For months, the talk about commercial real estate centered around the fear that this could be “the next shoe to drop.” With that backdrop, I was surprised to come across Jeff Fox’s recent article Commerical Real Estate’s Death Knell May Have Been Premature.
In the face of some otherwise-daunting obstacles, commercial real estate is proving to be an attractive area for investors looking for bargains as loans come due and foreclosures mount.
Analysts have been warning for months that commercial real estate could be the next shoe to drop in the subprime mortgage collapse that came to a head in 2008.
But with signs of thawing in the securitization markets and indications that investors are ready to come to auction when properties are on the block, the idea that the industry represents a major looming danger for the economy is losing traction.
My emphasis added. At the time that we were buying commercial real estate ETFs in our Global Macro strategy in early 2010 articles like this were nowhere to be found. However, we bought it anyway because that what we do-buy and sell securities based solely on their relative strength. Performance in the table below is for the period 7/21/2009 - 7/21/2010 and YTD through 7/21/2010.
One of the realities of employing relative strength strategies is that we often buy and sell securities well before such action is being trumpeted in the main stream media. Waiting for the blessing of the main stream media before taking action is a recipe for disaster.
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Click here and here for disclosures. ICF, IYR, RWR and other real estate securities are current holdings in products managed by Dorsey Wright Money Management. Past performance is no guarantee of future returns.
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