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Realty Income Corporation Message Board

  • thebookstar1 thebookstar1 May 28, 2013 7:39 AM Flag

    REIT MYTH #1 :" SHIFTING FROM BONDS TO REITS WILL PROTECT YOU AGAINST HIGHER BOND RATES "

    Reit myth #1 :" shifting from bonds to reits will protect you against higher bond rates " -false . Because, reits are "highly leveraged" . When bond yields head higher, reits will get killed. just remember this, because recent parabolic buying of reits like this one (income realty" is sign that traditional ma and pa bond investors who are reaching for higher income since bond yeilds are about half of what they used to be to live on with their stash of social security cash, are taking on unheard of "risk with a reit that's so highly leveraged" . Just tiny moves in interest rates kill reits from an operatations standpoint. Wait till you see their next earnings reports. you' can see then what a small move up in interest rates does to the reit expense and net income lines.

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    • you do realize O is not a mortgage REIT, right?

    • This is so true, i wonder if any of the newbies on this board have lost money in reits. what do all of you think? I noticed that income realty was down a little more today. This sure is fascinating to watch, isn't it?

    • This is so well put, NOTHING FURTHER NEEDS TO BE SAID. Excellent work "thebookstar1" !!! Ever consider a post on Wall Street as an Analyst or Research Specialist. YOU KNOW YOUR STUFF SIR!

    • your post got covered by stuff so i bumped it up for you take care

      • 1 Reply to paulstutz
      • PLEASE, FOR ALL THOSE PUTTING THEIR BANK MONEY INTO REITS IN HOPES TO BEAT BANK MONEY MRKET AND SAVINGS DEPOSIT INTEREST RATES, PLEASE READ THE FOLLOWING. I HONESTLY DO NOT BELIEVE THAT MOST OF THE MONEY GOING INTO REITS TODAY IS BY THOSE WHO UNDERSTAND HOW REIT SHARE PRICES REACT TO EVEN A HINT OF HIGHER INTEREST RATES. BUT I SUPPOSE AFTER THE PAST FEW DAYS AND AGAIN TODAY, THEY DO. STILL, PLEASE READ THE FOLLOWING AS IT SERVES AS AN EXCELLENT GUIDE FOR KNOWING WHAT YOU ARE REALLY INVESTING IN WHEN YOU PURCHASE SHARES OF REITS. DISCLOSURE: I AM NEITHER LONG NOR SHORT REIT SHARES AT THIS TIME. ... ENJOY! ...

        FOR ENTIRE ARTICLE, YOU CAN GOOGLE "Fed official William Dudley says mortgage REITs merit attention."

        - APRIL 19, 2013

        "The companies take advantage of low interest rates to buy longer-term mortgage-backed debt with inexpensive debt. They then pledge those securities as collateral to secure additional short-term funding, or leverage, to boost returns. The companies make money on the difference between the low interest rate they pay on their debt and the higher rate paid on their mortgage assets. One reason regulators are worried is the REITs finance their holdings with very cheap short-term debt which they have to newly secure on a regular basis."

 
O
44.16+0.62(+1.42%)Oct 20 4:05 PMEDT

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