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CBRE Clarion Global Real Estate Message Board

  • MINCE38 MINCE38 Dec 20, 2007 6:57 AM Flag

    A flight from income?

    Guys,

    I own junk bond funds, austrailian govt. bond funds, canadian oil trusts and pipeline trusts. All are income vehicles and all are getting smashed. I pray we are not seeing a flight from income into.........???????? This means a lot of people behind the scenes think are heading into massive inflation and the fed will have to start raising rates. That will be the final nail in the coffin for this stock and most income funds. Yes Virginia, these "safe" income instruments could get cut in half as interest rates gradually go up over next 2 years. Anyone remember when interest rates were 17%. Think it cant happen again. In hindsight, thats the time to buy stuff like this, when you are getting double digit returns and when they cut rates it also increses the share price. Buying anything for income now was the stupidist move of my investing career. But........I hope I get to eat my words and the fed holds steady and money pours back in after the 1st of the year.
    Good luck to all. Does anyone here have more than 20% of their money in IGR? Right now I do. Im not a happy camper.

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    • We are possibly already in a recession and a multiple contraction. Cash flow and payout ratios will be cut. This too shall pass in time. Now is the time to selectively consider buying on margin to boost yields and total returns.

    • A Junk bond fund in a credit crisis? Other than the fact that both may pay a monthly dividend, how is that at all similar to owning buildings all around the world?

      Realestate is a hard asset, a junk bond is a shaky promise to pay you paper dollars in the future.

      I'd bet on the hard asset for the long term.

      Here you have a period where there is a flight to every other hard asset.... Gold, Oil, Comodities... but realestate is on sale? If there is going to be inflation buildings seem like a great thing to own. To the extent that these companies have borrowed money to buy the buildings, in that sense you're also short the paper currency along the way.

      I've owned both IGR and RWF for a few years and just increased my position in both by 25%.

    • I believe just the opposite, fed will lower rates to 3% in 08. I believe good income stocks are being sold by large instutions to shore up their poor investments in sub-prime.Hold on, collect great dividends and watch for higher earnings in the second quarter.

    • If you're buying for long-term income, there's no need to worry about fluctuations in the share price, except as they provide opportunities, such as now, to purchase IGR at a historically low price for a historically high yield of 10% as of today's market. Assuming that the share price will recover over the next few years, all that really matters is the constancy of the dividend, which appears to be in good order, particularly given the very high quality of IGR's holdings.

      • 1 Reply to eliacal
      • This is from the prospectus.

        derives at least 50% of its revenues from the ownership, construction, financing, management or sale
        of commercial, industrial or residential real estate; or
        � has at least 50% of its assets invested in such real estate.

        Note...FINANCING!

        And ... then add "global"

        I lost a bit getting OUT of IGR on a dip below my parameter, but am also amazed at the continuing drop.

        My only concern is that FINANCING in the prospectus and the mental image I can concoct of a subprime GLOBAL construct.

        With less oversight (ha ha ha) than in the US ...plus.. TEMPTATION (wherever they might be) I am definitely concerned on this one.

        I'd like to come back, but outsmarting the MARKET is quite a trick.

    • This is getting scary. Usually a few weeks of selling doesnt mean anything, but in the last week of the year which 70% of the time, the markets gone straight up, its not! And all my junk bond funds and even austrailian bond funds are getting whacked. How is this possible after they just cut rates? If we are in a bear market, which we will know right in the 1st week of january, good night Irene. Dow could go back under 12000, and this POS could go to 9 bucks! And with the disappointing christmas retail report that just came out yesterday....uh ohhh.

    • YOu fogot to check the source of inflation, if it indeed comes: rent has a weight of 40% in CPI. If inflation becomes a serious problem, that means commodity price inflation would spread to the rest of the economy and wages and all other costs would increase, so will the rental price. In such a scenario, IGR will be able to raise dividend. This is like TIP fund-- its payout will go up with inflation.

      Evidence from the the 70's shows that REITs indeed are good hedges against inflation. Common stocks with strong pricing power (XOM, WMT, MCD, MO,BA,PG, etc) are good hedges as well.

 
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