significant money due to offensive, and not everyone is good and smart in the market. In fact, most or many may be only herd follower.

Normally mistake can be costly (aka lose money is faster due to mistake) as compared to gain, although it is not a must. But experience tell me, a lot of time, loss can be faster than gain one.
Whether I have made poor generation on this, up to everyone experience.

Just serve reminder, if it is a poor advice, so be it.

This post has been edited by cherroy: Aug 16 2013, 11:01 AM

Wait for double digit first?

Market just drop less than 10%, where can classify as bear....

Only after drop more than 10~20%, then only we talk about bear.

Bear market also can make money one.

In fact, I find more fun in bear market,
Can collect good dividend yield stock.

This only available for issuers, aka investment banks.

Retailers, may need to pay 10~30% premium to own those Put warrant....

Put warrant exercise at RM1.00, if share doesn't go up more than Rm1.00, issuers pocket the issuing price...

That's why you see A~Z call warrant in the market.

I do think it is a bit over-cooked.
Fundamental at current moment is way better than prior 1997.

For me, media seems over-cooked a lot of thing nowadays, either over-optimistic or over-pessimistic.

Before 2008 global crisis, over-optimistic, nothing could happen, subprime is just small matter. But the real result, big shake up on financial.
Those believe continue to bullish, suffer.

When global crisis hit, over-pessimistic, like end of the world,
Those sell at bottom, make bargain hunter rich and gain 100%, 200% afterwards.

When Europe crisis hit, over-pessimistic, no future, Euro breakup etc.
But FTSE, CAC, Dax, all recover well nowadays, and not far from all time high.

So now talk about Asian financial crisis again?

Yes, Asian household debt issue is alarming, and could dampen the economy further, slow down, even a mild recession, but it is not a straight forward answer it must lead to crisis.

Just my cheap 2 cents.

It is understandable.
Because over-stirring the negativity can cause panic to uninformed public.

Don't get me wrong, I am not saying media shouldn't report negative issue, but sometimes media should have some responsibility in not overly positive as well as negative in reporting.

Just like recent RM sliding vs USD to 3.30, if media report Rm depreciated 10% since hitting 3.00, and media report in big headline with title RM depreciated fast, and possibility lead to crisis, it may cause unnecessary panic factor to public (as most may not well verse with financial issue), which lead to various panic move by public (selling share, money outflow etc) causing economy standstill.

But in reality, it is more about USD strength, while RM vs other currency that actually not moving much.

Remember, financial system and economy, even business built on confidence.

See what happened when people lose confidence at height of 2008 crisis.

I do not think second half will pick up a lot.

Export figure is still weak.
External environment is not that robust as China is slowing down.

There is a need to control the household debt rising which may cool down the domestic demand/consumption.

Gov need to shrink its budget deficit, so unlikely to spend big to boost domestic consumption, construction activities.

At least current account is still a surplus, so does trade surplus, although both have been shrinking significantly.
As long as the figure doesn't fall into deficit (significant) situation, RM shouldn't under huge pressure, so does BNM on interest rate front.

Last time we have huge trade deficit + current account deficit, low foreign currency reserves.

But at least now we just see shrinking trade surplus + shrinking current account surplus.

I do not know why the chart showing current account deficit.
As latest data show still at surplus.

Even for 2012, 2011, if not mistaken, it is still a surplus.
If not foreign currency reserves of BNM won't become more.

http://www.thestar.com.my/Business/Busines...p-Slightly.aspx


This post has been edited by cherroy: Aug 22 2013, 02:56 PM