Gavekal Capital: US Residential REITS Locked in Persistent Downtrend

Friday, November 22, 2013

US Residential REITS Locked in Persistent Downtrend

Over the last year, as taper concerns have flared, US residential REITS have struggled.  As a group they have underperformed the MSCI World index by 24% on average.  The chart below shows the relative performance.

image

All four stocks look like they are locked in persistent downtrends.  Ignat's rule states that a portfolio full of underperforming stocks is likely to underperform.  The best way to confront this truth is to avoid stocks that are underperforming...especially those locked in persistent downtrends.

image

image

image


image