Buy the REIT That Soars When Interest Rates Rise

Hey, did you hear? Interest rates are going up. You know what that means: We should sell our real estate investment trusts (REITs). Well, that's what Wall Street would like you to believe during periods of rising interest rates. After all, REITs borrow a lot of money, so their borrowing costs will go up and cash flows will shrink, and they might have to cut their dividends. Higher rates mean more competition from fixed-income investments. That urges investors to sell their REITs, then take that cash to go buy bonds, thus dragging REIT prices lower. I mean, the U.S. Federal Reserve began raising rates in June 2004, going from 1.25% to 5.25% by summer 2006. That's a massive increase in just two years and had to have been horrible for REITs. There's just one small problem with this thinking, though... It's incorrect. In fact, if you look at the most recent period of rising interest rates, REITs performed exceptionally well. And it looks like we're entering yet another period of rising interest rates, in which we can outsmart Wall Street at its own game, collecting profits from undervalued REITs every step of the way... Tags: trading strategies To get full access to all Money Morning content, click here About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free . Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors. Disclaimer: © 2018 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201. The post Buy the REIT That Soars When Interest Rates Rise appeared first on Money Morning - We Make Investing Profitable .