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No. of Recommendations: 9
Murph:


Did you just happen to post this because Thomas quotes our own Ralph Block?<g>

It is a very valid subject for the board.

A few posters there were questioning some of the numbers as adjustments needed to be made to the stock price charts to account for the CCP spinoff. So the low 80's high pre spinoff price should actually be a low 70's number with VTR as a stand alone company.

Now the price had already dropped well before the spinoff, but one needs to make sure you are doing apples to apples comparisons. I do believe that VTR and CCP will be good REITs to own going forward. However rationally we come to our decisions, we have to realize the marketplace does not always work the same way.

When Ralph suggested that he considered a price below $35 for CCP as being a reasonable entry point, I concurred. I thought that if $35 was good, my first purchase @32.48 was even better. Some buyers earlier today were able to pick up shares at slightly below $30. Now all of us who have bought under $35 are better off than those who paid $37.60 shortly after the spinoff.

Put another way, this will take some patience. Even those who are pushing for a Fed rate hike acknowledge that it may well be a once and done or a couple of 1/4 point increases. This is hardly the stuff that should freak out owners and potential owners of REITs. Yet the general market reaction has been like there would be a 300-400 point increase in a fairly short window of time. IOW, rationally, a few modest bumps up in rates should have minimal impact on any well run REIT.

It is beyond frustrating to make a well thought out purchase only to see violent movements take place that have nothing to do with thoughtful analysis or evaluation. Of course in earlier times we all benefitted from people piling into REITs based on allocation recommendations from financial advisors. When you broaden the base, most newcomers will not be nearly as dedicated to the sector as those of us who have been into REITs for 20+ years. Those with good memories will recall that in the late 90's many REITs were clicking on all cylinders only to be cast aside by those investing in NASDAQ bubble stocks that would surely double in 6-12 months. Who wanted to bother with a below NAV REIT paying a 9% secure dividend?

Today there is a lot of money invested in bonds that shouldn't be. I say this as one who exited from that asset class too soon, so I am not unbiased. Just like we said in 1998-99 that tech and internet stocks could not keep rising, bonds have no room to run up in price. While both things are/were true, it does not follow that the next change in direction has to start at a particular date. Being right does not mean that you are right today.

My exit from bonds was based on the silly idea that the Fed would not possibly keep interest rates at zero for year after year. When equilibrium was approached, there would be normal principle erosion in prices. That still holds true, but multiple years have since passed. When it eventually comes to pass, lots of bondholders will wonder "What just happened?"


BG
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