Well, I was wrong again. For the past year I've been pulling back on REITs in client portfolios. Nothing major, just rebalancing to a target allocation or lowering the target allocation (where it used to be 10% of equities, it would now be 5%). In new portfolio's I haven't even added an allocation. Normally I don't mess with my target allocations as I'm a buy and hold policy kind of guy. The REIT run just seemed overdone....imagine my surprise when I looked up some of the major REIT funds and found them up 14-15% during the second quarter.
Do I regret my decision, not really. Would I have liked to earn the 15%? Sure, but it is irrelevant. REIT's are now yielding between two and five percent, way below there normal 7% and they just seem way overpriced, especially with interest rates trying to rise (a whole other story). I am not changing my mind and jumping back in, REIT's are still overpriced in my eyes, if the prices fall and bring yields back to the 6% range, perhaps I'll start nibbling again...until then, I'll take the chance of being wrong.
Scott
